株探米国株
日本語 英語
エドガーで原本を確認する
0000876883false00008768832022-11-032022-11-03

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported) — November 3, 2022
 
Stagwell Inc.  
(Exact Name of Registrant as Specified in its Charter)
 
Delaware 001-13718 86-1390679
(Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)
 
One World Trade Center, Floor 65, New York, NY 10007
(Address of principal executive offices and zip code)
 
(646) 429-1800
(Registrant’s Telephone Number)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.001 par value
STGW NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                              ☐

 
 



   
Item 2.02 Results of Operations and Financial Condition

On November 3, 2022, Stagwell Inc. (the “Company”) issued an earnings release reporting its financial results for the three and nine months ended September 30, 2022. A copy of this earnings release is attached as Exhibit 99.1 hereto. Following the issuance of this earnings release, the Company will host an earnings call in which its financial results for the three and nine months ended September 30, 2022 will be discussed. The investor presentation to be used for the call is attached as Exhibit 99.2 hereto.

The Company has posted the materials attached as Exhibit 99.1, and 99.2 on its website (www.stagwellglobal.com). The information found on, or otherwise accessible through, the Company’s website is not incorporated into, and does not form a part of, this Current Report on Form 8-K.
         
The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02 - Results of Operations and Financial Condition”. Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
    
The foregoing information and the exhibits hereto contain forward-looking statements within the meaning of the federal securities laws. These statements are based on present expectations, and are subject to the limitations listed therein and in the Company’s other SEC reports, including that actual events or results may differ materially from those in the forward-looking statements.










































Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
99.1 Press release dated November 3, 2022, relating to the Company’s results for the three and nine months ended September 30, 2022.

99.2 Investor presentation dated November 3, 2022.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)





Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed by the undersigned hereunto duly authorized.
 
Date: November 3, 2022
Stagwell Inc.
By: /s/ Frank Lanuto
Frank Lanuto
Chief Financial Officer
 


        
EX-99.1 2 stgw20220930pr.htm EX-99.1 Document
image.jpg
    
FOR IMMEDIATE ISSUE

CONTACTS:
For Investors: For Media:
Michaela Pewarski Beth Sidhu
(646) 429-1812 (202) 423-4414
michaela.pewarski@stagwellglobal.com
beth.sidhu@stagwellglobal.com


STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

Delivers Double-Digit 3Q 2022 Revenue Growth and Record Net New Business; Shares Roadmap for Stagwell Marketing Cloud


•3Q GAAP revenue grew 42.3% and 16.8% on a Pro Forma basis; YTD Pro Forma growth of 22.8%
•3Q Pro Forma organic net revenue growth of 11.3% and 16.7% YTD
•3Q net income of $35.3M; 3Q EPS of $0.08 and adjusted EPS of $0.21 per share
•YTD net income of $93.4M; YTD EPS of $0.27 and adjusted EPS of $0.68 per share
•Adjusted EBITDA of $115.1M in 3Q representing a 20.7% margin on net revenue
•Reduced net debt by $125M with net leverage ratio of 2.7x
•Record net new business wins of $86M during the third quarter

New York, NY, November 3, 2022 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three and nine months ended September 30, 2022.

THIRD QUARTER AND YTD HIGHLIGHTS:

•3Q revenue of $663.8 million, an increase of 42.3% versus the prior year period; YTD revenue of $1,979.6 million, an increase of 130.9% versus the prior year period
•Pro Forma 3Q revenue growth of 16.8% versus the prior year period and 10.1% ex-Advocacy; Pro Forma YTD revenue growth of 22.8% versus the prior year period and 19.3% ex-Advocacy
•3Q net revenue of $555.8 million, an increase of 35.8% versus the prior period; YTD net revenue of $1,638.7 million, an increase of 118.7% versus the prior year period
•Pro Forma 3Q net revenue growth of 11.6% versus the prior year period and 7.3% ex-Advocacy; Pro Forma YTD net revenue growth of 16.5% versus the prior year period and 14.4% ex-Advocacy
•Pro Forma 3Q organic net revenue growth of 11.3% versus the prior year period and 7.3% ex-Advocacy; Pro Forma YTD organic net revenue growth of 16.7% versus the prior year period and 14.7% ex-Advocacy
Page 1


image.jpg
•3Q net income of $35.3 million versus $7.9 million in the prior year period; YTD net income of $93.4 million versus $31.2 million in the prior year period
•3Q net income attributable to Stagwell Inc. common shareholders of $10.6 million versus net loss of $2.1 million in the prior year period; YTD net income attributable to Stagwell Inc. common shareholders of $33.7 million versus $20.2 million in the prior year period
•3Q adjusted EBITDA of $115.1 million, an increase of 31.5% versus the prior year period; YTD adjusted EBITDA of $327.8 million, an increase of 118.4% versus the prior year period
•Pro Forma 3Q adjusted EBITDA growth of 14.9% versus the prior period and 0.2% ex-Advocacy; Pro Forma YTD adjusted EBITDA growth of 19.4% versus the prior period and 12.9% ex-Advocacy
•3Q Adjusted EBITDA Margin of 20.7% of net revenue; YTD Adjusted EBITDA Margin of 20.0% of net revenue
•Net New Business wins totaled $86 million in the quarter

“Stagwell delivered another strong quarter of double-digit revenue growth and record net new business. Our Pro Forma organic net revenue increased 11.3% and was once again ahead of legacy global marketing services groups and most major technology companies. High-growth digital services continue to lead our strong performance, increasing net revenue 21% year-over-year, including 17% organic growth. We won a record $86 million of net new business during the quarter as our agencies expanded client relationships and won new mandates based on digital, creative and strategic excellence. Innovation, which is the foundation of our Brand Performance Network and the Stagwell Marketing Cloud, is opening up opportunities that we believe will allow us to outgrow the market for the long-term,” said Mark Penn, Chairman and Chief Executive Officer of Stagwell. “Importantly, Stagwell continues to be fiscally disciplined, managing expenses and investments prudently to produce EBITDA margins of 20.7%. Stagwell generated strong free cash flow, reduced net debt by $125 million and returned capital to shareholders through stock buybacks.”

Frank Lanuto, Chief Financial Officer, commented: “The Company reported strong third quarter results with GAAP revenue of $664 million, net revenue of $556 million and Adjusted EBITDA of $115 million. Adjusted EBITDA margins expanded 60 basis points year-over-year to 20.7% of net revenue as we continued our track record of cost discipline. We generated strong cash flow during the quarter allowing us to reduce net leverage to 2.7x.”

Financial Outlook

2022 financial guidance is as follows:

•Pro Forma Organic Net Revenue growth of 16% – 20%, reflecting a more modest contribution from advocacy fundraising relative to the 2020 Presidential cycle due to a decline in closely contested races, persisting inflation, and hurricane impact in large markets.

•Re-iterating Pro Forma Organic Net Revenue growth ex-Advocacy of 13% – 17%

•Re-iterating Adjusted EBITDA of $450 million – $480 million

•Adjusted EPS of $0.86 – $0.94

•Re-iterating Pro Forma Free Cash Flow growth of approximately 30%

Page 2


image.jpg

•Guidance assumes no impact from foreign exchange, acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 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.

Conference Call
Management will host a video webcast and conference call on Thursday, November 3, 2022, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and nine months ended September 30, 2022. The video webcast will be accessible at https://bit.ly/stgwq3earnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call 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 13,000+ 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.

Basis of Presentation
The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statements of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entirety of all periods presented.

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:
Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.
(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”.
Page 3


image.jpg
Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.
(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 EPS is defined as 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, per weighted average shares outstanding. 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.
Page 4


image.jpg
This press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading "Financial Outlook" and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify forward-looking statements. These 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. 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.

Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows 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;
•the continued impact of the coronavirus pandemic (“COVID-19”), and evolving strains of COVID-19 on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
•an inability to realize expected benefits of the combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, the “Transactions”);
•adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
•the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
•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 which complement and expand the Company’s business capabilities;
•the Company’s 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 conflict between Russia and Ukraine), 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 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.
Page 5


image.jpg
SCHEDULE 1
STAGWELL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands)
Three Months
Ended September 30,
Nine Months
Ended September 30,
2022 2021 2022 2021
Revenue $ 663,791  $ 466,634  $ 1,979,607  $ 857,436 
Operating Expenses
Cost of services 417,134  324,782  1,253,765  558,856 
Office and general expenses 119,186  121,770  429,121  226,720 
Depreciation and amortization 32,207  24,790  95,642  46,122 
Impairment and other losses 25,211  14,926  28,034  14,926 
593,738  486,268  1,806,562  846,624 
Operating Income (Loss) 70,053  (19,634) 173,045  10,812 
Other income (expenses):
Interest expense, net (19,672) (11,912) (56,552) (15,197)
Foreign exchange, net (3,927) (893) (4,163) (1,955)
Other, net 147  45,621  182  46,806 
(23,452) 32,816  (60,533) 29,654 
Income before income taxes and equity in earnings of non-consolidated affiliates 46,601  13,182  112,512  40,466 
Income tax expense 11,540  5,183  20,150  9,205 
Income before equity in earnings of non-consolidated affiliates 35,061  7,999  92,362  31,261 
Equity in income (loss) of non-consolidated affiliates 213  (76) 1,053  (75)
Net income 35,274  7,923  93,415  31,186 
Net income attributable to noncontrolling and redeemable noncontrolling interests (24,665) (9,994) (59,668) (10,987)
Net income (loss) attributable to Stagwell Inc. common shareholders $ 10,609  $ (2,071) $ 33,747  $ 20,199 
Income Per Common Share:
Basic
Net income (loss) attributable to Stagwell Inc. common shareholders $ 0.08  $ (0.06) $ 0.27  $ (0.06)
Diluted
Net income (loss) attributable to Stagwell Inc. common shareholders $ 0.08  $ (0.06) $ 0.27  $ (0.06)
Weighted Average Number of Common Shares Outstanding:
Basic 125,384  76,106  124,710  76,106 
Diluted 125,384  76,106  124,710  76,106 
Page 6


image.jpg
SCHEDULE 2
STAGWELL INC.
UNAUDITED PRO FORMA COMPONENTS OF NET REVENUE CHANGE
(amounts in thousands)

Net Revenue - Components of Change Change
Three Months Ended September 30, 2021 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2022 Organic Total
Integrated Agencies Network $ 299,964  $ (2,407) $ 135  $ 15,590  $ 13,318  $ 313,282  5.2  % 4.4  %
Brand Performance Network 136,455 (3,426) 10,491  16,952 24,017  160,472  12.4  % 17.6  %
Communications Network 54,192 (298) 1,076  23,595 24,373  78,565  43.5  % 45.0  %
All Other 7,519  (63) (4,061) 40  (4,084) 3,435  0.5  % (54.3) %
$ 498,130  $ (6,194) $ 7,641  $ 56,177  $ 57,624  $ 555,754  11.3  % 11.6  %


Net Revenue - Components of Change Change
Nine Months Ended September 30, 2021 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2022 Organic Total
Integrated Agencies Network $ 843,335  $ (6,125) $ 663  $ 95,845  $ 90,383  $ 933,718  11.4  % 10.7  %
Brand Performance Network 386,732 (8,306) 24,974  84,428 101,096  487,828  21.8  % 26.1  %
Communications Network 154,051 (686) 1,751  52,821 53,886  207,937  34.3  % 35.0  %
All Other 23,004  (163) (15,018) 1,401  (13,780) 9,224  6.1  % (59.9) %
$ 1,407,122  $ (15,280) $ 12,370  $ 234,495  $ 231,585  $ 1,638,707  16.7  % 16.5  %

Note: Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (brands) between operating segments.




Page 7


image.jpg
SCHEDULE 3
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(amounts in thousands)

For the Three Months Ended September 30, 2022
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 313,282  $ 160,472  $ 78,565  $ 3,435  $ —  $ 555,754 
Billable costs 53,840  10,991  43,205  —  108,037 
Revenue 367,122  171,463  121,770  3,436  —  663,791 
Billable costs 53,840  10,991  43,205  —  108,037 
Staff costs 194,057  102,925  44,197  2,750  7,835  351,764 
Administrative costs 25,592  20,798  8,836  1,029  2,708  58,963 
Unbillable and other costs, net 17,409  12,437  70  19  —  29,935 
Adjusted EBITDA (1)
76,224  24,312  25,462  (363) (10,543) 115,092 
Stock-based compensation 5,308  2,923  671  3,349  12,258 
Depreciation and amortization 18,316  8,205  2,654  1,206  1,826  32,207 
Deferred acquisition consideration 841  1,444  (32,074) —  —  (29,789)
Impairment and other losses 1,735  7,494  —  15,982  —  25,211 
Other items, net (1)
1,186  1,166  313  —  2,487  5,152 
Operating income (loss) $ 48,838  $ 3,080  $ 53,898  $ (17,558) $ (18,205) $ 70,053 

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

Note: Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (brands) between operating segments.





Page 8


image.jpg
SCHEDULE 4
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(amounts in thousands)

For the Nine Months Ended September 30, 2022
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 933,718  $ 487,828  $ 207,937  $ 9,224  $ —  $ 1,638,707 
Billable costs 162,043  75,718  103,138  —  340,900 
Revenue 1,095,761  563,546  311,075  9,225  —  1,979,607 
Billable costs 162,043  75,718  103,138  —  340,900 
Staff costs 583,299  301,233  125,834  7,950  23,554  1,041,870 
Administrative costs 82,889  61,840  23,200  2,217  11,460  181,606 
Unbillable and other costs, net 51,610  35,496  273  29  —  87,408 
Adjusted EBITDA (1)
215,920  89,259  58,630  (972) (35,014) 327,823 
Stock-based compensation 15,044  9,152  1,077  15  8,122  33,410 
Depreciation and amortization 55,206  25,044  7,718  2,457  5,217  95,642 
Deferred acquisition consideration 5,697  7,349  (27,466) —  —  (14,420)
Impairment and other losses 2,519  8,051  —  17,464  —  28,034 
Other items, net (1)
2,701  3,676  429  22  5,284  12,112 
Operating income (loss) $ 134,753  $ 35,987  $ 76,872  $ (20,930) $ (53,637) $ 173,045 

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

Note: Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (brands) between operating segments.




Page 9


image.jpg
SCHEDULE 5
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(amounts in thousands)

For the Three Months Ended September 30, 2021
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 299,964  $ 136,455  $ 54,192  $ 7,519  $ —  $ 498,130 
Billable costs 41,464  6,990  21,847  (7) —  70,294 
Revenue 341,428  143,445  76,039  7,512  —  568,424 
Billable costs 41,464  6,990  21,847  (7) —  70,294 
Staff costs 176,981  86,992  35,134  5,043  9,200  313,350 
Administrative costs 26,970  20,672  6,198  2,474  (402) 55,912 
Unbillable and other costs, net 17,727  10,023  804  147  11  28,712 
Adjusted EBITDA (1)
78,286  18,768  12,056  (145) (8,809) 100,156 
Stock-based compensation 32,693  2,644  15,446  15  3,184  53,982 
Depreciation and amortization 14,937  8,083  2,174  492  1,556  27,242 
Deferred acquisition consideration 3,422  —  136  —  —  3,558 
Impairment and other losses 80  14,846  —  —  —  14,926 
Other items, net (1)
1,372  858  (239) —  20,896  22,887 
Operating income (loss) $ 25,782  $ (7,663) $ (5,461) $ (652) $ (34,445) $ (22,439)

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

Note: Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (brands) between operating segments.




Page 10


image.jpg
SCHEDULE 6
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(amounts in thousands)

For the Nine Months Ended September 30, 2021
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 843,335  $ 386,732  $ 154,051  $ 23,004  $ —  $ 1,407,122 
Billable costs 114,721  30,962  59,611  —  —  205,294 
Revenue 958,056  417,694  213,662  23,004  —  1,612,416 
Billable costs 114,721  30,962  59,611  —  —  205,294 
Staff costs 510,382  253,969  101,323  15,389  26,021  907,084 
Administrative costs 77,093  57,321  15,891  9,220  2,008  161,533 
Unbillable and other costs, net 40,231  23,111  148  533  24  64,047 
Adjusted EBITDA (1)
215,629  52,331  36,689  (2,138) (28,053) 274,458 
Stock-based compensation 36,147  2,739  15,688  15  4,368  58,957 
Depreciation and amortization 29,266  22,961  5,587  2,013  4,927  64,754 
Deferred acquisition consideration 26,839  102  (52) —  —  26,889 
Impairment and other losses 955  14,846  —  —  —  15,801 
Other items, net (1)
5,429  4,222  78  —  30,011  39,740 
Operating income (loss) $ 116,993  $ 7,461  $ 15,388  $ (4,166) $ (67,359) $ 68,317 

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

Note: Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (brands) between operating segments.




Page 11


image.jpg
SCHEDULE 7
STAGWELL INC.
UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)
(amounts in thousands)

For the Three Months Ended September 30, 2022

Reported (GAAP) Adjustments Reported
(Non-GAAP)
Net income attributable to Stagwell Inc. common shareholders $ 10,609  $ 16,159  $ 26,768 
Weighted average number of common shares outstanding 125,384  125,384  125,384 
Adjusted Diluted EPS $ 0.08  $ 0.13  $ 0.21 
Adjustments to Net Income (loss) attributable to Stagwell Inc. Common shareholders
Pre-Tax Tax Net
Amortization $ 23,814  $ (4,763) $ 19,051 
Impairment and other losses 25,211  (414) 24,797 
Stock-based compensation 12,258  (2,452) 9,806 
Deferred acquisition consideration (29,789) 5,958  (23,831)
Other items, net (1)
5,152  (1,030) 4,122 
Discrete tax items —  2,680  2,680 
$ 36,646  $ (21) $ 36,625 
Less: Net income attributable to Class C shareholders (20,466)
Net income attributable to Stagwell Inc. common shareholders $ 16,159 

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

Page 12


image.jpg
SCHEDULE 8
STAGWELL INC.
UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)
(amounts in thousands)

thousands)

For the Nine Months Ended September 30, 2022

Reported (GAAP) Adjustments Reported
(Non-GAAP)
Net income attributable to Stagwell Inc. common shareholders $ 33,747  $ 50,815  $ 84,562 
Weighted average number of common shares outstanding 124,710  124,710  124,710 
Adjusted Diluted EPS $ 0.27  $ 0.41  $ 0.68 
Adjustments to Net Income (loss) attributable to Stagwell Inc. Common shareholders
Pre-Tax Tax Net
Amortization $ 70,541  $ (14,108) $ 56,433 
Impairment and other losses 28,034  (979) 27,055 
Stock-based compensation 33,410  (6,682) 26,728 
Deferred acquisition consideration (14,420) 2,884  (11,536)
Other items, net (1)
12,112  (2,422) 9,690 
Discrete tax items —  6,805  6,805 
$ 129,677  $ (14,502) $ 115,175 
Less: Net income attributable to Class C shareholders (64,360)
Net income attributable to Stagwell Inc. common shareholders $ 50,815 

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





Page 13


image.jpg
SCHEDULE 9
STAGWELL INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
  September 30, 2022 December 31, 2021
 
ASSETS    
Current Assets    
Cash and cash equivalents $ 165,251  $ 184,009 
Accounts receivable, net 725,346  696,937 
Expenditures billable to clients 57,873  63,065 
Other current assets 71,249  61,830 
Total Current Assets 1,019,719  1,005,841 
Fixed assets, net 123,128  118,603 
Right-of-use lease assets - operating leases 283,974  311,654 
Goodwill 1,615,694  1,652,723 
Other intangible assets, net 879,049  937,695 
Other assets 47,784  29,064 
Total Assets $ 3,969,348  $ 4,055,580 
LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 294,402  $ 271,769 
Accrued media 188,344  237,794 
Accruals and other liabilities 211,263  272,533 
Advance billings 340,675  361,885 
Current portion of lease liabilities - operating leases 73,659  72,255 
Current portion of deferred acquisition consideration 74,426  77,946 
Total Current Liabilities 1,182,769  1,294,182 
Long-term debt 1,329,134  1,191,601 
Long-term portion of deferred acquisition consideration 85,163  144,423 
Long-term lease liabilities - operating leases 308,162  342,730 
Deferred tax liabilities, net 103,243  103,093 
Other liabilities 70,167  57,147 
Total Liabilities 3,078,638  3,133,176 
Redeemable Noncontrolling Interests 65,817  43,364 
Commitments, Contingencies and Guarantees
Shareholders' Equity:
Common shares - Class A & B 135  118 
Common shares - Class C
Paid-in capital 348,663  382,893 
Retained earnings (loss) 6,573  (6,982)
Accumulated other comprehensive loss (64,956) (5,278)
Stagwell Inc. Shareholders' Equity 290,417  370,753 
Noncontrolling interests 534,476  508,287 
Total Shareholders' Equity 824,893  879,040 
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity $ 3,969,348  $ 4,055,580 
Page 14


image.jpg
SCHEDULE 10
STAGWELL INC.
UNAUDITED SUMMARY CASH FLOW DATA
(amounts in thousands)
Nine Months Ended September 30,
2022 2021
Cash flows from operating activities:
Net income $ 93,415  $ 31,186 
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation 33,410  53,465 
Depreciation and amortization 95,642  46,122 
Impairment and other losses 28,034  14,926 
Provision for bad debt expense 2,681  1,893 
Deferred income taxes (1,557) 2,710 
Adjustment to deferred acquisition consideration (14,420) 9,456 
Gain on sale of asset —  (43,440)
Other (8,716) 6,998 
Changes in working capital:
Accounts receivable (34,637) (26,095)
Expenditures billable to clients 5,525  (9,230)
Other assets 4,100  (14,568)
Accounts payable 34,630  (37,435)
Accrued expenses and other liabilities (138,947) (26,668)
Advance billings (23,017) 16,598 
Deferred acquisition related payments (10,776) (5,772)
Net cash provided by operating activities 65,367  20,146 
Cash flows from investing activities:
Capital expenditures (25,495) (13,666)
Current period acquisitions, net of cash acquired (37,461) 130,155 
Proceeds from sale of business, net —  37,232 
Other (1,328) — 
Net cash (used in) provided by investing activities (64,284) 153,721 
Cash flows from financing activities:
Repayment of borrowings under revolving credit facility (855,000) (535,472)
Proceeds from borrowings under revolving credit facility 989,500  408,369 
Shares acquired and cancelled (14,970) (820)
Distributions to noncontrolling interests and other (38,486) (19,245)
Payment of deferred consideration (61,089) — 
Purchase of noncontrolling interest (3,600) — 
Proceeds from issuance of the 5.625% Notes —  1,100,000 
Debt issuance costs —  (15,365)
Distributions —  (204,929)
Repurchase of 7.50% Senior Notes —  (884,398)
Repurchase of Common Stock (28,667) — 
Net cash used in financing activities (12,312) (151,860)
Effect of exchange rate changes on cash and cash equivalents (7,529) 1,025 
Net decrease in cash and cash equivalents (18,758) 23,032 
Cash and cash equivalents at beginning of period 184,009  92,457 
Cash and cash equivalents at end of period $ 165,251  $ 115,489 

Page 15

EX-99.2 3 stagwell3q22earningspres.htm EX-99.2 stagwell3q22earningspres
Third Quarter 2022 EARNINGS PRESENTATION NOVEMBER 3 | 2022


 
This press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading "Financial Outlook" and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify forward-looking statements. These 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. 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. Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows 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; • the continued impact of the coronavirus pandemic (“COVID-19”), and evolving strains of COVID-19 on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties; • an inability to realize expected benefits of the combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, the “Transactions”); • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs; • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions; • 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 which complement and expand the Company’s business capabilities; • the Company’smaterial 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 conflict between Russia and Ukraine), 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 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings. FORWARD LOOKING STATEMENTS & OTHER INFORMATION 2


 
DEFINITIONS OF NON-GAAP FINANCIAL MEASURES 3 In addition to its reported results, Stagwell Inc. has included in this presentation 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: Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. (1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year. (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 EPS is defined as 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, per weighted average shares outstanding. 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 presentation are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.


 
FINANCIAL OUTLOOK Full-Year 2022 Organic Net Revenue Growth Organic Net Revenue Growth, Ex-Advocacy In Adjusted EBITDA 16% - 20% 13% - 17% $450M - $480M Note: Guidance as of 11/03/2022. All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 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 on definitions for Organic Net Revenue, Organic Net Revenue Ex-Advocacy, Adjusted EBITDA, Adjusted Earnings Per Share, and Free Cash Flow. Please refer to our investor website at stagwellglobal.com/investors for information on Forward Looking Statements and risk factors outlined in our 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings. ~30% Free Cash Flow Growth 4 $0.86 - $0.94 In Adjusted Earnings Per Share


 
T H I R D Q U A R T E R H I G H L I G H T S Strategic INVESTMENT Leading GROWTH Strong FINANCIAL DISCIPLINE Record NEW BUSINESS In The Stagwell Marketing Cloud ~$5M in organic investments year-to-date Expanded sr. leadership team with CTO Mansoor Basha 4 Divisions: Data, CommsTech, Media Studio, Specialty Media $86M In Net New Business Driven by larger wins and client diversification into new services Top 25 clients averaged $6M in 3Q net revenue, up 20% y/y Awarded Bud Light’s North American Creative account 11.6% Net Revenue Growth, 11.3% Organic On top of 30% organic growth in 3Q21; 34% two-year stack +21% y/y digital net revenue growth; 17% organic growth 57% of 3Q net revenue from digital capabilities 20.7% adj. EBITDA margin on net revenue Reduced net debt by $125M bringing net leverage to 2.7x Returned $14M in capital through buybacks and $29M YTD $0.21 of adjusted earnings per share; $0.68 year-to-date NET DEBT: $1,180M | NET LEVERAGE RATIO: 2.7x | STOCK BUY BACKS: $14M Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. All growth rates are Pro Forma, year-over-year growth unless otherwise noted. Net Debt defined as bonds plus revolver balance less cash. Net Debt Ratio defined as Net Debt divided by LTM Adjusted EBITDA. 5


 
S U M M A R Y P R O F O R M A C O M B I N E D F I N A N C I A L S Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2021. Figures may not foot due to rounding. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net Revenue $ 555,754 $ 498,130 $ 1,638,707 $ 1,407,122 Billable Costs 108,037 70,294 340,900 205,294 Revenue $ 663,791 $ 568,424 $ 1,979,607 $ 1,612,416 Billable Costs 108,037 70,294 340,900 205,294 Staff costs 351,764 313,350 1,041,870 907,084 Administrative costs 58,963 55,912 181,606 161,533 Unbillable and other costs, net 29,935 28,712 87,408 64,047 Adjusted EBITDA $ 115,092 $ 100,156 $ 327,823 $ 274,458 Stock-based compensation 12,258 53,982 33,410 58,957 Depreciation and amortization 32,207 27,242 95,642 64,754 Deferred acquisition consideration (29,789) 3,558 (14,420) 26,889 Impairment and other losses 25,211 14,926 28,034 15,801 Other items, net 5,152 22,887 12,112 39,740 Operating income (loss) $ 70,053 $ (22,439) $ 173,045 $ 68,317 Pro Forma adjusted EBITDA margin (on net revenue) 20.7% 20.1% 20.0% 19.5% 6 $ in Thousands


 
P R O F O R M A N E T R E V E N U E Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2021. Figures may not foot due to rounding. Three Months Ended, September 30, 2022 Nine Months Ended, September 30, 2022 Net Revenue Change Net Revenue Change 2021 Net Revenue $ 498,130 $ 1,407,122 Organic revenue 56,177 11.3% 234,495 16.7% Acquisitions (divestitures), net 7,641 1.5% 12,370 0.9% Foreign currency (6,194) (1.2%) (15,280) (1.1%) Total Change $ 57,624 11.6% $ 231,585 16.5% 2022 Net Revenue $ 555,754 $ 1,638,707 7 $ in Thousands


 
3 Q N E T R E V E N U E B Y G E O G R A P H Y Note: Figures presented on a Pro Forma basis giving effect to the combination as if completed on January 1, 2020. Figures may not foot due to rounding. 3Q Organic Growth Y/Y 81.5% 7.6% 10.8% Geography 3Q22 YTD United States 9.7% 15.4% United Kingdom 25.5% 33.9% Other 14.1% 16.5% TOTAL 11.3% 16.7% 8 % OF NET REVENUE 81.4% 7.5% 11.1% YTD


 
3 Q N E T R E V E N U E M I X B Y P R I N C I P A L C A P A B I L I T Y Note: Figures may not foot due to rounding. Creativity & Communications Blue-Chip Customer Base Performance Media & Data Addressable on a Global Scale Consumer Insights & Strategy Tracking Across the Entire Consumer Journey Digital Transformation Building & Designing Digital Platforms & Technology 1 2 3 4 29% 18% 9% 43% 9 57%


 
3 Q Y E A R - O V E R - Y E A R G R O W T H B Y C A P A B I L I T Y Note: Figures presented on a Pro Forma basis giving effect to the combination as if completed on January 1, 2021. Advocacy includes Targeted Victory, SKDK, and TMA Direct. Figures may not foot due to rounding. *EBITDA includes corporate expenses, notionally allocated ratably across each capability. Principal Capability Organic Net Revenue Growth Net Revenue Growth Adjusted EBITDA* Growth Digital Transformation 28.4% 30.5% 48.7% Performance Media & Data 4.8% 13.1% 4.1% Consumer Insights & Strategy 11.3% 12.7% (0.8%) Creativity & Communications 4.8% 0.9% (0.2%) TOTAL 11.3% 11.6% 14.9% TOTAL EX-ADVOCACY 7.3% 7.3% 0.2% % OF NET REVENUE 29% 18% 9% 43% 10 39% 11% 8% 43% % OF ADJ EBITDA*


 
Three Months Ended, SEPT 30, 2022 SEPT 30, 2021 % Change Total Net Revenue $556 $498 11.6% Advocacy Net Revenue 52 29 79.9% Ex Advocacy Net Revenue $504 $469 7.3% 3 Q E X - A D V O C A C Y N E T R E V E N U E & A D J U S T E D E B I T D A Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. Advocacy includes Targeted Victory, SKDK, and TMA Direct. Figures may not foot due to rounding. $ in Millions 11 Three Months Ended, SEPT 30, 2022 SEPT 30, 2021 % Change Total Adj. EBITDA $115 $100 14.9% Advocacy Adj. EBITDA 21 6 251.4% Ex Advocacy Adj. EBITDA $95 $94 0.2% NET REVENUE ADJ. EBITDA


 
12 STRONG NEW BUSINESS in Q3 2022 LTM NET NEW BUSINESS OF $247M $75M $54M $31M $86M 4Q21 1Q22 2Q22 3Q22


 
N E W B U S I N E S S U P D A T E 13 PER CLIENT AT TOP 25 Notable Business WINS & EXPANSIONS Net New Business 3Q $86M LTM $247M Avg. Net Revenue 3Q $6.1M


 
14 BRAND PERFORMANCE NETWORK is working YEAR FOUNDED 2021 GLOBAL HQ NYC MEDIA MANAGED $5B+ YTD NET REVENUE ~$500M LOCATIONS / COUNTRIES 60/20 PEOPLE 6K+ YOY NET REVENUE +26% PARTNERSHIPS 150 "Creative + Media + Commerce'—the new equation for modern marketing—is simple, but executing against it is complex," “Brands need truly integrated partners to navigate this convergence.“ MARK PENN, CHAIRMAN AND CEO OF STAGWELL, SAID IN A STATEMENT ABOUT THE REBRANDING.


 
S T R A T E G I C M & A I N Q 3 Transaction 80% ACQUISITION (remaining stake) Business Headquartered in Los Angeles, Wolfgang is a consultancy and creative agency, purposely built for the modern age. Wolfgang’s mission is to bridge the gap between management consulting and advertising by focusing on solving client problems with analytics and creativity, from the ground up. Wolfgang’s offerings include Consulting & Strategy, Creative and Production. Rationale Wolfgang will become part of the Doner Partner Network (“DPN”), with the three founders each taking up additional roles within the wider DPN. Colin Jeffery will take on the role of Chief Creative Officer of the combined operation, Mike Geiger will remain CEO of Wolfgang and will also lead production at Cahoots Studio, and Seema Miller will lead strategic and new business initiatives across Stagwell in addition to her Chief Strategy role at Wolfgang. The acquisition of Wolfgang further improves Stagwell’s foothold in California, while bringing it an enviable client roster including Gillette, Adidas, Uniqlo, Panda Express, UNICEF and Georgia Pacific.


 
DEVELOPMENT OF THE STAGWELL MARKETING CLOUD is a critical way to enhance the value of our company. Technology is not something that others do - it’s something we all need to participate in & get across the finish line. WE ARE MAKING INVESTMENTS & getting ready to market products that we believe can reach a $500 million revenue run-rate by 2027 and add billions to the value of the company.


 
17 SMC IS A PROPRIETARY SUITE of SaaS & DaaS tools built for the in-house marketer TARGETING Our Four Divisions HARRIS DATA COMMS TECH MEDIA STUDIO SPECIALTY MEDIA One-Stop Suite Of DaaS Tools For Market Researchers SaaS Platform For Modern Communication Professionals DIY Platform For In-House Media Buyers Proprietary & Premium Owned Media Channels$500M ~$140M OF REVENUE IN 2023 & A RUN-RATE BY 2027


 
18 ADDED SMC CHIEF TECHNOLOGY OFFICER ADDED & INTEGRATED NEW PRODUCTS INTO SUITE ORGANIZING SMC AROUND FOUR BUSINESS UNITS SMC Key Updates Previously with Accenture’s Applied Intelligence Practice, working on strategy & consulting, data led transformation, cloud analytics, AI & machine learning. HARRIS DATA COMMS TECH MEDIA STUDIO SPECIALTY MEDIA


 
19 LEADERSHIP team Mark J. Penn CHAIRMAN & CEO, STAGWELL GLOBAL • Founded, grew and sold Penn Schoen Berland to WPP • In WPP, served as CEO of Burson Marsteller and PSB • Executive Vice President and Chief Strategy Officer at Microsoft, running a $2 billion advertising budget • Author of Microtrends, a New York Times and Wall Street Journal best seller. EXPERIENCED SMC PRODUCT LEADERSHIP TEAM COMPRISED OF SUCCESSFUL SERIAL ENTREPRENEURS Mansoor Basha CTO Abe Geiger CPO Matthew Lochner MD Elspeth Rollert CMO Former CPO of Hudson MX, media buying & accounting systems provider, with clients including Dentsu, IPG, WPP, & Publicis media agencies Served in brand, performance & partnership marketing US & Global leadership roles at Uber & Microsoft Stagwell Group deal team member, working on over 20 private equity transactions Previously with Accenture’s Applied Intelligence Practice, working on strategy & consulting, data led transformation, cloud analytics, AI, & machine learning SMC CORPORATE LEADERSHIP TEAM SMC BOARD Dan Gardner BOARD MEMBER John Kahan BOARD MEMBER Former Chief Data & Analytics Officer, Microsoft Co-Founder of Code and Theory and business leader of Stagwell’s Code and Theory network Jim CarusoAaron Kwittken Ged Parton Josh Beatty Will Johnson Paul Krasinski Business Unit CEO, CommsTech Business Unit CEO, Harris Data Founder, ARound CEO, Harris Brand Platform CEO, Epicenter CEO, CUE


 
20


 
21


 
22 WE HAVE OUR FINANCIAL HOUSE in order Refinanced Bonds, Securing $1.1BN in financing › Fixed interest rate of 5.625% in rising interest rate environment › 8 years to maturity in 2029, providing financial flexibility Secured $500M Revolving Credit Facility with flexible terms, 5-year maturity Moody’s upgraded Stagwell’s corporate family rating (CFR) to B1 from B2 in July 2022


 
23 MAINTAINING DISCIPLINE AROUND Deferred Acquisition Costs REDUCED DAC BY $63M FROM 2021 YEAR-END BALANCE $222M $224M $197M $160M 4Q21 1Q22 2Q22 3Q22 Note: Numbers may not foot due to rounding.


 
G A A P C O N S O L I D A T E D O P E R A T I N G P E R F O R M A N C E Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue $ 663,791 $ 466,634 $ 1,979,607 $ 857,436 Cost of services 417,134 324,782 1,253,765 558,856 Office & general expenses 119,186 121,770 429,121 226,720 Depreciation & amortization 32,207 24,790 95,642 46,122 Impairment & other losses 25,211 14,926 28,034 14,926 Total operating expenses $ 593,738 $ 486,268 $ 1,806,562 $ 846,624 Operating income (Loss) $ 70,053 $ (19,634) $ 173,045 $ 10,812 Interest expense, net (19,672) (11,912) (56,552) (15,197) Foreign exchange, net (3,927) (893) (4,163) (1,955) Other, net 147 45,621 182 46,806 Other income (expenses) $ (23,452) $ 32,816 $ (60,533) $ 29,654 Income tax expense 11,540 5,183 20,150 9,205 Income before equity in earnings of non-consolidated affiliates $ 35,061 $ 7,999 $ 92,362 $ 31,261 Equity in income (loss) of non-consolidated affiliates 213 (76) 1,053 (75) Net income $ 35,274 $ 7,923 $ 93,415 $ 31,186 Net (income) loss attributable to non-controlling & redeemable non-controlling interests (24,665) (9,994) (59,668) (10,987) Net income attributable to Stagwell Inc. common shareholders $ 10,609 $ (2,071) $ 33,747 $ 20,199 Earnings Per Share Basic $ 0.08 $ (0.06) $ 0.27 $ (0.06) Diluted $ 0.08 $ (0.06) $ 0.27 $ (0.06) Weighted Average Number of Shares Outstanding Basic 125,384 76,106 124,710 76,106 Diluted 125,384 76,106 124,710 76,106 Note: Conversion of Class C shares currently results in an anti-dilutive effect. Therefore, GAAP requires Diluted earnings per share and share count to reflect the lesser Basic figures. Pro forma Diluted earnings per share, as if the Class C converted, was $0.10 for the three months ended September 30, 2022 and $0.29 for the nine months ended September 30, 2022. Numbers may not foot due to rounding. 24 $ and Shares in Thousands


 
A D J U S T E D E A R N I N G S P E R S H A R E Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Reported (GAAP) Adjustments Non-GAAP Reported (GAAP) Adjustments Non-GAAP Net income attributable to Stagwell Inc. common shareholders $ 10,609 $ 16,159 $ 26,768 $ 33,747 $ 50,815 $ 84,562 Weighted average number of common shares outstanding (basic and diluted) 125,384 125,384 125,384 124, 710 124,710 124,710 Adjusted earnings per share (basic and diluted) $ 0.08 $ 0.13 $ 0.21 $ 0.27 $ 0.41 $ 0.68 Adjustments to net income (loss) Pre-Tax Tax Net Pre-Tax Tax Net Amortization $ 23,814 $ (4,763) $ 19,051 $ 70,541 $ (14,108) $ 56,433 Impairment and other losses 25,211 (414) 24,797 28,034 (979) 27,055 Stock-based compensation 12,258 (2,452) 9,806 33,410 (6,682) 26,728 Deferred acquisition consideration (29,789) 5,958 (23,831) (14,420) 2,884 (11,536) Other items, net 5,152 (1,030) 4,122 12,112 (2,422) 9,690 Discrete tax items ̶ 2,680 2,680 ̶ 6,805 6,805 Total Adjustments $ 36,646 $ (21) $ 36,625 $ 129,677 $ (14,502) $ 115,175 Less: Net income attributable to Class C shareholders (20,466) (64,360) Net income attributable to Stagwell Inc. Common shareholders $ 16,159 $ 50,815 25 $ and Shares in Thousands Note: Conversion of Class C shares currently results in an anti-dilutive effect. Therefore, GAAP requires diluted earnings per share and share count to reflect the lesser Basic figures. Numbers may not foot due to rounding.


 
P R O F O R M A C A P I T A L S T R U C T U R E Note: Pro Forma share count assumes full conversion of Class C shares to Class A on a one-to-one basis. Numbers may not foot due to rounding 1. Excludes $503M in non-controlling interest of Stagwell Class C shareholders to reflect NCI balance pro forma for full conversion of Class C shares to Class A. 2. Includes redeemable non-controlling interest and obligations in connection with profit interests held by employees. 3. Includes issued and outstanding Class A shares (including unvested restricted stock) and 3,946 Class B shares which have equal economic rights and 10x voting rights to Class A shares. Note: Stagwell Agency Holdings, which is a fully owned subsidiary of Stagwell Media, owns 26.5M of the Class A shares related to its investment in legacy MDC Partners in 2019, of which the common portion was converted to Stagwell Inc. Class A shares upon the closing of the Business Combination in August 2021 and preferred portion converted to Stagwell Inc. Class A shares in September 2021. 4. Class C shares are held by Stagwell Media, the parent company of Stagwell Agency Holdings, issued in August 2021 as consideration for the contribution of its assets to the Business Combination. 5. Dilution calculated using treasury stock method applied to 6,009,246 total share-based awards outstanding (includes unvested RSUs and unexercised SARs). Net Debt & Debt-Like ($M, as of 9/30/22) Revolving Credit Facility $ 245 Bonds 1,100 NCI1 32 DAC 160 RNCI2 98 Less: Cash 165 TOTAL NET DEBT & DEBT-LIKE $ 1,469 Pro Forma Share Count (Thousands, as of 10/28/22) Class A3 130,790 Class C4 (equal voting & economic rights to Class A) 164,376 Share-based awards5 3,712 PRO FORMA DILUTED 298,877 26


 
Appendix


 
L I Q U I D I T Y Available Liquidity (as of 9/30/22) Commitment Under Credit Facility $ 500 Drawn 245 Undrawn Letters of Credit 25 Undrawn Commitments Under Facility $ 230 Total Cash & Cash Equivalents 165 Total Available Liquidity $ 395 28 $ in Millions


 
G L O B A L N E T W O R K 29 North America Latin America Europe Asia Pacific • Australia • China • Hong Kong • India • Indonesia • Japan • Malaysia • Philippines • Taiwan • Thailand • Singapore • South Korea Middle East & Africa • Austria • Belgium • Bulgaria • Italy • Latvia • Romania • Slovak Republic • Slovenia • Switzerland • Turkey • Ukraine • France • Germany • Netherlands • Poland • Spain • Sweden • United Kingdom • Argentina • Aruba • Bolivia • Brazil • Curacao • Colombia • Costa Rica • Dominican • Ecuador • El Salvador • Guatemala • Honduras • Jamaica • Nicaragua • Panama • Peru • Republic • Uruguay • Venezuela • Algeria • Bahrain • Egypt • Jordan • Kuwait • Lebanon • Libya • Morocco • Nigeria • Oman • Saudi Arabia • South Africa • Tunisia • United Arab Emirates Stagwell +Affiliates COUNTRIES 34 69 EMPLOYEES 13K+ 24K+ Stagwell’s Affiliate Network Significantly Expands Our Global Footprint • Canada • USA • Mexico Note: As of September 30, 2022.


 
Thank You Contact Us: IR@StagwellGlobal.com