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0000876883false00008768832023-03-022023-03-02

 
 
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) — March 2, 2023
 
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 March 2, 2023, Stagwell Inc. (the “Company”) issued an earnings release reporting its financial results for the three months and year ended December 31, 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 months and year ended December 31, 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 March 2, 2023, relating to the Company’s results for the three months and year ended December 31, 2022.

99.2 Investor presentation dated March 2, 2023.

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: March 2, 2023
Stagwell Inc.
By: /s/ Frank Lanuto
Frank Lanuto
Chief Financial Officer
 


        
EX-99.1 2 stgw20221231pr.htm EX-99.1 Document
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FOR IMMEDIATE ISSUE


STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022

FY22 Revenue rises to record $2.7B following sixth-consecutive quarter of double-digit growth; company doubles stock buyback program to $250M

•FY22 Pro Forma revenue growth of 21%; 16% in Q4
•FY22 Pro Forma organic net revenue growth of 14%; 8% in Q4
•Adjusted EBITDA of $451M in FY22, a 20.3% margin on net revenue
•Adjusted EBITDA of $123M in Q4, a 21.1% margin on net revenue
•FY22 Adjusted net income of $268M; $63M in Q4
•FY22 Adjusted EPS of $0.90; $0.22 in Q4
•FY22 Free Cash Flow of $270M; $268M in Q4
•FY22 Net New Business of $213M; $42M in Q4
•Reduced net debt by $47M versus prior year, ending with a net leverage ratio of 2.17x
•Issues 2023 Organic Net Revenue growth guidance of 7.5%-10% and 10%-14% ex-Advocacy
•Issues 2023 Adjusted EBITDA guidance of $450M-$490M and Free Cash Flow conversion of 50%-60%

New York, NY, March 2, 2023 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three months and year ended December 31, 2022.

FOURTH QUARTER AND FULL YEAR HIGHLIGHTS:

•Q4 revenue of $708 million, an increase of 16% versus the prior year period; FY22 revenue of $2,688 million, an increase of 83% versus the prior year period
•Q4 revenue growth of 16% versus the prior year period and 13% ex-Advocacy; Pro Forma FY22 revenue growth of 21% versus the prior year period and 17% ex-Advocacy
•Q4 net revenue of $583 million, an increase of 12% versus the prior period; FY22 net revenue of $2,222 million, an increase of 75% versus the prior year period
•Q4 net revenue growth of 12% versus the prior year period and 10% ex-Advocacy; Pro Forma FY22 net revenue growth of 15% versus the prior year period and 13% ex-Advocacy
•Q4 organic net revenue growth of 8% versus the prior year period and 6% ex-Advocacy; Pro Forma FY22 organic net revenue growth of 14% versus the prior year period and 12% ex-Advocacy
•Q4 Adjusted EBITDA of $123 million, an increase of 19% versus the prior year period; FY22 Adjusted EBITDA of $451 million, an increase of 78% versus the prior year period
•Q4 Adjusted EBITDA growth of 19% versus the prior period and 10% ex-Advocacy; Pro Forma FY22 Adjusted EBITDA growth of 19% versus the prior period and 12% ex-Advocacy
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•Q4 Adjusted EBITDA Margin of 21.1% on net revenue; FY22 Adjusted EBITDA Margin of 20.3% on net revenue
•Q4 net loss of $28 million versus net income of $5 million in the prior year period; FY22 net income of $66 million versus $36 million in the prior year period
•Q4 net loss attributable to Stagwell Inc. common shareholders of $6 million versus net income of $1 million in the prior year period; FY22 net income attributable to Stagwell Inc. common shareholders of $27 million versus $21 million in the prior year period
•Q4 Adjusted net income of $63 million; FY22 Adjusted net income of $268 million
•Q4 Adjusted earnings per share for Stagwell Inc. common shareholders of $0.22; FY22 Adjusted earnings per share of $0.90
•Q4 net new business of $42 million; FY22 net new business of $213 million

“Stagwell closed out 2022 with industry-leading double-digit growth, strong margin expansion, record free cash flow, record earnings per share, and a net debt ratio significantly below our target. We promised to transform marketing, and we have built game-changing AI and AR-driven products as we continue to grow and transform both our business and the industry,” said Mark Penn, Chairman and CEO, Stagwell. “We look forward to another year of double-digit growth outside of our advocacy businesses in 2023, continuing our momentum.”
Frank Lanuto, Chief Financial Officer, commented: “The Company reported a record $708 million of revenue in the fourth quarter, a 16% increase over the prior year and Adjusted EBITDA of $123 million. Adjusted EBITDA margin as a percentage of net revenue rose to 21.1% for the quarter and 20.3% for the year as a result of careful cost management. Free cash flows rose to $270 million driving down the Company's net leverage ratio to 2.17x.”

Financial Outlook
2023 financial guidance is as follows:
•Organic Net Revenue growth of 7.5% – 10%
•Organic Net Revenue growth ex-Advocacy of 10% – 14%
•Adjusted EBITDA of $450 million – $490 million
•Free Cash Flow Conversion of 50% – 60%
•Adjusted EPS of $0.90 – $1.05
•Guidance assumes no impact from foreign exchange, acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company’s 2023 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 March 1, 2023, the Board authorized an extension and a $125,000,000 increase in the size of our previously approved stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $250,000,000 of shares of our 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 March 1, 2026.

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Conference Call
Management will host a video webcast and conference call on Thursday, March 2, 2023, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three months and year ended December 31, 2022. The video webcast will be accessible at https://stgw.io/Q4andFYEarnings. 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.

Contacts
For Investors:
Jason Reid
Ir@stagwellglobal.com

For Press:
Beth Sidhu
Pr@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.
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(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 Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.
(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.
(6) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.
Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.
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This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “guidance,” “intend,” “look,” “may,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.

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

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
•risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
•inflation and actions taken by central banks to counter inflation;
•the Company’s ability to attract new clients and retain existing clients;
•the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
•financial failure of the Company’s clients;
•the Company’s ability to retain and attract key employees;
•the Company’s ability to compete in the markets in which it operates;
•the Company’s ability to achieve its cost saving initiatives;
•the Company’s implementation of strategic initiatives;
•the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
•the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company’s business capabilities;
•the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
•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 unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
•the Company’s ability to protect client data from security incidents or cyberattacks;
•economic disruptions resulting from war and other geopolitical tensions, 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.
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SCHEDULE 1
STAGWELL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
Three Months Ended
 December 31,
Year Ended December 31,
2022 2021 2022 2021
Revenue $ 708,185  $ 611,927  $ 2,687,792  $ 1,469,363 
Operating Expenses
Cost of services 419,811  348,000  1,673,576  906,856 
Office and general expenses 172,415  197,318  601,536  424,038 
Depreciation and amortization 35,631  31,381  131,273  77,503 
Impairment and other losses 94,145  1,314  122,179  16,240 
722,002  578,013  2,528,564  1,424,637 
Operating Income (Loss) (13,817) 33,914  159,228  44,726 
Other income (expenses):
Interest expense, net (19,510) (16,697) (76,062) (31,894)
Foreign exchange, net 1,557  (1,377) (2,606) (3,332)
Other, net (7,241) 3,252  (7,059) 50,058 
(25,194) (14,822) (85,727) 14,832 
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates (39,011) 19,092  73,501  59,558 
Income tax expense (benefit) (12,570) 14,193  7,580  23,398 
Income (loss) before equity in earnings of non-consolidated affiliates (26,441) 4,899  65,921  36,160 
Equity in loss of non-consolidated affiliates (1,132) (165) (79) (240)
Net income (loss) (27,573) 4,734  65,842  35,920 
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests 21,095  (3,897) (38,573) (14,884)
Net income (loss) attributable to Stagwell Inc. common shareholders $ (6,478) $ 837  $ 27,269  $ 21,036 
Income (loss) Per Common Share:
Basic
Net income (loss) attributable to Stagwell Inc. common shareholders $ (0.05) $ 0.01  $ 0.22  $ (0.04)
Diluted
Net income (loss) attributable to Stagwell Inc. common shareholders $ (0.05) $ 0.01  $ 0.17  $ (0.04)
Weighted Average Number of Common Shares Outstanding:
Basic 122,927  99,615  124,262  90,426 
Diluted 122,927  104,066  296,596  90,426 
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SCHEDULE 2
STAGWELL INC.
UNAUDITED PRO FORMA COMPONENTS OF NET REVENUE CHANGE
(amounts in thousands)

Net Revenue - Components of Change Change
Three Months Ended December 31, 2021 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended December 31, 2022 Organic Total
Integrated Agencies Network $ 299,300  $ (2,201) $ 2,175  $ 14,376  $ 14,350  $ 313,650  4.8  % 4.8  %
Brand Performance Network 156,644 (4,006) 13,462  13,954 23,410  180,054  8.9  % 14.9  %
Communications Network 60,778 (272) 931  17,567 18,226  79,004  28.9  % 30.0  %
All Other 2,969  (673) 10,369  (1,927) 7,769  10,738  (64.9) % 261.7  %
$ 519,691  $ (7,152) $ 26,937  $ 43,970  $ 63,755  $ 583,446  8.5  % 12.3  %


Net Revenue - Components of Change Change
Year Ended December 31, 2021 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Year Ended December 31, 2022 Organic Total
Integrated Agencies Network $ 1,142,636  $ (8,327) $ 2,838  $ 110,221  $ 104,732  $ 1,247,368  9.6  % 9.2  %
Brand Performance Network 543,376 (12,305) 38,434  98,377 124,506  667,882  18.1  % 22.9  %
Communications Network 214,829 (970) 2,682  70,400 72,112  286,941  32.8  % 33.6  %
All Other 25,973  (835) (4,633) (543) (6,011) 19,962  (2.1) % (23.1) %
$ 1,926,814  $ (22,437) $ 39,321  $ 278,455  $ 295,339  $ 2,222,153  14.5  % 15.3  %

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.




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

For the Three Months Ended December 31, 2022
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 313,650  $ 180,054  $ 79,004  $ 10,738  $ —  $ 583,446 
Billable costs 70,391  13,608  40,741  (1) —  124,739 
Revenue 384,041  193,662  119,745  10,737  —  708,185 
Billable costs 70,391  13,608  40,741  (1) —  124,739 
Staff costs 188,025  111,749  43,275  6,061  1,555  350,665 
Administrative costs 29,396  29,013  8,521  1,677  6,542  75,149 
Unbillable and other costs, net 18,506  12,716  154  2,961  —  34,337 
Adjusted EBITDA (1)
77,723  26,576  27,054  39  (8,097) 123,295 
Stock-based compensation (1,270) (3,322) 720  26  3,588  (258)
Depreciation and amortization 19,403  8,630  3,113  2,777  1,708  35,631 
Deferred acquisition consideration 3,460  (5,613) 3,168  —  —  1,015 
Impairment and other losses 49,841  42,727  —  1,577  —  94,145 
Other items, net (1)
1,772  4,453  326  —  28  6,579 
Operating income (loss) $ 4,517  $ (20,299) $ 19,727  $ (4,341) $ (13,421) $ (13,817)

(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.





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

For the Year Ended December 31, 2022
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 1,247,368  $ 667,882  $ 286,941  $ 19,962  $ —  $ 2,222,153 
Billable costs 232,434  89,326  143,879  —  —  465,639 
Revenue 1,479,802  757,208  430,820  19,962  —  2,687,792 
Billable costs 232,434  89,326  143,879  —  —  465,639 
Staff costs 771,324  412,982  169,109  14,011  25,109  1,392,535 
Administrative costs 112,285  90,853  31,721  3,894  18,002  256,755 
Unbillable and other costs, net 70,116  48,212  427  2,990  —  121,745 
Adjusted EBITDA (1)
293,643  115,835  85,684  (933) (43,111) 451,118 
Stock-based compensation 13,774  5,830  1,797  41  11,710  33,152 
Depreciation and amortization 74,609  33,674  10,831  5,234  6,925  131,273 
Deferred acquisition consideration 9,157  1,736  (24,298) —  —  (13,405)
Impairment and other losses 52,360  50,778  —  19,041  —  122,179 
Other items, net (1)
4,473  8,129  755  22  5,312  18,691 
Operating income (loss) $ 139,270  $ 15,688  $ 96,599  $ (25,271) $ (67,058) $ 159,228 

(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.




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

For the Three Months Ended December 31, 2021
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 299,301  $ 156,644  $ 60,778  $ 2,969  $ —  $ 519,692 
Billable costs 51,096  10,879  30,260  —  —  92,235 
Revenue 350,397  167,523  91,038  2,969  —  611,927 
Billable costs 51,096  10,879  30,260  —  —  92,235 
Staff costs 191,971  90,689  36,877  1,634  9,466  330,637 
Administrative costs 28,047  21,648  6,583  563  3,503  60,344 
Unbillable and other costs, net 15,953  8,850  93  260  (19) 25,137 
Adjusted EBITDA (1)
63,330  35,457  17,225  512  (12,950) 103,574 
Stock-based compensation 14,760  2,631  543  24  3,610  21,568 
Depreciation and amortization 18,859  7,961  2,465  486  1,610  31,381 
Deferred acquisition consideration 9,001  184  80  —  —  9,265 
Impairment and other losses 1,314  —  —  —  —  1,314 
Other items, net (1)
801  3,205  152  —  1,974  6,132 
Operating income (loss) $ 18,595  $ 21,476  $ 13,985  $ $ (20,144) $ 33,914 

(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


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

For the Year Ended December 31, 2021
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 1,142,636  $ 543,376  $ 214,829  $ 25,973  $ —  $ 1,926,814 
Billable costs 165,817  41,841  89,871  —  —  297,529 
Revenue 1,308,453  585,217  304,700  25,973  —  2,224,343 
Billable costs 165,817  41,841  89,871  —  —  297,529 
Staff costs 702,353  344,658  138,200  17,023  35,487  1,237,721 
Administrative costs 105,140  78,969  22,474  9,783  5,511  221,877 
Unbillable and other costs, net 56,184  31,961  241  793  89,184 
Adjusted EBITDA (1)
278,959  87,788  53,914  (1,626) (41,003) 378,032 
Stock-based compensation 50,907  5,370  16,231  39  7,978  80,525 
Depreciation and amortization 48,125  30,922  8,052  2,499  6,537  96,135 
Deferred acquisition consideration 35,840  286  28  —  —  36,154 
Impairment and other losses 2,269  14,846  —  —  —  17,115 
Other items, net (1)
6,230  7,427  230  —  31,985  45,872 
Operating income (loss) $ 135,588  $ 28,937  $ 29,373  $ (4,164) $ (87,503) $ 102,231 

(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


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SCHEDULE 7
STAGWELL INC.
UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)
(amounts in thousands, except per share amounts)

For the Three Months Ended December 31, 2022
Reported (GAAP) Adjustments Reported
(Non-GAAP)
Net income (loss) attributable to Stagwell Inc. common shareholders $ (6,478) $ 42,485  $ 36,007 
Net income attributable to Class C shareholders —  27,300  27,300 
Net income (loss) - Diluted EPS $ (6,478) $ 69,785  $ 63,307 
Weighted average number of common shares outstanding 122,927  5,666  128,593 
Weighted average number of common Class C shares outstanding —  164,376  164,376 
Weighted average number of shares outstanding 122,927  170,042  292,969 
Diluted EPS and Adjusted Diluted EPS $ (0.05) $ 0.22 
Adjustments to Net Income (loss)
Pre-Tax Tax Net
Amortization $ 28,886  $ (5,777) $ 23,109 
Impairment and other losses 94,145  (114) 94,031 
Stock-based compensation (258) 52  (206)
Deferred acquisition consideration 1,015  (203) 812 
Other items, net (1)
6,579  (1,316) 5,263 
Tax adjustments 7,482  (34,131) (26,649)
Total add-backs $ 137,849  $ (41,489) $ 96,360 
Net loss attributable to Class C shareholders (26,575)
$ 69,785 
Allocation of adjustments to net income
Net income attributable to Stagwell Inc. common shareholders - add-backs $ 42,485 
Net income attributable to Class C shareholders - add-backs 53,875 
Net loss attributable to Class C shareholders (26,575)
27,300 
$ 69,785 

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

Page 12


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SCHEDULE 8
STAGWELL INC.
UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)
(amounts in thousands, except per share amounts)

For the Year Ended December 31, 2022
Reported (GAAP) Adjustments Reported
(Non-GAAP)
Net income attributable to Stagwell Inc. common shareholders $ 27,269  $ 95,147  $ 122,416 
Net income attributable to Class C shareholders 24,452  120,655  145,107 
Net income - Diluted EPS 51,721  215,802  267,523 
Weighted average number of common shares outstanding 130,625  —  130,625 
Weighted average number of common Class C shares outstanding 165,971  —  165,971 
Weighted average number of shares outstanding 296,596  —  296,596 
Diluted EPS and Adjusted Diluted EPS $ 0.17  $ 0.90 
Adjustments to Net Income
Pre-Tax Tax Net
Amortization $ 104,763  $ (20,953) $ 83,810 
Impairment and other losses 122,179  (1,093) 121,086 
Stock-based compensation 33,152  (6,630) 26,522 
Deferred acquisition consideration (13,405) 2,681  (10,724)
Other items, net (1)
18,691  (3,738) 14,953 
Tax adjustments 7,482  (27,327) (19,845)
Total add-backs $ 272,862  $ (57,060) $ 215,802 

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



Page 13


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SCHEDULE 9
STAGWELL INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
  December 31, 2022 December 31, 2021
 
ASSETS    
Current Assets    
Cash and cash equivalents $ 220,589  $ 184,009 
Accounts receivable, net 645,846  696,937 
Expenditures billable to clients 93,077  63,065 
Other current assets 71,443  61,830 
Total Current Assets 1,030,955  1,005,841 
Fixed assets, net 98,878  97,516 
Right-of-use assets - operating leases 273,567  311,654 
Goodwill 1,566,956  1,652,723 
Other intangible assets, net 907,529  958,782 
Other assets 115,447  29,064 
Total Assets $ 3,993,332  $ 4,055,580 
LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 357,253  $ 271,769 
Accrued media 240,506  237,794 
Accruals and other liabilities 248,477  272,533 
Advance billings 337,034  361,885 
Current portion of lease liabilities - operating leases 76,349  72,255 
Current portion of deferred acquisition consideration 90,183  77,946 
Total Current Liabilities 1,349,802  1,294,182 
Long-term debt 1,184,707  1,191,601 
Long-term portion of deferred acquisition consideration 71,140  144,423 
Long-term lease liabilities - operating leases 294,049  342,730 
Deferred tax liabilities, net 40,109  103,093 
Other liabilities 69,780  57,147 
Total Liabilities 3,009,587  3,133,176 
Redeemable Noncontrolling Interests 39,111  43,364 
Commitments, Contingencies and Guarantees
Shareholders' Equity
Common shares - Class A & B 132  118 
Common shares - Class C
Paid-in capital 491,899  382,893 
Retained earnings 29,445  (6,982)
Accumulated other comprehensive loss (38,941) (5,278)
Stagwell Inc. Shareholders' Equity 482,537  370,753 
Noncontrolling interests 462,097  508,287 
Total Shareholders' Equity 944,634  879,040 
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity $ 3,993,332  $ 4,055,580 
Page 14


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SCHEDULE 10
STAGWELL INC.
UNAUDITED SUMMARY CASH FLOW DATA
(amounts in thousands)
  Year Ended December 31,
2022 2021
Cash flows from operating activities:
Net income $ 65,842  $ 35,920 
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation 33,152  75,032 
Depreciation and amortization 131,273  77,503 
Impairment and other losses 122,179  16,240 
Provision for bad debt expense 7,755  2,031 
Deferred income taxes (18,319) (3,818)
Adjustment to deferred acquisition consideration (13,405) 18,721 
Gain on sale of asset —  (43,440)
Other, net (5,692) (1,463)
Changes in working capital:
Accounts receivable 37,780  (30,784)
Expenditures billable to clients (32,366) (35,371)
Other assets 2,411  3,997 
Accounts payable 98,871  (46,356)
Accrued expenses and other liabilities (42,808) 61,974 
Advance billings (27,062) 76,021 
Deferred acquisition related payments (10,793) (5,351)
Net cash provided by operating activities
348,818  200,856 
Cash flows from investing activities:
Capital expenditures (22,663) (8,797)
Current period acquisitions, net of cash acquired (75,466) 150,346 
Proceeds from sale of business, net —  37,232 
Capitalized software and other (19,378) (14,829)
Net cash (used in) provided by investing activities
(117,507) 163,952 
Cash flows from financing activities:
Repayment of borrowings under revolving credit facility (1,266,000) (719,088)
Proceeds from borrowings under revolving credit facility 1,255,500  516,669 
Shares acquired and cancelled (18,729) (841)
Distributions to noncontrolling interests and other (39,197) — 
Payment of deferred consideration (63,170) — 
Purchase of noncontrolling interest (3,600) (37,500)
Proceeds from issuance of the 5.625% Notes —  1,100,000 
Debt issuance costs —  (15,053)
Distributions —  (233,203)
Repurchase of 7.50% Senior Notes (884,398)
Repurchase of Common Stock (51,540) — 
Net cash used in financing activities
(186,736) (273,414)
Effect of exchange rate changes on cash and cash equivalents (7,995) 158 
Net increase in cash and cash equivalents 36,580  91,552 
Cash and cash equivalents at beginning of period 184,009  92,457 
Cash and cash equivalents at end of period $ 220,589  $ 184,009 

Page 15

EX-99.2 3 stagwell4q22earningspres.htm EX-99.2 stagwell4q22earningspres
Fourth Quarter & Full Year 2022 EARNINGS PRESENTATION MARCH 2 | 2022


 
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”), and the Private Securities Litigation Reform Act of 1995, as amended. The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “estimate,” “project,” “target,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “should,” “would,” “may,” “foresee,” “plan,” “will,” “guidance,” “look,” “opportunity,” “outlook,” “future,” “possible,” “assume,” “forecast,” “focus,” “continue” 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; • the effects of the outbreak of the novel coronavirus pandemic (“COVID-19”, including the measures to reduce its spread, and the impact 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; • 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. 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 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”. 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.


 
4 FINANCIAL Outlook Full-Year 2023 7.5 - 10% Organic Net Revenue Growth 10 - 14% Organic Net Revenue Growth Ex-Advocacy $450M - $490M In Adjusted EBITDA 50 - 60% EBITDA Conversion on Free Cash Flow $0.90 - $1.05 In Adjusted Earnings Per Share Note: Guidance as of 3/02/2023. 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 2023 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.


 
F O U R T H Q U A R T E R & P R O F O R M A F U L L Y E A R 2 0 2 2 H I G H L I G H T S Strategic M&A Leading GROWTH Strong MARGINS, FCF, & EPS Expanding INTERNATIONALLY Closed 8 acquisitions in 2022 BNG adds AI-driven e-commerce capabilities internationally Maru adds DaaS + analytics platform to Stagwell Marketing Cloud Epicenter adds location-based targeting to Stagwell Marketing Cloud Growing twice as fast internationally vs. domestic 26% FY net revenue growth internationally, 14% in North America Launched regional hubs in Singapore and Brazil 15% FY Net Revenue Growth, 14% Organic 12% Q4 net revenue growth, 8% organic 57% of FY net revenue from digital capabilities grew 28% 20.3% FY adj. EBITDA margin on net revenue 21.1% Q4 adj. EBITDA margin on net revenue FY FCF of $270M, ending with a net leverage of 2.17x $0.22 Q4 adjusted EPS; $0.90 in FY NET DEBT: $979M | NET LEVERAGE RATIO: 2.17x | FY STOCK BUYBACKS: $52M 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 Leverage 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 December 31, Twelve Months Ended December 31, 2022 2021 2022 2021 Net Revenue $ 583,446 $ 519,692 $ 2,222,153 $ 1,926,814 Billable Costs 124,739 92,235 465, 639 297,529 Revenue $ 708,185 $ 611,927 $ 2,687,792 $ 2,224,343 Billable Costs 124,739 92,235 465,639 297,529 Staff costs 350,665 330,637 1,392,535 1,237,721 Administrative costs 75,149 60,344 256,755 221,877 Unbillable and other costs, net 34,337 25,137 121,745 89,184 Adjusted EBITDA $ 123,295 $ 103,574 $ 451,118 $ 378,032 Stock-based compensation (258) 21,568 33,152 80,525 Depreciation and amortization 35,631 31,381 131,273 96,135 Deferred acquisition consideration 1,015 9,265 (13,405) 36,154 Impairment and other losses 94,145 1,314 122,179 17,115 Other items, net 6,579 6,132 18,691 45,872 Operating income (loss) $ (13,817) $ 33,914 $ 159,228 $ 102,231 Pro Forma adjusted EBITDA margin (on net revenue) 21.1% 19.9% 20.3% 19.6% 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 December 31, 2022 Twelve Months Ended December 31, 2022 Net Revenue Change Net Revenue Change 2021 Net Revenue $ 519,691 $ 1,926,814 Organic revenue 43,970 8.5% 278,455 14.5% Acquisitions (divestitures), net 26,937 5.2% 39,321 2.0% Foreign currency (7,152) (1.4)% (22,437) (1.2)% Total Change $ 63,755 12.3% $ 295,339 15.3% 2022 Net Revenue $ 583,446 $ 2,222,153 7 $ in Thousands


 
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, 2021. Figures may not foot due to rounding. Q4 Organic Growth Y/Y 78.4% 9.0% 12.6% Geography Q422 PF FY 2022 United States 9% 14% United Kingdom 20% 30% Other (4)% 6% TOTAL 8% 14% 8 % OF NET REVENUE 80.6% 7.9% 11.5% FY 2022


 
G L O B A L N E T W O R K 9 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 65+ EMPLOYEES 13K+ 21K+ Stagwell’s Affiliate Network Significantly Expands Our Global Footprint • Canada • USA • Mexico Note: As of December 31, 2022.


 
O U R P R I N C I P A L C A P A B I L I T I E S 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 10 57% Q422 57% FY22


 
N E T R E V E N U E 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. Q422 PF FY 2022 Principal Capability Organic Net Revenue Growth Net Revenue Growth Organic Net Revenue Growth Net Revenue Growth Digital Transformation 21.5% 21.8% 33.4% 33.5% Performance Media & Data 2.5% 12.5% 9.6% 18.3% Consumer Insights & Strategy 16.6% 38.5% 25.3% 31.7% Creativity & Communications 3.1% 2.5% 5.1% 2.4% TOTAL 8.5% 12.3% 14.5% 15.3% TOTAL EX-ADVOCACY 5.7% 9.6% 12.3% 13.1% % OF NET REVENUE 25% 21% 11% 43% 11 28% 19% 10% 43% FY 2022 Q4


 
A D J E B I T D A 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 Q422 PF FY 2022 Digital Transformation 47% 45% Performance Media & Data (14)% 16% Consumer Insights & Strategy 49% 31% Creativity & Communications 16% 2% TOTAL 19% 19% TOTAL EX-ADVOCACY 10% 12% % OF ADJ. EBITDA* 29% 17% 10% 44% 12 37% 14% 9% 40% FY 2022 Q4 Adj. EBITDA* Growth Y/Y


 
Net Revenue Adjusted EBITDA 2022 2021 % Change 2022 2021 % Change Total 583 520 12.3% 123 104 19.0% Advocacy 53 35 48.6% 23 12 87.0% Total Ex Advocacy 531 484 9.6% 101 92 10.0% Net Revenue Adjusted EBITDA 2022 2021 % Change 2022 2021 % Change Total 2,222 1,927 15.3% 451 378 19.3% Advocacy 183 124 47.8% 67 36 88.0% Total Ex Advocacy 2,039 1,803 13.1% 384 342 12.1% 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, & TMA Direct. Actuals may not foot due to rounding $ in Millions Q4 FULL YEAR 13


 
N E W B U S I N E S S U P D A T E 14 PER CLIENT AT TOP 25 Notable Business WINS & EXPANSIONSNet New Business Q4 $42M FY 2022 $213M Avg. Net Revenue Q4 $6.3M FY 2022 $24.1M PER CLIENT AT TOP 25


 
15 A STRONG YEAR FOR M&A: 8 Strategic Acquisitions in 2022 Closed Description 3/11 Multicultural full-service marketing agency 4/20 Provider of scaled commerce and marketplace solutions for 150+ global brands and 500+ e-retailers worldwide 5/15 Direct response firm in the political data and marketing arena 7/1 A real-time, AI-powered SaaS platform that uncovers consumer, creative, and contextual insights for scaled modern marketing 7/12 Omnichannel content creation and adaptation production company 10/3 Software experience & insights data platform Epicenter 10/3 Enterprise software company leveraging mobile & location data to map and sequence complex consumer behavior 10/3 Award-winning creative agency


 
16 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 › ~7 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


 
L I Q U I D I T Y Available Liquidity (as of 12/31/22) Commitment Under Credit Facility $ 500 Drawn 100 Undrawn Letters of Credit 25 Undrawn Commitments Under Facility $ 375 Total Cash & Cash Equivalents 221 Total Available Liquidity $ 596 17 $ in Millions


 
18 MAINTAINING DISCIPLINE AROUND Deferred Acquisition Costs REDUCED DAC BY $61M FROM 2021 YEAR-END BALANCE $222M $161M Q421 Q422


 
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 December 31, 2022 Twelve Months Ended December 31, 2022 Reported (GAAP) Adjustments Non-GAAP Reported (GAAP) Adjustments Non-GAAP Net income attributable to Stagwell Inc. common shareholders $ (6,478) $ 42,485 $ 36,007 $ 27,269 $ 95,147 $ 122,416 Net income attributable to Class C Shareholders - 27,300 27,300 24,452 120,655 145,107 Net income – diluted EPS $ (6,478) $ 69,785 $ 63,307 $ 51,721 $ 215,802 $ 267,523 Weighted average number of common shares outstanding (diluted) 122,927 5,666 128,593 130,625 - 130,625 Weighted average number of common class C shares outstanding (diluted) - 164,376 164,376 165,971 - 165,971 Weighted average number of shares outstanding 122,927 170,042 292,969 296,596 - 296,596 Adjusted earnings per share (diluted) $ (0.05) $ 0.22 $ 0.17 $ 0.90 Adjustments to net income (loss) Pre-Tax Tax Net Pre-Tax Tax Net Amortization $ 28,886 $ (5,777) $ 23,109 $ 104,763 $ (20,953) $ 83,810 Impairment and other losses 94,145 (114) 94,031 122,179 (1,093) 121,086 Stock-based compensation (258) 52 (206) 33,152 (6,630) 26,522 Deferred acquisition consideration 1,015 (203) 812 (13,405) 2,681 (10,724) Other items, net 6,579 (1,316) 5,263 18,691 (3,738) 14,953 Tax adjustments 7,482 (34,131) (26,649) 7,482 (27,327) (19,845) Total add-backs $ 137,849 $ (41,489) $ 96,360 $ 272,862 $ (57,060) $ 215,802 Net income attributable to Class C shareholders (26,575) - Total add-backs & net income attributable to class C shareholders $ 69,785 $ 215,802 19 $ 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 exclude conversion of Class C shares. 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 December 31, Twelve Months Ended December 31, 2022 2021 2022 2021 Revenue $ 708,185 $ 611,927 $ 2,687,792 $ 1,469,363 Cost of services 419,811 348,000 1,673,576 906,856 Office & general expenses 172,415 197,318 601,536 424,038 Depreciation & amortization 35,631 31,381 131,273 77,503 Impairment & other losses 94,145 1,314 122,179 16,240 Total operating expenses $ 722,002 $ 578,013 $ 2,528,564 $ 1,424,637 Operating income (Loss) $ (13,817) $ 33,914 $ 159,228 $ 44,726 Interest expense, net (19,510) (16,697) (76,062) (31,894) Foreign exchange, net 1,557 (1,377) (2,606) (3,332) Other, net (7,241) 3.252 (7,059) 50,058 Other income (expenses) $ (25,194) $ (14,822) $ (85,727) $ 14,832 Income tax expense (benefit) (12,570) 14,193 7,580 23,398 Income (loss) before equity in earnings of non-consolidated affiliates $ (26,441) $ 4,899 $ 65,921 $ 36,160 Equity in income (loss) of non-consolidated affiliates (1,132) (165) (79) (240) Net income (loss) $ (27,573) $ 4,734 $ 65,842 $ 35,920 Net (income) loss attributable to non-controlling & redeemable non-controlling interests 21,095 (3,897) (38,573) (14,884) Net income (loss) attributable to Stagwell Inc. common shareholders $ (6,478) $ 837 $ 27,269 $ 21,036 Earnings Per Share Basic $ (0.05) $ 0.01 $ 0.22 $ (0.04) Diluted $ (0.05) $ 0.01 $ 0.17 $ (0.04) Weighted Average Number of Shares Outstanding Basic 122,927 99,615 124,262 90,426 Diluted 122,927 104,066 296,596 90,426 Note: Conversion of Class C shares currently results in an anti-dilutive effect. Therefore, GAAP requires Diluted earnings per share and share count to exclude the conversion of Class C shares. Numbers may not foot due to rounding. 20 $ and Shares in Thousands


 
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 $478M in non-controlling interest of Stagwell Class C shareholders to reflect NCI balance pro forma for full conversion of Class C shares to Class A. 2. Includes redeemable non-controlling interest and obligations in connection with profit interests held by employees. 3. Non-consolidated investments 4. Includes issued and outstanding Class A shares (including unvested restricted stock) and 2,271 Class B shares which have equal economic rights and 10x voting rights to Class A shares. Note: Stagwell Agency Holdings, which is a fully owned subsidiary of Stagwell Media, owns 26.5M of the Class A shares related to its investment in legacy MDC Partners in 2019, of which the common portion was converted to Stagwell Inc. Class A shares upon the closing of the Business Combination in August 2021 and preferred portion converted to Stagwell Inc. Class A shares in September 2021. 5. Class C shares are held by Stagwell Media, the parent company of Stagwell Agency Holdings, issued in August 2021 as consideration for the contribution of its assets to the Business Combination. 6. Represents unvested restricted share units Net Debt & Debt-Like ($M, as of 12/31/22) Revolving Credit Facility $ 100 Bonds 1,100 NCI1 34 DAC 161 RNCI2 60 Less: Investments3 18 Less: Cash 221 TOTAL NET DEBT & DEBT-LIKE $ 1,217 Pro Forma Share Count (Thousands, as of 2/28/22) Class A4 131,614 Class C5 (equal voting & economic rights to Class A) 160,909 Share-based awards6 4,868 PRO FORMA DILUTED 297,391 21


 
22 AUGMENTED REALITY FOR SPORTS GENERATIVE AI FOR COMMS STAGWELL MARKETING CLOUD Next Wave of Technology Shared AR product ARound is bringing premium and interactive brand-sponsored AR experiences to live sports at scale Comms Tech AI product PRophet is launching generative AI for pitches, press releases, and social posts powered by its ability to target relevant journalists


 
23 AUGMENTED REALITY Product Spotlight THE NEXT GENERATION OF STADIUM ENTERTAINMENT AND FAN ENGAGEMENT ARound is a category creator, bringing a whole new level of fan engagement to the sports and entertainment world with shared augmented reality. By 3D mapping stadiums and delivering localized, interactive content through smartphones, ARound creates a shared digital experience for all fans.


 
24 GENERATIVE AI FOR PITCHES, PRESS RELEASES AND SOCIAL POSTS PRophet is the first-ever generative and predictive AI SaaS platform designed by and for the PR community. The platform uses AI to help modern PR professionals become more performative, productive and predictive by generating, analyzing and testing content that predicts earned media interest and sentiment. GENERATIVE AI Product Spotlight


 
Thank You Contact Us: IR@StagwellGlobal.com