Good morning, and welcome to the Interpublic Group Second Quarter 2021 Conference Call. All parties are in a listen-only mode until the question-and-answer portion. This conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Mr. Jerry Leshne, Senior Vice President of Investor Relations.

Sir, you may begin..

Good morning. Thank you for joining us. We hope you are all well. This morning, we are joined by our CEO, Philippe Krakowsky; and by Ellen Johnson, our CFO. We have posted our earnings release and our slide presentation on our website, interpublic.com.

We will begin our call with prepared remarks, to be followed by Q&A, and plan to conclude before market open at 9:30 Eastern..

Thanks, Jerry, and thank you all for joining us this morning. As always, I'll start with a high level view of our performance in the quarter. Ellen will then provide additional details, and I'll conclude with updates on key developments at our agencies to be followed by Q&A.

I'd like to begin once again by thanking our 53,000 fellow employees around the world for the professionalism and dedication that continue to see us through the many challenges of COVID.

These include the transition to work from home, and now are planning for return to office in many parts of the world, as well as the significant personal difficulties presented by the long course of the pandemic.

It's due to the efforts of our people, their commitment to their craft, our clients and to each other that we can share with you today these very strong results. Performance that demonstrates our resilience represents a remarkable rebound from the impact of the pandemic, and is also the largest second quarter in our company's history.

Our strong results in the quarter build on IPG's consistent record of industry outperformance and margin expansion. Our growth across regions, disciplines and client sectors speaks to more than a recovering global economy.

It underscores the elevated value that marketing and media partners can deliver in the integration of creativity, technology and data at scale made the significantly increased velocity of digital transformation.

At Interpublic, we're confident that we are attuned to the powerful currents that are transforming consumer behavior and are required for business relevance. And then we are increasingly delivering differentiated and higher-end solutions that help our clients win in a world of accelerated technological and societal change.

That takes creativity and precision, data and accountability, all of which we're able to bring together in customized teams that drive talent from across our portfolio. Ultimately, our growth speaks to our ability to drive outstanding business results for our clients..

Thank you. I hope that everyone is safe and healthy. I would like to join Philippe with our thanks to our people for their terrific accomplishments. As a reminder, my remarks will track to the presentation slides that accompany our webcast.

Beginning on Slide 2 of the presentation, second quarter net revenue increased 22.5% from a year ago with organic growth of 19.8%. Adjusted EBITDA, before a small restructuring adjustment, was $405.8 million, and margin was 17.9%. These are levels that compare very favorably against any previous second quarter.

With growth having accelerated, certain variable expenses continue to lag and we are additionally seeing the structural benefits of last year's restructuring program. Diluted earnings per share were $0.66 as reported and $0.70 as adjusted for the after-tax impact of the amortization of acquired intangibles..

Thanks, Ellen. While we remain very pleased with our results, it's worth reiterating as Ellen just said that this is an unusual, in fact, unprecedented environment in which we're operating. Now importantly, it bears noting that when compared to our non-pandemic results in 2019, Q2 results show our company is performing at a very high level.

We continue to feel this is the result of strategic decisions that we've taken over a number of years to position our company for the future, investments and actions that have created a sustainable advantage for our organization.

Today's IPG delivers addressable and accountable digital marketing programs, combined with our world-class creative storytelling capabilities. These solutions make us higher value partners to our clients.

One of our many priorities over the years has been the creation and implementation of open architecture solutions, where we bring the best of IPG together in collaborative teams that are customized to client-specific business needs and increasingly a key element of this approach.

Open Architecture 2.0, as it were, is Acxiom whose data management expertise and data assets play a role in an increasingly broad range of our offerings. In addition, Kinesso powers many of our applications and services that provide clients with a deep understanding of audiences.

In order to provide insights that inform creative work, segments for media delivery and line of sight to the effectiveness of the work that we're doing together. We saw this model come to life in the quarter with a Cigna count win, which combined talent from McCann Worldgroup, Initiative, and R/GA powered by Kinesso and Acxiom.

This is a continuation of several years of strong performance in integrated pitches, especially those that include creative and media, as well as media and data.

And other another key decision that's contributed to our success has been our continued investment in strong agency brands, which helps us attract and retain top talent and deliver breakthrough creative ideas across a range of marketing disciplines.

As a result of this strategy, IPG companies across our portfolio earned a number of important accolades during the quarter. Most notably, we have an impressive showing at the 2021 Cannes International Festival of Creativity. IPG agencies took home eight Grand Prix, the festival’s highest honor.

Wins across the network represented a broad range of clients, categories, agencies, disciplines and geographies. FCB’s performance was a standout, as the agency took home four Grand Prix and was named Global Network of the Year. The agency's creative community and its leadership deserve credit for this terrific accomplishment.

FCB Health was also named Healthcare Network of the Year and Area 23 and FCB Health Agency was named Healthcare Agency of the Year. McCann Client Microsoft was named Marketer of the Year at the festival, which is another major honor.

And the agency also won a Grand Prix in brand experience and activation for its remarkable true name work for Mastercard, which empowers transgender and non-binary cardholders to use their true name when using their credit card.

In PR, McCann Paris earned a Grand Prix, partnering with Weber Shandwick for a campaign that ran across the Middle East, which teaches women in a culturally sensitive way to perform self-checks for early breast cancer detection. FCB Chicago and Weber Shandwick teamed to earn a Grand Prix for work for AB InBev.

And R/GA continues to be recognized for its ability to humanize technology, winning a Grand Prix in social and influencer marketing for disruptive work it did for Reddit on the Super Bowl. On Ad Age’s annual A-List and Creativity Awards, both Deutsch LA and the Martin Agency were named to the prestigious A-list.

Initiative was named Media Agency of the Year and FCB Health’s CEO was recognized as our industry's Executive of the Year. At the holding company level, we made a number of announcements that position us for further success. Chief among them was our launch of IPG Health earlier this month.

The move will align our top performing companies, FCB Health and McCann Health under a new global network, IPG Health, led by a dynamic and proven CEO and a skilled executive leadership team. In this new operating structure, the distinct agency brands within FCB Health and McCann Health will remain active and continue to go to market independently.

They will also benefit from access to additional specialty services, knowledge sharing, proactive career management, shared investment in new capabilities and skill sets, highly complimentary geographic coverage, as well as an even higher level of collaboration.

Around the world, healthcare and wellbeing are areas of growing importance for our clients and society at large. As an industry sector, healthcare represents an increasingly vital part of the economy, and one where innovation is becoming an ever more important driver of success.

So the alignment of IPG’s fully dedicated healthcare networks under the banner of IPG Health strengthens our leadership position in this dynamic sector. The scale, reach and most importantly, quality of our people and our work makes for an exciting combination.

And it's why we think this new offering will continue to deliver great things in the years to come.

This month, we also added to our strong roster of marketing technology and e-commerce providers with a launch of Performance Art, a data-led creative CRM agency, whose leadership team is known for delivering platform level creative ideas that are at home in a client's e-retail flow as they are in a 30-second spot.

Turning to performance at our agencies, growth at IAN in the quarter was once again highlighted by media, data and tech and FCB led by healthcare. UM saw significant wins in the quarter with Enterprise Holdings, Behr Paint and most recently NYC & Company, New York City's official marketing and tourism organization.

UM also saw an important account retention for the Australian government. At the Campaign Agency of the Year Awards, UM earned Global Media Agency of the Year honors and UM APAC was named Best Media Network in that region.

At Initiative, the agency was named 2020’s Most Competitive Network Globally in Media Pitches and saw a major win in the UK with banking insurance company, NatWest Group. We also continue to see terrific momentum at Reprise, especially as relates to their growing e-commerce capabilities. Acxiom, Kinesso, and Matterkind are also performing well.

And they're key to how we help clients thrive in the addressable media market, which requires flexibility, given the quickly shifting landscape. At Acxiom, we continue to invest behind innovative new products and services, such as customer data platforms, and identity resolution, with which we are seeing increased client adoption.

Another important development saw Acxiom deploy their latest customer intelligence platform on the cloud with a key financial services client.

At our creative integrated networks, FCB, McCann and MullenLowe Group were named to Act Responsible 2020 Good Report, a unique ranking of the world's best use of creative communications to promote sustainability and social responsibility.

On top of its exceptional showing at Cannes at FCB Global, the network continues to invest in talent and new offerings, hiring a head of data science and connections to expand its expertise and commerce, data and technology fueled creativity. McCann also continues to prove a creative powerhouse.

As we saw, in the network was recently named Webby Network of the Year and McCann New York was named Webby Agency of the Year. MRM continues to leverage its more tech expertise, missing strong growth with its MRM commerce division, which helps marketers drive engagement, interaction and conversion on commerce platforms.

And MullenLowe Group, Mediahub continues a strong new business momentum and during the quarter, added Hallmark's parent company, Crown Media, as well as Tally Financial. MullenLowe is also a global leader in purpose driven work.

And we saw that as it continues to partner with governments and a number of countries around the world to inform people the benefits of being vaccinated against COVID-19. At R/GA, campaign named the London office is the UK’s Digital Agency of the Year. And R/GA London added two new clients, financial services company, Allianz and Vollebak clothing.

We named the new CEO at Huge, who joins the digital agency after a very successful tenure at Initiative, where he helped turn the agency into a leader in the media space. During the quarter, Huge also saw strong new business activity, adding Sub-Zero Appliances, Wakefern, Tezos Foundation and Nikko Asset Management.

The Martin Agency continues to impact culture and drive strong business results for its clients. Notably, the Agency’s Soul of the City short film for DoorDash, premiered at the Tribeca Film Festival last month and had captured the resilience of New York City's restaurants and the role they play in the cities like.

At IPG DXTRA, we also saw recognition as a number of companies were called out for their ability to deliver creative solutions. Weber Shandwick was the most awarded PR agency at Cannes this year.

Current Global demonstrated their commitment to closing the disability and inclusion gap by creating guidelines and toolkits for marketers, so as to make content more accessible for consumers with sight, hearing or other cognitive impairments. And this program was recognized as one of Fast Company's World Changing Ideas for 2021.

Jack Morton launched what they are referring to as the return-to-live dashboard, and that's a tool for brand marketers to access where, when and how businesses in the U.S. can safely get back to hosting live experiences.

Golan continued its strong performance in new business, was selected as LinkedIn’s global social media agency of record and also agency of record for Yamaha music. Golan was also named PRWeek's Global Agency of the Year. And at Octagon, the Sports and Entertainment Network won Best Talent Representation at the 2021 Sports Business Awards.

Pivoting now back to the holding company another key area that BEHR's mentioned is our long-term focus on ESG, including diversity, equity and inclusion.

As a leader in marketing services, and a citizen of the communities where our employees live, work and vote, we welcome the responsibility to operate sustainably and contribute to the healthier society and planet. In all of our operations and activities we are working to build on and more fully live into this commitment.

And this includes reassessing how we hire, train and promote a diverse workforce, incorporate rigorous practices around data ethics and media responsibility, as well as reduce our greenhouse gas emissions further around the world.

Key accomplishments on this front include IPG being recently named by Forbes, to their top ten list of America's Best Employers for Diversity.

During the quarter, we also created a new position, our industry's first Culture Officer, to focus on long-term thought leadership relating to a broad range of social justice issues for underserved and underrepresented communities.

During the quarter, as part of our integrated ESG efforts, we also announced an action plan that consists of three climate roles, committing to set a science-based target; sourcing 100% renewable electricity by 2030 and joining The Climate Pledge co-founded by Amazon and Global Optimism.

In addition, we've published our first SASB report, becoming the first company in the advertising and marketing sector to publish an alignment with SASB’s industry standards. Our agencies also contribute significantly to our ESG profile.

And importantly, here in the U.S., we saw media brands take a leading role in the industry conversation about promoting greater media equity. And they announced that they are committing to invest at least 5% of client budgets in Black-owned media by 2023.

Octagon launched an accelerator program with historically black colleges and universities for students interested in sports and entertainment as a career.

And RGA created an innovative program to raise money for environmental organizations through a dedicated YouTube channel that plays nature videos, which have become hugely popular during the pandemic. And it directs all the ad revenues generated on this channel to environmental NGOs.

Now, as we sit here at the halfway mark of 2021, the success we've seen, is thanks to the talent, efforts and commitment of our people. And we continue to be highly focused on supporting their physical and mental well-being as we plan return to office.

Like many of us, I look forward to working live with colleagues and clients, especially given that we're an ideas-driven service business. Our culture, our capacity for innovation and the ways in which we combine creativity with technology and data are all enhanced by in-person interactions.

Now here in the U.S., we expect to have more people returning to our offices in a flexible, hybrid model, beginning in mid-September, as is already the case in certain other parts of the world.

We will of course, be mindful of the public health situation, and of the learnings we've accumulated during the past 16 months, when it comes to flexible work practices.

We expect the costs associated with live collaboration with colleagues, as well as travel will begin to return as a normal part of how we work and therefore be reflected in our operating results.

For example, as we look forward to the remainder of the year, we expect an increase in travel costs in the fourth quarter, which could return to levels consistent with what we saw in the fourth quarter of 2019. As we said earlier, these are unprecedented times.

None of us have previously been required to adapt to the constraints of living and working through a pandemic. And likewise, none of us has experience in emerging for one. Thankfully, as a company, we are well positioned to do so. Earlier on the call, we shared our perspective on the balance of the year.

Based on the assumption that there will continue to be a reasonably steady course of macro recovery, that people continue to become vaccinated to protect themselves and their communities. And then we're able to adequately mitigate the impact of dangerous new variants.

We've delivered a very strong first half of the year, on top of the most challenging comps in our industry. Further, despite continued macro uncertainty, we have greater clarity to the balance of 2021.

We therefore believe that current performance, combined the continued execution of our long-term strategy are significant drivers for the sustained enhancement value for all of our stakeholders. As always, we're committed to sound financial fundamentals, including debt reduction, as well as continuing to grow our dividends.

We also remain focused on getting back to our share repurchase program. And we will keep you apprised of our progress as the year develops. As always, we want to thank our clients and our people, who are ultimately the two key pillars of our success. I'd also like to thank you all for your time this morning.

And with that, turn the call over for questions..

Thank you. Our first question is from Alexia Quadrani with JPMorgan, you may go ahead..

Thank you very much. I just have a couple of questions if I might. The first one is really kind of a broad question on the really impressive organic growth you guys delivered in the quarter.

I'm wondering what surprised you on the upside versus your internal budgets? Like where did you see kind of incremental growth versus what you expected? And I guess along those lines, I guess, how much do you think of the strong growth is IPG sort of gaining share of wallet, from the clients versus just a bounce back in their budgets or their spending?.

Hi Alexia. Look, I mean, I think, those are terrific questions or things we obviously think about.

And so, if I were to track the progression for you, what I'd say to you is if you think back to what we talked about last time we were all together from February to April, we clearly saw improvement in the broader economic environment, but also in the tone of what I guess I'd call client sentiment, right.

And so, as we went through the quarter, that trend was clearly continuing to build over the course of the second quarter, right.

And so, as we think about it, is it a question of surprise, I mean, I think, we said to you, we felt confident in our offerings, specifically, in ways we can help clients to stand apart and to succeed in a digital-first kind of economy. So now that growth is available, we are obviously pleased to see that we're capitalizing on the environment.

So, you start breaking down the results, and what do you see, you see, whether it's geographies or practice areas, content creation, creativity, data and tech, it was very, very widely spread. And so Matterkind addressable media growing, a very, very strong grower for us.

Healthcare continued to be an area where we're seeing really, really good results. And then perhaps, if you are bracketing it, having decreased by north of 30% in light of the pandemic, we clearly have experiential and events, showing a real recovery, though they are not all the way back, right. Month-to-month in the quarter, we saw consistency.

So, that's something where, in terms of projecting forward to, we see that as encouraging.

And then as we forecast for the back half of the year, we also see that consistency, and that ratable, there isn't a moment in time, where we're expecting there to be something dramatic to get us to what we've communicated to you, which is that 9% to 10% number, right.

And the one big caveat is one that applies for all of us around the world, which is just, there's a significant deterioration on the public health front.

And you really get at something, because what, I think, we're seeing is we're seeing the overall environment stronger, but we're also seeing underlying factors that have to do with strategic actions we've been taking over a number of years and they are aligned with trends that have been accelerated by the pandemic, right.

So, whether that is addressable media, precision in the creative that we deliver, ecommerce, those are all areas where we're strong, and we're definitely seeing growth.

Hard to tell you exactly given that we don't know what some of our peers have done, and that we clearly believe that that we're taking share, as well as seeing net new opportunities, because we're building new capabilities to take us into kind of new addressable universe.

And I think last, I think for us, as a management team, the strongest indicator is how relevant is an offering when you just benchmark off of the same period in 2019, and you think about the two-year stack from the Q2 2021 results, that's what's telling us competitiveness of a specific part of our space or of IPG all in a sustainable platform where we feel like that's what gives us confidence that we can grow for the balance of the year, and obviously beyond that..

And then just a quick follow-up on margins, sort of also a high-level question. You obviously have some great margin improvement this year with the benefit of expenses being cut back and also the bigger picture, permanent cost cut you took, that you announced earlier on.

When you think about margins longer term though, I'm not sure if you can still achieve margin improvement in 2020, given the comp, but is there still the plan to continue to improve margins longer term post this year?.

There is. So let me actually why don't I just talk to that at a fairly macro level and then, I think, we should get Ellen into the conversation as well. But I mean, there were a lot of moving parts in terms of what's going on with our profitability in this calendar year.

But it's good to see significant strides on margin performance, like on the top line. We're very committed to the savings that we have consistently shared with you all around the restructuring. And so that's permanent annualized $160 million. We're tracking that. And we're holding ourselves and our and our operating teams accountable to that.

Then there's the fact that, I think, we've got a consistent track record over time that we grow margin with revenue growth. So, there's meaningful opportunity there. And so operating leverage, I think, is a lever that stays with us into 2022 and beyond.

And then lastly, as I mentioned, in the answer to your revenue question, the higher value services, and the new commercial models, I think, are also an opportunity from a margin perspective. And let's see, Ellen can pull apart all the ins and outs of this year..

Good morning Alexia. How are you? Thank you for the question. I'll start with the actions that we took last year as part of the restructuring, and they were clearly structural and strategic, and that is why we are so confident in them and that we will realize the savings that we've committed to.

So, if you break them down and you look at the fact that we took out 15% of our real estate portfolio, or that we eliminated certain regional or other layers of management to become more agile, or that we were able to nearshore or offshore certain roles, that gives us great confidence that those savings are permanent, and they will not come back with revenue growth.

Turning to some of the more variable expenses, if you look at travel and meetings, they will come back. And initially they may come back pretty full as there is pent-up demand for people to get back together to get out and see clients and to see our people for training and development.

Do they go back fully to pre-pandemic levels? That remains to be seen. I am hopeful that the learnings from the pandemic with using technology and really thinking carefully about the environment will help us be more efficient, and prevent them from fully going back to pre-pandemic levels.

And then I would just reiterate the fact that what Philippe said is that we've demonstrated over a period of time that with revenue growth, we can expand margins. And we're incentivized to do so. Our incentives are largely based on organic revenue growth and margin improvement. And that makes me pretty optimistic..

Thank you very much..

Thank you. The next question is from John Janedis with Wolfe Research. You may go ahead..

Thank you. Good morning..

Hi John..

Ellen may be one for you – hi Phillippe, and maybe one for Phillippe.

Phillippe maybe just to start, you talked about lagging vaccination rates, with some of the renewed COVID headlines in areas, say Asia or Latin America, are your agencies on the ground seeing any change in outlook from clients? And I know they are pretty small, but do you do you expect China and Japan to turn the corner sometime later this year?.

Well, look I mean, to date, we’re seeing the benefits of the progress that, any number of places around the world has seen.

And then I think, as we’ve discussed previously, I think a second or third wave, or whatever it is that any country might be experiencing, is not going to necessarily be the same as the first because there is a sense that you’re still making progress toward an outcome.

So you’re still either getting people vaccinated, or in the case of many of our clients, you’ve pivoted into an accelerated your ability to operate, whether it’s through e-com or other ways, in which you’re going direct to consumers, you’re clearly leaning more heavily into digital as part of your mix and transforming your business.

So I think that, again, means that we don’t necessarily see that, the impact will be as significant. And then, specific to certain markets for us, as we’ve also said before, client mix can have a pretty significant impact for us on the ground in any given market, so to my mind, TBD as to whether we’re getting there on those two markets.

They’re fairly modest in size for us. I think China is probably the one we focus on the most as a place where we want to be delivering for our global multinational, and we’re doing some interesting things in that market with Acxiom and some of our relationships with some of the large platforms there and what we can do with data.

So still work in progress. I couldn’t put a date on that for you..

Okay, and then maybe separately, your outlook wouldn’t suggest it.

But are you seeing any notable impact on the business from wage or other inflation? And related to the $160 million of annual cost savings now? Can you update us in terms of; is there still a talent to those savings perhaps, the real estate sector have those been largely completed?.

All right, I let Ellen start with that piece of the question. And then whatever she’d like to, speak to on your talent question. I’ll, sort of add on..

Sure. So starting with the question regarding our real estate savings, are largely seeing the vast majority of them this year, there will be some incremental ones next year as the remainder of the properties get subleased. But we’re seeing a good portion of them already. And they’re on track versus our plan, which is great.

On the inflation question, I mean, to date, we haven’t seen generalized wage inflation, but we’re watching it closely. It is something we talked about with our operators, the talent market is competitive. And that’s not a new thing. We’ve been used to that for quite some time. And I think what you are seeing is a little bit of higher attrition.

And whether that’s because people sat at home for 16 months, and now have the ability to move around. So we’re watching that closely as well.

But we’re being very innovative in the way we recruit and retain talent, we’re focusing on flexibility, the quality of our return to office experience that we’re planning, training and development and, of course, diversity, equity and inclusion, which is something that we’ve been focused on for a very long time for now.

With that, and I’ll that, see what Philippe..

No, look I mean, there’s not a lot to add there. I think its fair question. I mean, we’re in a professional services business, we’ve always been focused on the importance of talent as a driver of, our competitive advantage, and we’ve been evolving the offering.

So clearly, we’ve been dealing with the pressures of the talent market for the kind of digital, in tech talent that, has been in demand for a while, I think to Ellen’s point, some of those, turnover numbers feel as if we’ve yet to see what it normalizes out to because there, it does feel like they were lower in 2020.

They’re picking up now, I think that, people were, understandably, sitting still last year, and now that the world feels like a place where you might get out and about again, you’re looking, and so it’s a topic that comes up in our conversations with the operators.

We’re, keeping a close eye on it, look into how we – how do we manage it? And how do we stay ahead of it to mitigate, the impact, and we’ll keep you posted on kind of what we’re seeing, but, people come to work across our portfolio because, a range of things, that have meant that whether we were competing for talent with startups or with large tech companies for the last few years.

We’ve been, fairly successful at it. So we got to just keep, to Ellen’s point, figuring out how we put, what are our advantages to work in those conversations..

All right great. Thank you very much..

Thank you. Next question is from Michael Nathanson with MoffettNathanson. You may go ahead..

Great, thanks.

Do you guys hear me?.

Yes. Hi, Michael..

Okay. Hi, hey Philippe. Philippe, I have one for you, then I have one maybe probably both you.

I’m just wondering when you sit down virtually with your clients today? What are their priorities and the urgency of those priorities now versus maybe what it was pre pandemic, right? So what has changed in the conversation, maybe the speed to innovate and transform, and then more broadly, you’ve given how well you’re doing and given the balance sheet? What is the company waiting for? In terms of buybacks it seems like you guys have, clearly gotten over the hurdles of COVID-19 in terms of performance, your balance sheets pristine, why not start leaning into the buyback sooner than later?.

All right, I will take the first one. I guess we’re both to your point take the second one. We’ll say we’ll be vehemently in agreement on the second one, Ellen and I..

Okay..

Look, I think it’s any number of things which you would assume so clearly, the need to be conversant in and to put into effect programs so that you are, we call it what you will, so people call it e-com and there’s a lot going on there.

I mean, socials becoming a big part of what happens somewhere in the funnel, in the middle of the funnel actually, and moving upstream in the funnel. So everybody is clearly wanting to talk about and engage in conversations around, call it digital marketing, calling e-com et cetera.

Increasingly, everybody is also, we’ve had some really interesting conversations with, regional clients in the CPG space that’s, for example, you might not think of who are very, very focused, on data and on either assessing their first party data assets and understanding how they get organized so that they can begin to put them to work or if they’re further behind in terms of the readiness there, how do you take businesses that traditionally have not been particularly data-rich and begin to interact with consumers, so that you’re going to basically pull those that kind of information in, to the question Alexia asked earlier, in the experiential event space, we’re clearly seeing the need to get more digital and to use that as a way to so from to my mind, those are the two really big questions that have risen to the top of most everybody’s list, right? And then in terms of the balance sheet, question you asked us, as I said, we are committed to – we’ve returned, what is it $4.8 billion, we believe that’s a big part of our story, and how it is that we should be thinking about kind of balanced growth for the company.

So we’re currently focused on that..

And I loved your reference to a pristine balance sheet. That’s something that we think is extremely important as well, including our solid investment grade ratings, but a balanced program of capital return, which includes the dividend, which we’ve grown consistently. And share repurchases has been something that we’ve always believed in.

And we look forward to getting back to, as we mentioned, we are planning on paying off $500 million notes down in October of this year. And we do have a really nice maturity profile thereafter. So nothing has changed. We believe in balanced program, and we look forward to getting back to it..

Okay. Thanks, you guys would come such a long way from way back when. Congratulations..

Thank you..

Thank you. Our next question is from Julien Roch with Barclays. You may go ahead..

Yes. Good morning, Philippe. Good morning, Ellen..

Hi, Julien..

Two questions on margin, if I may, why would margins fall in the second half of 2021 versus the second half of 2019 because if I put the same margin, you get 16.9 for the full year of 2021. And I understand that, travels are coming back. People are going back to the office, but you’re guiding to more costs than in 2019.

And so I want to know why? It’s my first question on margin. And then the second one is a longer-term question.

Philosophically, the ceiling at which either clients or employees will say, I want my share of your margin, or there’s no limit to margin, as long as revenue goes up, could you go to 18% margin or 20% margin? A bit of a philosophical question on whether there is a ceiling, or you will be dancing on the ceiling?.

I’ll let, Ellen go first on your first one..

Sure. And thank you for the question. And when you comp against last year, we have to remind ourselves what was going on last year at this time. And there was everything from taking salary cuts to furloughs, to government subsidies that were comping against. There was zero travel; there was zero going back to the office.

I think it’s really important that we remind ourselves that and as we mentioned, we are envisioning a second half where people are returning back to the office, to the extent we can in the safe manner, where people are beginning to travel and meet again.

And, we will be salaried, and wage cuts, and that is all gone and elapsed, and we will be hiring against revenue growth. So I think those are the ins and outs, but it’s very important when you just look at the second half comp..

Look, and I think, there’s pent-up demand, as we were saying, John’s question around potential turnover. I think there’s pent-up demand, for travel absolutely. So I think that, you’ll see people wanting to, there’s definitely things that get done when we are working to physically together that are much harder to do remotely.

And then there is growth and we want to be sure that, that’s getting staffed appropriately and that we’ve got, clients who are giving us these new remits or new net new clients to us. You’re getting the appropriate level of service in terms of the philosophical question; it’s interesting, because I don’t know that I would call it philosophy.

But, as we said, the restructuring positions us well, we’ve said all along, we want to come out of the pandemic, a stronger company, and I think we’re showing that we’re well on our way there.

And then you do begin to see the transformation into certain of the areas, which we think will be accretive, because they’ll take us to more performance based kinds of models and to higher value or, instances in which our IP can be licensed out or can give us access to.

So I think, to my mind, it’s not philosophy because I can’t give you a tenant that says this will be good forever, I can tell you that at the moment, we see continued opportunity and upside. And therefore, whether it’s in 2022, 2023, that’s going to be what we’re making our objective to Ellen’s point, that’s also how we reward our people.

And if there comes a point at which we began to believe or see that the ceiling that you mentioned is there, then as always, we’re going to be very transparent and walk you collectively through what we’re seeing and why what we believe is what we believe.

But I can’t, say something now that is going to be kind of evergreen in that way because, our business is in the midst of evolving. And right now, we see opportunity..

Okay. Very clear. Thank you..

Thank you..

Cheers..

And that was our final question. I’ll now turn it back to Philippe for any final thoughts..

Well, look, just thank you all for the time this morning. Again, we’re looking forward to continuing the conversation. We’re hugely appreciative of, sort of, win in sales thanks to the hard work that our colleagues are doing and to our clients. And I hope everybody is staying healthy..

Thank you and that does conclude today’s conference. You may disconnect at this time..