Stagwell Inc. (NASDAQ:STGW) Q3 2023 Earnings Call Transcript

Ben Allanson: Maybe just one final question on political before we hand over to Frank for a couple of questions on the financials. But question from Jeff Van Sinderen over at B. Riley. What are the early reason of magnitude and possible timing of advocacy revenue contribution as we enter the year leading up to the presidential election?

Mark Penn: Well, I think all reads are that this is going to be the biggest spending election in history exceeding $12 billion of expenditures. I think the timing is a little less clear because we don’t know what’s going to happen in terms of how much activity there’ll be in primary fights. Looks like there isn’t really a Democratic primary fight. So that’ll push some of their spending later. Looks like there may or may not be a Republican fight. We’ll really find that out as these contests start to happen in Iowa and New Hampshire. So, I think the crescendo is going to be hit the closer you get to the election. We don’t know how much of it will come in in first versus second quarter, depending upon how the primary season works its way out.

Ben Allanson: Maybe just a quick question for Frank here. And this is looking at our free cash flow conversion, a question from an investor, just saying what was the driver of the change in conversion from 55% at the midpoint previously down to 45%?

Frank Lanuto: I think it’s two things. One, it’s interest, both a function of raising rates throughout 2023 and also the higher average outstanding balance. We financed the acquisition of a larger share purchase. But this was more of a one-time event. So it’s a temporary condition and that should bring interest down in 2024 is our expectation. And then second, we see potentially just some lighter prepayments, perhaps in Q4, and I think that’s all it is.

Ben Allanson: I think we’re coming to a close here, but one question on a slightly lighter note? Are the blue shirts the new Stagwell uniform?

Mark Penn: They were my uniform at Microsoft and they’re my uniform here at Stagwell.

Ben Allanson: Good stuff. Well, that brings our third quarter earnings call to a close. If you have any questions, please do feel free to reach out to the IR team over here at Stagwell. And we look forward to chatting to you early next year for our fourth quarter.