PPHC Announces Interim Financial Results for the First Half of 2023

Strong growth within target margin levels; on track to meet full year expectations

Public Policy Holding Company, Inc., the leading government relations and public affairs group of companies providing a comprehensive range of advisory services, today announces its interim results for the six months ended 30 June 2023 (“2023H1”).


Group revenue increased 27% to $65.7m, with a strong Q2 as encouraging trends returned following the delayed formation of the majority leadership in the United States House of Representatives in the early part of this year. PPHC continues to pursue its stated M&A strategy to add certain complementary specialisations to its portfolio, as well as to expand its footprint both in the US and into the EU and UK. The strong momentum in Q2 has positioned the Group well for the remainder of the year and the Group remains on track to meet full year expectations for FY23, with management retaining immediate and long-term confidence in the Group’s growth and margin prospects.

Group Revenue$65.7m$51.7m+27%
Underlying EBITDA$16.9m$14.4m+17%
Underlying EBITDA margin25.8%27.9%(2.2)pt
Underlying Profit after Tax$12.7m$10.7m+18%
Underlying EPS basic11.4c9.9c+15%
Underlying EPS fully diluted11.1c9.9c+12%
Interim Dividend$0.0460$0.0450+2%
Net Debt / (Cash) at period-end$9.1m-$(17.8)m$(27.0)m

Financial Highlights

  • 2023H1 Group revenue increased 27% to $65.7m (2022H1: $51.7m), with organic growth of 4%.
  • Underlying EBITDA of $16.9m is up 17% year-on-year and was achieved at a 25.8% margin, in line with the Group’s ongoing intention to manage the business between 25% and 30% at margin level.
  • Underlying Profit after Tax of $12.7m was 18% ahead of 2022H1, while Underlying EPS (basic) increased by 15%.
  • The Group continued to generate cash, supporting ongoing M&A ambitions and the wider capital allocation policy. At period-end, Net Debt totalled $9.1m (2022FY: Net Cash of $17.8m), with the movement a result of the use of debt to fund the EPS accretive acquisition of MultiState Associates, Inc. (“MultiState”) in March 2023.
  • The Board retains strong confidence in the Group’s ongoing prospects and has declared an Interim Dividend of $0.046 per Common Outstanding Share.

Operational Highlights

  • The Group advanced its strategy of supplementing organic growth with M&A, acquiring MultiState Associates on 1 March 2023. The integration process is ongoing and MultiState is performing ahead of internal expectations. Alongside the acquisition of KP Public Affairs in October 2022, the Group now has seven operating companies providing a greater range of services in more US geographies.
  • Diversification of revenue continues with the top 10 Group clients representing 8.0% of total revenue in 2023H1, versus 10.0% at the end of FY22 and 13.1% for FY21.
  • Revenue distribution by segment reflects the inclusion of new business lines following the MultiState acquisition, while existing lines remained stable: Government Relations 71% (2022H1: 73%); Public Affairs 25% (2022H1: 27%); and Diversified Services 4% (2022H1: Nil).
  • A broadening client base is supported by sustained high retention rates, with the Group now directly representing almost 40% of the Fortune 100 (and 22% of the Fortune 500), in addition to many more via their trade associations that the Group serves.
    • New Group clients include The Aluminium Association, General Electric, Hertz, Life Science Logistics, Morton’s Salt, Veterinary Medical Association and Rain Industries.
    • Client retention rate (based on # of clients) in 2023H1 was 80%, with Government Relations above 90% and Public Affairs between 65% and 70%.
    • Each of the Group’s business lines (Government Relations, Public Affairs and Diversified Services) achieved growth when compared to 2022H1.
  • The quality of PPHC’s operating companies continues to be reflected in the 2023 Lobbying Disclosure Act rankings, with Group agencies, when aggregated, topping the rankings as the US market leader in both Q1 and Q2 2023, as well as for the whole of FY22.
  • Strengthening of the management team with Roel Smits being promoted to CFO in July as part of the executive succession planning process and retention of Bill Chess as an Executive Director in the newly created position of Chief Administrative Officer.

Outlook and medium-term guidance

  • The strong performance delivered in H1 has set the Group up well for the remainder of the year.
    • The Group is on track to meet full year market expectations.
    • Revenue growth between 20% and 30%, with the FY23 organic growth rate expected to be similar to H1 and supported by the better-than-expected performance of recently acquired companies.
    • The Underlying EBITDA margin for H2 is expected to be around the same level as in H1.
  • The focus in H2 will be on driving client retention rates, new business generation and the continued cross-selling of services across the Group’s broad operating company base to support organic growth prospects.
  • The market for public affairs and professional lobbying services in key geographies remains fragmented and the Board continues to view the Group as a natural consolidator in the sector with favourable bipartisan positioning.
  • The pipeline of acquisition opportunities under development in the US, UK and Mainland Europe remains strong in an active market for the strategic communications sector. The Group is actively seeking to expand its portfolio of operating companies internationally while adding complementary specialisations.
  • The Board retains its confidence in the ongoing prospects for the Group and reiterates its medium-term guidance to achieve:
    • organic revenue growth between 5% and 10%;
    • incremental growth from future M&A; and
    • an Underlying EBITDA margin between 25% and 30%.

Stewart Hall, CEO of PPHC, commented:

“We are a very well-placed business, with increasingly diversified operating companies and growing capabilities at a time of massive change in the interplay of business and government around the world. Corporates, charities, NGOs and other client organisations are increasing their spend in the specific advisory areas that we specialise in, and our high-quality operating companies generate excellent client retention rates and provide high quality earnings.

“Even though the delayed formation of Congress slowed the start of Q1, clients returned leading to improved Q2 trading and setting the Group up well for H2. Our lobbying operations continue to be market leading in the US, consistently at the top of the Lobbying Disclosure Act rankings, while demand for our specialist public affairs advisory work continues to increase.

“The two recent acquisitions are successfully integrating and benefiting from their association with the Group.  Acquisitions are an important part of our strategy as they enable us to effectively diversify the client offering into new areas while increasing our geographical reach. This, in time, supports our ongoing ability to generate a good level of organic growth as we have greater reach and more sought-after services to cross-refer clients. The markets we operate in remain highly fragmented and we are a natural sector consolidator, with a well advanced and exciting pipeline of acquisition opportunities in the US, UK and Mainland Europe.

“Our people continue to be the lifeblood of the business, and we are proud that they consistently generate work that achieves incredible results on behalf of clients. Their knowledge and depth of experience attracts high levels of premier new business, and we now directly retain well over a fifth of the Fortune 500 as clients.

“These interim results show that in a difficult macro-economic environment, we remain well positioned to deliver good growth at target margin levels and can continue to capitalise on the clear market opportunity. The runway for growth and expansion remains significant, and we look forward to continuing to achieve for our people, clients, wider stakeholders and investors in the second half and beyond.”

Read the full results statement here.