September 18, 2024 • Insight
PPHC Announces Interim Results for the First Half of 2024
Strategic execution delivers positive financial and operational progress; full year expectations affirmed
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 unaudited interim results for the six months ended 30 June 2024 (“H1 2024” or the “Period”).
Financial Highlights
- H1 revenue increased 8% to $71.1m (H1 2023: $65.7m), with organic growth contributing 1.2% and the balance driven by two earnings accretive acquisitions completed in the Period.
- Underlying EBITDA of $17.4m, up 3%, was achieved at a 24.5% margin. This margin performance was achieved after the Group invested $1.8m into M&A advisory costs and further incremental investment in Concordant.
- Underlying Profit after Tax of $13.2m is up 4% (H1 2023: $12.7m) with an increase in finance costs offset by a more favourable effective tax rate.
- EPS of $0.113 was down 1%, primarily as a result of the average share count increasing by 5% (or 6% on a fully diluted basis).
- The Group’s balance sheet remains robust with strong free cashflow of $6.0m (H1 2023: $1.8m), enabling strategic progress via organic investment and earnings enhancing M&A.
- Net Debt of $28.3m (H1 2023: $9.1m) reflects a prudent leverage ratio and the deployment of $23.7m to fund the H1 acquisitions.
- The Board retains strong confidence in the Group’s outlook and has declared an Interim Dividend of $0.047 per Common Outstanding Share, up 2% from last year’s $0.046.
| H1 2024 | H1 2023 | Change | |
| Group Revenue | $71.1m | $65.7m | +8% |
| Underlying EBITDA | $17.4m | $16.9m | +3% |
| Underlying EBITDA margin | 24.5% | 25.8% | -1.3pt |
| Underlying Profit after Tax | $13.2m | $12.7m | +4% |
| Underlying EPS basic | 11.30c | 11.40c | -1% |
| Underlying EPS fully diluted | 10.81c | 11.06c | -2% |
| Interim Dividend | 4.70c | 4.60c | +2% |
| Net Debt / (Cash) at period-end | $28.3m | $9.1m | $19.2m |
Operational Highlights
- The Period showcases the Group’s ability to successfully execute its stated growth strategy, with ten operating companies providing an enhanced complementary range of services to a now global client base:
- Acquisition of London-based Pagefield, broadening the Group’s operational presence outside of the US for the first time and providing significant revenue opportunity via the referral to and from the pre-existing Group.
- Acquisition of California-based Lucas Public Affairs (“LPA”), expanding the Group’s presence in a state that is characterised by a highly regulatory environment and would register as the world’s fifth largest economy.
- Integration of LPA has completed and the integration of Pagefield is being delivered as expected, with both companies already benefitting from client referrals via the wider PPHC network.
- Revenue diversification further enhanced with the top 10 Group clients representing 7.6% of revenue in H1 2024 versus 8.4% at the end of FY23 and 10.0% for FY22.
- By segment:
- Government Relations grew strongly at 8% (4% organically) while Public Affairs decreased by 6% (13% organically) as a consequence of a reduction in project-based work due to pending elections and economic concerns. Diversified Services (Research and Compliance) grew strongly at 97% (32% organically), albeit from a lower base.
- The revenue share of Government Relations remained stable at 71% (H1 2023: 71%); Public Affairs decreased marginally to 22% (H1 2023: 25%); and Diversified Services grew to 7% (H1 2023: 4%).
- A broadening client base of c.1,200 Group clients is supported by sustained high retention rates, with the Group directly representing almost half of the Fortune 100 and a quarter of the Fortune 500, in addition to many more via trade associations.
- The quality of PPHC’s operating companies continues to be reflected in the 2024 Lobbying Disclosure Act rankings, with Group agencies, when aggregated, topping the rankings as the US market leader in both Q1 and Q2 2024, as well as for the previous 14 consecutive quarters.
Current Trading and Outlook
- The performance delivered in H1 2024 has set the Group up well for the remainder of the year and it remains on track to meet full year market expectations, with Underlying EBITDA margin for H2 2024 expected to be at or slightly above the H1 2024 level.
- The focus continues to be on driving client retention rates, new business generation following the outcomes of elections in the US and UK, 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 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 government relations and strategic communications sectors. The Group is actively seeking to expand its portfolio of operating companies internationally with strategically and financially attractive opportunities while adding complementary specialisations.
- The Board remains confident 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
- Underlying EBITDA margin between 25% and 30%.
Stewart Hall, CEO of PPHC, commented:
“I am pleased with the progress we have achieved in the first six months of the year as we continued to acquire excellent businesses complementing our wider growth strategy. We began our international expansion through the acquisition of Pagefield, giving us a foothold in the UK, while all ten of our operating companies are well positioned to benefit from increasing demand for their services as new governments and administrations are formed around the world, this year and next. Our ability to deliver organic growth in a period of impending elections is testament to the diversity of our revenue base and our high client retention rates.
“We have an exciting and robust M&A pipeline, both in the US and internationally, and are confident in our ability to deploy more capital to further accelerate our growth trajectory. I look forward to updating shareholders on our continued progress in the months ahead.”