Slide 1: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results February 12, 2019 Investor Presentation
Slide 2: 2018 vs. 2017 P&L Summary
2018 vs. 2017 P&L Summary Fourth Quarter Fourth Quarter 2018 (a) 2017 (c) Revenue $ 4,086.7 $ 4,176.6 Operating Expenses (b) 3,459.5 3,550.1 Operating Profit 627.2 626.5 Net Interest Expense 53.1 50.0 Income Tax Expense 149.7 289.5 Tax Rate % 26.1% 50.2% Income from Equity Method Investments 5.3 0.8
Slide 3: 2018 vs. 2017 Earnings per Share – Diluted
2018 vs. 2017 Earnings per Share – Diluted Fourth Quarter Fourth Quarter 2018 (a) 2017 (c) Net Income - Omnicom Group Inc. $ 399.2 $ 254.4 Net Income allocated to participating securities — (0.3) Net Income available for common shares $ 399.2 $ 254.1 Diluted Shares (millions) 225.6 232.3 Earnings pe
Slide 4: 2018 vs. 2017 P&L Summary (Full Year)
2018 vs. 2017 P&L Summary Full Year Full Year 2018 (a) (d) (e) 2017 (c) Revenue $ 15,290.2 $ 15,273.6 Operating Expenses (b) 13,156.7 13,189.8 Operating Profit 2,133.5 2,083.8 Net Interest Expense 209.2 198.9 Income Tax Expense 492.7 696.2 Tax Rate % 25.6% 36.9% Income from Equity Method Investments
Slide 5: 2018 vs. 2017 Earnings per Share – Diluted (Full Year)
2018 vs. 2017 Earnings per Share – Diluted Full Year Full Year 2018 (a) (d) 2017 (c) Net Income - Omnicom Group Inc. $ 1,326.4 $ 1,088.4 Net Income allocated to participating securities (0.1) (1.6) Net Income available for common shares $ 1,326.3 $ 1,086.8 Diluted Shares (millions) 227.6 233.9 Earni
Slide 6: 2018 Total Revenue Change
2018 Total Revenue Change Fourth Quarter Full Year $ %∆ $ %∆ Prior Period Revenue, as reported under ASC 605 $ 4,176.6 $ 15,273.6 Foreign exchange rate impact (a) (83.0) -2.0% 85.1 0.6% Acquisition revenue, net of disposition revenue (b) (101.0) -2.4% (326.6) -2.1% Organic growth (c) 131.7 3.2% 404.
Slide 7: 2018 Revenue by Discipline
2018 Revenue by Discipline Fourth Quarter Full Year Healthcare Healthcare 6.9% 6.9% PR PR 9.0% 9.4% CRM CRM Execution Execution & Support & Support 10.5% Advertising Advertising 12.4% 56.8% 54.2% CRM Consumer CRM Experience Consumer 16.8% Experience 17.1% % Organic % Organic $ Mix % Growth Growth (a
Slide 8: 2018 Revenue by Region
2018 Revenue by Region Fourth Quarter Full Year Latin Middle East Latin Middle East America & Africa America & Africa 3.2% 2.4% 3.0% 2.0% Asia Asia Pacific Pacific 10.9% 11.2% Euro Euro Markets & Markets & Other Other United Europe United Europe 18.9% States 19.1% States 52.2% 52.3% UK UK 9.2% 9.5%
Slide 9: 2018 Revenue by Region
2018 Revenue by Region Fourth Quarter Full Year % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) United States $ 2,135.2 0.2% 2.6% United States $ 7,999.8 -2.4% 0.7% Other North 128.7 -2.4% 1.3% Other North 442.7 -9.5% -3.9% America America UK 377.2 -0.3% 2.4% UK 1,456.0 4.3%
Slide 10: Revenue by Industry
Revenue by Industry Full Year – 2018 Full Year – 2017 T&E Auto Auto T&E 10% 7% 10% Telcom 7% 5% Telcom Consumer Consumer 5% Products Products 10% Tech 9% 8% Tech 9% Financial Financial Services Services 8% Retail 8% 6% Retail 6% Food & Pharma & Food & Beverage Health Beverage 13% 13% Pharma & 13% He
Slide 11: Cash Flow Performance
Cash Flow Performance Full Year 2018 2017 Net Income $ 1,440.5 $ 1,192.2 Depreciation and Amortization of Intangible Assets 264.0 282.1 Share-Based Compensation 70.5 80.2 Net gain from dispositions of subsidiaries (178.4) — Impact of 2017 Tax Act 28.9 106.3 Other Items to Reconcile to Net Cash Provi
Slide 12: Cash Flow Performance
Cash Flow Performance Full Year 2018 2017 Free Cash Flow (a) $ 1,641.8 $ 1,675.4 Primary Uses of Cash: Dividends paid to Common Shareholders 548.5 515.2 Dividends paid to Noncontrolling Interest Shareholders 134.9 101.7 Capital Expenditures 195.7 156.0 Acquisition of Businesses and Affiliates, Acqui
Slide 13: Current Credit Picture
Current Credit Picture Full Year 2018 2017 EBITDA (a) $ 2,397.5 $ 2,365.9 Gross Interest Expense on Indebtedness 241.9 224.5 EBITDA / Gross Interest Expense on Indebtedness 9.9 x 10.5 x Total Debt / EBITDA 2.0 x 2.1 x Net Debt (b) / EBITDA 0.5 x 0.5 x Debt Bank Loans (Due Less Than 1 Year) $ 8 $ 12
Slide 14: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a): Twelve months ended December 31, 2018 29.6% Twelve months ended December 31, 2017 24.4% Return on Equity (b): Twelve months ended December 31, 2018 51.4% Twelve months ended December 31, 2017 45.6% (a) Return on Invested Capital is After Tax
Slide 15: Supplemental Financial Information
Supplemental Financial Information February 12, 2019 14
Slide 16: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2009 through December 31, 2018, Omnicom distributed 104% of Net Income to shareholders through Dividends and Share Repurchases. 104% $12.0 107% $10.3 $10.0 108% $9.0 110% 3.9 $7.9 $8.0 3.4 $ In Billions 110% $6.8 2.9 104%
Slide 17: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $8 2019 Senior Notes $500 2026 Senior Notes $1,400 2020 Senior Notes $1,000 2024 Senior Notes $750 2022 Senior Notes $1,250 The above chart sets forth Omnicom’s debt outstanding at December 31, 2018. The amounts reflected above for the 2019, 2020, 2022, 2024 and 202
Slide 18: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 2026 Senior 2022 Notes $1,400 Senior Notes $1,200 2020 Senior Notes $1,000 2024 Senior $800 Notes 2019 $600 Senior Notes $400 $200 Other Borrowings $0 8 19 9 20 0 21 1 22 2 23 3 24 4 25 5 26 6 -1 -1 -2 -2 -2 -2 -2 -2 -2 n- n- n- n- n- n- n- n- ec ec ec ec ec ec ec ec ec
Slide 19: 2018 Acquisition Related Expenditures
2018 Acquisition Related Expenditures Full Year Acquisition of Businesses and Affiliates (a) $ 350.4 Acquisition of Additional Noncontrolling Interests (b) 43.6 Contingent Purchase Price Payments (c) 99.0 Total Acquisition Expenditures (d) $ 493.0 (a) Includes acquisitions of a majority interest in
Slide 20: Condensed Cash Flow
Condensed Cash Flow Full Year 2018 2017 Net Income $ 1,440.5 $ 1,192.2 Share-Based Compensation 70.5 80.2 Depreciation and Amortization of Intangible Assets 264.0 282.1 Other Items to Reconcile to Net Cash Provided by Operating Activities, net 16.3 14.6 Net gain from dispositions of subsidiaries (17
Slide 21: Supplemental Information
Supplemental Information Fourth Quarter Full Year % of % of % of % of 2018 Rev 2017 Rev 2018 Rev 2017 Rev Revenue $ 4,086.7 $ 4,176.6 $ 15,290.2 $ 15,273.6 Operating expenses: Salary and service costs 2,986.3 73.1 % 3,042.5 72.8 % 11,306.1 73.9 % 11,227.2 73.5 % Occupancy and other costs 292.9 7.2 %
Slide 22: P&L Summary – Impact of Adoption of ASC 606 on Reported Results
2018 P&L Summary – Impact of Adoption of ASC 606 on Reported Results Fourth Quarter Without the Reported under Adjustments Adoption of ASC ASC 606 606 Revenue $ 4,086.7 $ 37.6 $ 4,124.3 Operating Expenses 3,459.5 41.4 3,500.9 Operating Profit $ 627.2 $ (3.8) $ 623.4 Full Year Without the Reported un
Slide 23: Non-GAAP Financial Measures - 2018 Excluding Net Gain on Third Quarter Dispositions
2018 Non-GAAP Financial Measures - 2018 Excluding Net Gain on Third Quarter Dispositions, Repositioning Actions and Tax Reform Act Adjustments Full Year Non-GAAP Non-GAAP 2018 2018 (a) Adjustments Adjusted Operating Profit $ 2,133.5 $ 29.0 $ 2,104.5 Net Interest Expense 209.2 — 209.2 Income Tax Expe
Slide 24: Full Year 2018 Operating Expenses – Impact of Net Gain on Third Quarter Dispositions
Full Year 2018 Operating Expenses – Impact of Net Gain on Third Quarter Dispositions & Repositioning Actions Full Year 2018 - Increase / (Decrease) Repositioning Net Gain on Total Actions Dispositions Operating expenses (a): Salary and service costs $ 73.7 $ — $ 73.7 Occupancy and other costs 73.5 —
Slide 25: vs. 2017 Non-GAAP Financial Measures – EBITA
2018 vs. 2017 Non-GAAP Financial Measures – EBITA Fourth Quarter Full Year 2018 (a) 2017 2018 (a) 2017 Revenue $ 4,086.7 $ 4,176.6 $ 15,290.2 $ 15,273.6 Operating expenses (b) 3,459.5 3,550.1 13,156.7 13,189.8 Operating Profit 627.2 626.5 2,133.5 2,083.8 Operating Profit Margin % 15.3% 15.0% 14.0% 1
Slide 26: Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA
Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA Three Months Ended December 31 Full Year 2018 (a) 2017 2018 (a) 2017 Net Income - Omnicom Group Inc. $ 399.2 $ 254.4 $ 1,326.4 $ 1,088.4 Net Income Attributed to Noncontrolling Interests 30.5 33.4 114.1 103.8 Net Income 429.7 287.8 1,4
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Full Year 2018 2017 Net Cash Provided by Operating Activities $ 1,722.3 $ 2,023.9 Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital 80.5 348.5 Free Cash Flow $ 1,641.8 $ 1,675.4 Full Year 2018 2017 Net (Decrease) / Inc
Slide 28: Reconciliation of Non-GAAP Financial Measures – Operating Profit
Reconciliation of Non-GAAP Financial Measures – Operating Profit Full Year (a) 2018 2017 Net Income - Omnicom Group Inc. $ 1,326.4 $ 1,088.4 Net Income Attributed to Noncontrolling Interests 114.1 103.8 Net Income 1,440.5 1,192.2 Income from Equity Method Investments 8.9 3.5 Income Tax Expense 492.7
Slide 29: Reconciliation of 2018 Non-GAAP Financial Measures - Income Tax Expense
Reconciliation of 2018 Non-GAAP Financial Measures - Income Tax Expense Twelve months ended December 31, 2018 Income Tax Expense, as reported $ 492.7 Add: Income tax benefit on repositioning actions, less income tax expense on net 25.0 gain from dispositions Less: Increase in income tax expense for
Slide 30: Reconciliation of 2018 Non-GAAP Financial Measures - Net Income - Omnicom Group Inc.
Reconciliation of 2018 Non-GAAP Financial Measures - Net Income - Omnicom Group Inc. Twelve months ended December 31, 2018 Net Income - Omnicom Group Inc., as reported $ 1,326.4 Net gain from dispositions before income tax expense (178.4) Repositioning actions - Incremental Severance and other items
Slide 31: Fourth Quarter Acquisition
Fourth Quarter Acquisition Omnicom Media Group Germany has acquired Media and Performance Marketing (M&PM), a division of United Digital Group. M&PM is one of Germany's leading providers of performance marketing services, offering a comprehensive portfolio that includes search engine optimization, a
Slide 32: Selected Footnotes
Selected Footnotes (a) ASC 606 - On January 1, 2018, we adopted FASB ASC Topic 606 “Revenue from Contracts with Customers” ("ASC 606"). ASC 606 was applied using the modified retrospective method, where the cumulative effect of initial application is recognized as an adjustment to opening retained e
Slide 33: Disclosure
Disclosure The preceding materials have been prepared for use in the February 12, 2019 conference call on Omnicom’s results of operations for the three and twelve months ended December 31, 2018. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-eve