Omnicom Group Inc. · NYSE:OMC
Omnicom — Q3 2014 Earnings Presentation
37 slides from Omnicom's earnings presentation, Oct 21, 2014
Slide 1: Third Quarter 2014 Results
Third Quarter 2014 Results October 21, 2014 Investor Presentation
Slide 2: 2014 vs. 2013 P&L Summary – Third Quarter
2014 vs. 2013 P&L Summary – Third Quarter Third Quarter 2014 2013 Revenue $ 3,749.6 $ 3,490.5 (a) (b) EBITA 460.5 405.2 Margin % 12.3% 11.6% Amortization of Intangibles 26.9 25.8 (b) Operating Income $ 433.6 $ 379.4 Margin % 11.6% 10.9% (a) EBITA is a non-GAAP financial measure. See page 36 for the
Slide 3: 2014 vs. 2013 P&L Summary – Third Quarter
2014 vs. 2013 P&L Summary – Third Quarter Third Quarter 2014 2013 Operating Income $ 433.6 $ 379.4 Net Interest Expense 31.4 42.8 (a) Income Taxes 134.4 116.2 Tax Rate % 33.4% 34.5% (a) Income from Equity Method Investments 5.8 4.3 Noncontrolling Interests 29.8 28.7 Net Income - Omnicom Group $ 243.
Slide 4: 2014 vs. 2013 Earnings Per Share – Third Quarter
2014 vs. 2013 Earnings Per Share – Third Quarter Third Quarter 2014 2013 Net Income - Omnicom Group $ 243.8 $ 196.0 Net Income allocated to Participating Securities (4.3) (4.8) Net Income available for common shares $ 239.5 $ 191.2 Diluted Shares (millions) 252.4 259.9 EPS - Diluted $ 0.95 $ 0.74 (a
Slide 5: 2014 vs. 2013 P&L Summary – Year to Date
2014 vs. 2013 P&L Summary – Year to Date Year to Date 2014 2013 Revenue $ 11,122.7 $ 10,526.4 (a) (b) (c) EBITA 1,441.8 1,350.5 Margin % 13.0% 12.8% Amortization of Intangibles 77.1 76.3 Operating Income $ 1,364.7 (b) $ 1,274.2 (c) Margin % 12.3% 12.1% (a) EBITA is a non-GAAP financial measure. See
Slide 6: 2014 vs. 2013 P&L Summary – Year to Date
2014 vs. 2013 P&L Summary – Year to Date Year to Date 2014 2013 (d) Operating Income $ 1,364.7 (a) $ 1,274.2 Net Interest Expense 104.1 124.6 (b) (e) Income Taxes 410.9 388.9 Tax Rate % 32.6% (b) 33.8% (e) Income from Equity Method Investments 10.4 10.5 Noncontrolling Interests 85.6 80.5 (c) (f) Net
Slide 7: 2014 vs. 2013 Earnings Per Share – Year to Date
2014 vs. 2013 Earnings Per Share – Year to Date Year to Date 2014 2013 (a) (e) Net Income - Omnicom Group $ 774.5 $ 690.7 Net Income allocated to Participating Securities (14.7) (b) (18.1) (f) (c) (g) Net Income available for common shares $ 759.8 $ 672.6 Diluted Shares (millions) 257.3 260.4 (d) (h
Slide 8: Total Revenue Change – Third Quarter
2014 Total Revenue Change – Third Quarter 7.4% $226 $13 $20 $3,750 $3,491 0.4% 0.5% 6.5% (a) (c) 3Q 13 FX Impact Net Organic 3Q 14 (b) Acquisitions Revenue (a) To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from the equivalen
Slide 9: Total Revenue Change – Year to Date
2014 Total Revenue Change – Year to Date 5.7% $587 $17 $(7) $11,123 $10,526 0.2% (0.1%) 5.6% (a) (c) YTD 3Q 13 FX Impact Net Organic YTD 3Q 14 (b) Acquisitions Revenue (a) To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from t
Slide 10: Revenue by Discipline
2014 Revenue by Discipline Third Quarter Year to Date Specialty Specialty 6.6% 6.9% PR PR 9.2% 9.2% Advertising Advertising 49.4% 49.4% CRM CRM 34.8% 34.5% % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) Advertising $ 1,853.3 13.1% 12.5% Advertising $ 5,491.4 9.0% 9.3% CRM 1,
Slide 11: Revenue by Region
2014 Revenue by Region Third Quarter Year to Date Latin Africa Latin Africa America MidEast America MidEast 2.7% 1.7% 2.7% 1.6% Asia Asia Pacific Pacific 10.5% 10.8% North Europe North Europe America 28.5% America 28.1% 56.7% 56.7% October 21, 2014 10
Slide 12: Revenue by Region
2014 Revenue by Region Third Quarter Year to Date % Organic % Organic (a) (a) $ Mix % Growth Growth $ Mix % Growth Growth North America $ 2,124.4 8.6% 8.9% North America $ 6,302.2 6.0% 7.2% Europe 1,053.5 5.8% 2.2% Europe 3,165.8 6.7% 2.2% Asia Pacific 405.3 5.2% 4.4% Asia Pacific 1,165.9 2.7% 5.0%
Slide 13: Revenue by Industry
Revenue by Industry Year to Date – 2014 Year to Date – 2013 Telcom Growth 5% T&E Auto T&E Auto Financial Auto 2.4% 6% 8% 5% 8% Services Telcom 7% 7% Food & Beverage 2.3% Tech Consumer Consumer Products Tech Products 9% Consumer Products 4.0% 10% 9% 10% Financial Financial Services 0.8% Retail Servic
Slide 14: Cash Flow Performance
Cash Flow Performance Nine Months Ended September 30 2014 2013 Net Income $ 860.1 $ 771.2 Depreciation and Amortization Expense 217.4 212.9 Share-Based Compensation Expense 69.5 64.9 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating (22.0) (34.9) Activities, net Free Cash Flow (a)
Slide 15: Cash Flow Performance
Cash Flow Performance Nine Months Ended September 30 2014 2013 Free Cash Flow (a) $ 1,125.0 $ 1,014.1 Primary Uses of Cash: (b) Dividends 340.7 212.6 Dividends paid to Noncontrolling Interest Shareholders 83.2 81.1 Capital Expenditures 138.3 123.3 Acquisitions and Payments for Additional Interest in
Slide 16: Current Credit Picture
Current Credit Picture Twelve Months Ended September 30 2014 Reported 2013 Reported EBITDA (a) $ 2,205.2 $ 2,107.2 Gross Interest Expense 183.8 198.1 EBITDA / Gross Interest Expense 12.0 x 10.6 x Total Debt / EBITDA 1.7 x 1.9 x (b) Net Debt / EBITDA 1.3 x 1.2 x Debt Bank Loans (Due Less Than 1 Year)
Slide 17: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve Months Ended September 30, 2014 17.2% Twelve Months Ended September 30, 2013 16.7% Return on Equity (b): Twelve Months Ended September 30, 2014 33.7% Twelve Months Ended September 30, 2013 29.8% (a) Return on Invested Capital is After
Slide 18: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2004 through Q3 2014, Omnicom distributed over 100% of Net Income to shareholders through Dividends and Share Repurchases. 108% 104% $9.7 $10.0 107% $8.9 103% $7.9 $8.0 $ In Billions 103% $6.9 92% $5.9 7.9 105% $6.0 $5.1
Slide 19: Supplemental Financial Information
Supplemental Financial Information October 21, 2014 18
Slide 20: 2014 vs. 2013 P&L Summary – Third Quarter
2014 vs. 2013 P&L Summary – Third Quarter Third Quarter 2014 2013 2013 Reported Non GAAP (a) Reported Revenue $ 3,749.6 $ 3,490.5 $ 3,490.5 EBITA (a) (b) 460.5 433.3 (c) 405.2 Margin % 12.3% 12.4% (c) 11.6% Amortization of Intangibles 26.9 25.8 25.8 Operating Income (a) $ 433.6 $ 407.5 (d) $ 379.4 M
Slide 21: 2014 vs. 2013 P&L Summary – Third Quarter
2014 vs. 2013 P&L Summary – Third Quarter Third Quarter 2014 2013 2013 Reported Non GAAP (a) Reported Operating Income (a) $ 433.6 $ 407.5 (b) $ 379.4 Net Interest Expense 31.4 42.8 42.8 Income Taxes (a) 134.4 122.6 (c) 116.2 Tax Rate % 33.4% 33.6% (c) 34.5% Income from Equity Method Investments 5.8
Slide 22: 2014 vs. 2013 Earnings Per Share – Third Quarter
2014 vs. 2013 Earnings Per Share – Third Quarter Third Quarter 2014 2013 2013 Reported Non GAAP (a) Reported Net Income - Omnicom Group (a) $ 243.8 $ 217.7 (b) $ 196.0 (a) Net Income allocated to Participating Securities (4.3) (5.4) (c) (4.8) Net Income available for common shares (a) $ 239.5 $ 212.
Slide 23: 2014 vs. 2013 P&L Summary – Year to Date
2014 vs. 2013 P&L Summary – Year to Date Year to Date 2014 2013 2013 Reported Non GAAP (a) Reported Revenue $ 11,122.7 $ 10,526.4 $ 10,526.4 EBITA (a) (b) 1,441.8 (c) 1,378.6 (d) 1,350.5 Margin % 13.0% (c) 13.1% (d) 12.8% Amortization of Intangibles 77.1 76.3 76.3 (c) (a) Operating Income $ 1,364.7
Slide 24: 2014 vs. 2013 P&L Summary – Year to Date
2014 vs. 2013 P&L Summary – Year to Date Year to Date 2014 2013 2013 Reported Non GAAP (a) Reported Operating Income (a) $ 1,364.7 (b) $ 1,302.3 (e) $ 1,274.2 Net Interest Expense 104.1 124.6 124.6 Income Taxes (a) 410.9 (c) 395.3 (f) 388.9 Tax Rate % 32.6% (c) 33.6% (f) 33.8% Income from Equity Met
Slide 25: 2014 vs. 2013 Earnings Per Share – Year to Date
2014 vs. 2013 Earnings Per Share – Year to Date Year to Date 2014 2013 2013 (a) Reported Non GAAP Reported (a) (b) Net Income - Omnicom Group $ 774.5 $ 712.4 (f) $ 690.7 (a) Net Income allocated to Participating Securities (14.7) (c) (18.7) (g) (18.1) (a) Net Income available for common shares $ 759
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Third Quarter 2013 Merger 2013 Reported Expenses Non GAAP EBITA $ 405.2 $ 28.1 $ 433.3 Operating Income 379.4 28.1 407.5 Income Tax Expense 116.2 6.4 122.6 Net Income - Omnicom Group Inc. 196.0 21.7 217.7 Net Income allocated to participating securities 4.8 0.6 5.
Slide 27: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $32 2016 Senior Notes 2022 Senior Notes $1,000 $1,250 2019 Senior Notes $500 2020 Senior Notes $1,000 The above chart sets forth Omnicom’s debt outstanding at September 30, 2014. The amounts reflected above for the 2016, 2019, 2020 and 2022 Senior Notes represent th
Slide 28: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 2022 Senior Notes $1,250 2016 2020 Senior Notes Senior Notes $1,000 $750 2019 Senior Notes $500 $250 Other Borrowings $0 Other borrowings at September 30, 2014 include short-term borrowings of $32 million which are due in less than one year. For purposes of this present
Slide 29: Historical Return Trends
Historical Return Trends Return on Equity Average through September 30, 2014 - 25.3% Return on Invested Capital Average through September 30, 2014 - 20.4% 40.0% ROE(a) ROIC(b) 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 30: Acquisition Related Expenditures
2014 Acquisition Related Expenditures Year to Date (a) Acquisitions of Businesses and Affiliates $ 65.3 (b) Additional Interest in Controlled Subsidiaries 22.0 (c) Earn-outs on acquisitions completed after January 1, 2009 74.5 Total Acquisition Expenditures (d) $ 161.8 (a) Includes acquisitions of a
Slide 31: Condensed Cash Flow
Condensed Cash Flow Nine Months Ended September 30 2014 2013 Net Income $ 860.1 $ 771.2 Share-Based Compensation Expense 69.5 64.9 Depreciation and Amortization 217.4 212.9 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating Activities, net (22.0) (34.9) Changes in Operating Capital
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3 Months Ended September 30 9 Months Ended September 30 12 Months Ended September 30 2014 2013 2014 2013 2014 2013 Revenue $ 3,749.6 $ 3,490.5 $ 11,122.7 $ 10,526.4 $ 15,180.9 $ 14,471.0 Operating Expenses, excluding Depreciation and 3,241.9 3,040.1 9,540.6 9,039.
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Nine Months Ended September 30 2014 2013 Net Free Cash Flow $ (422.5) $ 15.7 Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital (1,091.9) (654.2) Repayment of Convertible Debt (252.7) (406.7) Proceeds from Short-term & Long-term Debt, n
Slide 34: Supplemental Information
Supplemental Information Third Quarter Year to Date 2014 2013 2014 2013 %∆ %∆ Reported Reported Reported Reported Operating expenses: Salary and service costs $ 2,813.2 $ 2,585.2 8.8% $ 8,230.7 $ 7,733.3 6.4% Office and general expenses: Amortization of Intangibles 26.9 25.8 77.1 76.3 Depreciation 4
Slide 35: Third Quarter Acquisitions
Third Quarter Acquisitions The Planning Shop international (“TPSi”) is a research based brand consultancy focused on the healthcare industry. For over 25 years, TPSi has been known for giving its clients’ brands an edge over competitors by providing tangible customer and consumer orientated solution
Slide 36: Third Quarter Acquisitions
Third Quarter Acquisitions Established in 1982, ÇÖZÜM is a full service advertising agency, providing traditional advertising offerings along with various below-the-line capabilities including Shopper, Retailer and Promotional Marketing services to its roster of local and international client brands
Slide 37: Disclosure
Disclosure The preceding materials have been prepared for use in the October 21, 2014 conference call on Omnicom’s results of operations for the period ended September 30, 2014. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts. Forward-Looking Statements Cer