Omnicom Group Inc. · NYSE:OMC
Omnicom — Q2 2018 Earnings Presentation
27 slides from Omnicom's earnings presentation, Jul 17, 2018
Slide 1: Second Quarter 2018 Results
Second Quarter 2018 Results July 17, 2018 Investor Presentation
Slide 2: 2018 vs. 2017 P&L Summary
2018 vs. 2017 P&L Summary Second Quarter Second Quarter 2018 (a) 2017 Revenue $ 3,859.6 $ 3,790.1 Operating Expenses (b) 3,277.3 3,218.6 Operating Profit 582.3 571.5 Net Interest Expense 52.5 51.3 Income Tax Expense 136.7 166.7 Tax Rate % 25.8% 32.0% Income from Equity Method Investments 1.7 1.6 Net
Slide 3: 2018 vs. 2017 Earnings per Share – Diluted
2018 vs. 2017 Earnings per Share – Diluted Second Quarter Second Quarter 2018 (a) 2017 Net Income - Omnicom Group Inc. $ 364.2 $ 328.6 Net Income allocated to participating securities (0.1) (0.5) Net Income available for common shares $ 364.1 $ 328.1 Diluted Shares (millions) 228.1 234.0 Earnings pe
Slide 4: 2018 vs. 2017 P&L Summary (Six Months)
2018 vs. 2017 P&L Summary Year to Date Year to Date 2018 (a) 2017 Revenue $ 7,489.2 $ 7,377.6 Operating Expenses (b) 6,485.3 6,390.4 Operating Profit 1,003.9 987.2 Net Interest Expense 99.3 96.6 Income Tax Expense 227.7 274.7 Tax Rate % 25.2% 30.8% Income from Equity Method Investments 2.6 1.6 Net I
Slide 5: 2018 vs. 2017 Earnings per Share – Diluted (Six Months)
2018 vs. 2017 Earnings per Share – Diluted Year to Date Year to Date 2018 (a) 2017 Net Income - Omnicom Group Inc. $ 628.3 $ 570.4 Net Income allocated to participating securities (0.1) (1.0) Net Income available for common shares (a) $ 628.2 $ 569.4 Diluted Shares (millions) 229.8 235.2 Earnings pe
Slide 6: 2018 Total Revenue Change
2018 Total Revenue Change Second Quarter Year to Date $ %∆ $ %∆ Prior Period Revenue, as reported under ASC 605 $ 3,790.1 $ 7,377.6 Foreign exchange rate impact (a) 78.8 2.1% 229.9 3.1% Acquisition revenue, net of disposition revenue (b) (37.6) -1.0% (191.1) -2.6% Organic growth (c) 77.3 2.0% 164.2
Slide 7: Revenue by Discipline
2018 Revenue by Discipline Second Quarter Year to Date Healthcare Healthcare 7.0% 6.8% PR PR 9.4% 9.5% CRM CRM Execution Execution & Support & Support Advertising Advertising 12.9% 13.4% 53.6% 53.0% CRM CRM Consumer Consumer Experience Experience 17.1% 17.3% % Organic % Organic $ Mix % Growth Growth
Slide 8: Revenue by Region
2018 Revenue by Region Second Quarter Year to Date Middle Middle Latin Latin East & East & America America Africa Africa 3.0% 3.0% 1.8% 1.9% Asia Asia Pacific Pacific 11.3% 11.0% Euro Euro Markets & Markets & Other Other Europe Europe North North 20.2% 19.9% America America 54.3% 54.6% UK UK 9.4% 9.
Slide 9: Revenue by Region
2018 Revenue by Region Second Quarter Year to Date % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) North America $ 2,097.4 -3.6% -0.9% North America $ 4,083.1 -5.4% -0.5% UK 363.5 3.7% -2.2% UK 721.5 9.4% 0.3% Euro & Other Europe 779.1 17.7% 11.2% Euro & Other Europe 1,491.2
Slide 10: Revenue by Industry
Revenue by Industry Year to Date – 2018 Year to Date – 2017 T&E Auto T&E Auto 7% 10% 6% 9% Telcom Telcom 5% 5% Consumer Consumer Products Products 9% Tech 10% Tech 9% 9% Financial Financial Services Services 8% Retail 7% Retail 6% 6% Food & Food & Pharma & Beverage Pharma & Beverage Health 13% Healt
Slide 11: Cash Flow Performance
Cash Flow Performance Six Months Ended June 30 2018 2017 Net Income $ 679.5 $ 617.5 Depreciation and Amortization of Intangible Assets 136.8 143.8 Share-Based Compensation 35.1 40.0 Other Items to Reconcile to Net Cash Used in Operating 7.5 (3.8) Activities, net Free Cash Flow (a) $ 858.9 $ 797.5 Ad
Slide 12: Cash Flow Performance
Cash Flow Performance Six Months Ended June 30 2018 2017 Free Cash Flow (a) $ 858.9 $ 797.5 Primary Uses of Cash: Dividends paid to Common Shareholders 278.1 260.7 Dividends paid to Noncontrolling Interest Shareholders 57.3 67.3 Capital Expenditures 89.8 67.9 Acquisition of Businesses and Affiliates
Slide 13: Current Credit Picture
Current Credit Picture Twelve months ended June 30 2018 2017 EBITDA (a) $ 2,375.6 $ 2,342.7 Gross Interest Expense on Indebtedness 230.6 215.4 EBITDA / Gross Interest Expense on Indebtedness 10.3 x 10.9 x Total Debt / EBITDA 2.1 x 2.1 x Net Debt (b) / EBITDA 1.2 x 1.3 x Debt Bank Loans (Due Less Tha
Slide 14: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a): Twelve months ended June 30, 2018 20.2% Twelve months ended June 30, 2017 20.1% Return on Equity (b): Twelve months ended June 30, 2018 50.1% Twelve months ended June 30, 2017 51.8% (a) Return on Invested Capital is After Tax Reported Operati
Slide 15: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2008 through June 30, 2018, Omnicom distributed 106% of Net Income to shareholders through Dividends and Share Repurchases. 106% $12.0 105% $10.6 106% $10.0 $10.0 108% $8.9 3.9 3.6 108% $7.8 $8.0 3.1 $ In Billions 102% $6
Slide 16: Supplemental Financial Information
Supplemental Financial Information July 17, 2018 15
Slide 17: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $21 2019 Senior Notes $500 2026 Senior Notes $1,400 2020 Senior Notes $1,000 2024 Senior Notes 2022 Senior $750 Notes $1,250 The above chart sets forth Omnicom’s debt outstanding at June 30, 2018. The amounts reflected above for the 2019, 2020, 2022, 2024 and 2026 S
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 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 -1 -1 -1 -1 -1 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 ec n ec n ec n ec n ec n
Slide 19: Acquisition Related Expenditures
2018 Acquisition Related Expenditures Year to Date Acquisition of Businesses and Affiliates (a) $ 207.3 Acquisition of Additional Noncontrolling Interests (b) 40.3 Contingent Purchase Price Payments (c) 51.3 Total Acquisition Expenditures (d) $ 298.9 (a) Includes acquisitions of a majority interest
Slide 20: Condensed Cash Flow
Condensed Cash Flow Six Months Ended June 30 2018 2017 Net Income $ 679.5 $ 617.5 Share-Based Compensation 35.1 40.0 Depreciation and Amortization of Intangible Assets 136.8 143.8 Other Items to Reconcile to Net Cash Used in Operating Activities, net 7.5 (3.8) Changes in Operating Capital (1,431.8)
Slide 21: 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 Second Quarter Without the Reported under Adjustments Adoption of ASC ASC 606 606 Revenue $ 3,859.6 $ 49.0 $ 3,908.6 Operating Expenses 3,277.3 41.5 3,318.8 Operating Profit $ 582.3 $ 7.5 $ 589.8 Year to Date Without the Reported u
Slide 22: 2018 vs. 2017 Non-GAAP Financial Measures – EBITA
2018 vs. 2017 Non-GAAP Financial Measures – EBITA Second Quarter Year to Date 2018 (a) 2017 2018 (a) 2017 Revenue $ 3,859.6 $ 3,790.1 $ 7,489.2 $ 7,377.6 Operating expenses (b) 3,277.3 3,218.6 6,485.3 6,390.4 Operating Profit 582.3 571.5 1,003.9 987.2 Operating Profit Margin % 15.1% 15.1% 13.4% 13.4
Slide 23: Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA
Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA Three Months Ended Six Months Ended Twelve months ended June 30 June 30 June 30 2018 (a) 2017 2018 (a) 2017 2018 (a) 2017 Net Income - Omnicom Group Inc. $ 364.2 $ 328.6 $ 628.3 $ 570.4 $ 1,146.3 $ 1,174.6 Net Income Attributed to Nonc
Slide 24: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Six Months Ended June 30 2018 2017 Net Cash Used in Operating Activities $ (572.9) $ (331.0) Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital (1,431.8) (1,128.5) Free Cash Flow $ 858.9 $ 797.5 Six Months Ended June 30
Slide 25: Supplemental Information
Supplemental Information Second Quarter Year to Date % of % of % of % of 2018 Rev 2017 Rev 2018 Rev 2017 Rev Revenue $ 3,859.6 $ 3,790.1 $ 7,489.2 $ 7,377.6 Operating expenses: Salary and service costs 2,772.9 71.8 % 2,731.7 72.1 % 5,485.7 73.2 % 5,420.2 73.5 % Occupancy and other costs 319.6 8.3 %
Slide 26: Second Quarter Acquisition
Second Quarter Acquisition Omnicom Health Group has acquired the pharmaceutical communications business of Elsevier in Japan. Going forward, the agency will operate under the name EMC K.K. Established in 1980, EMC specializes in creating quality medical content for promotional materials and educatio
Slide 27: Disclosure
Disclosure The preceding materials have been prepared for use in the July 17, 2018 conference call on Omnicom’s results of operations for the three and six months ended June 30, 2018. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-events-and-fil