Omnicom Group Inc. · NYSE:OMC
Omnicom — Q4 2019 Earnings Presentation
31 slides from Omnicom's earnings presentation, Feb 11, 2020
Slide 1: Fourth Quarter 2019 Results
Fourth Quarter 2019 Results February 11, 2020 Investor Presentation
Slide 2: 2019 vs. 2018 P&L Summary
2019 vs. 2018 P&L Summary Fourth Quarter Fourth Quarter 2019 2018 Revenue $ 4,141.2 $ 4,086.7 Operating Expenses (a) 3,494.8 3,459.5 Operating Profit 646.4 627.2 Net Interest Expense 38.6 53.1 Income Tax Expense 158.8 149.7 Tax Rate % 26.1% 26.1% Income From Equity Method Investments 0.8 5.3 Net Inc
Slide 3: 2019 vs. 2018 Earnings per Share – Diluted
2019 vs. 2018 Earnings per Share – Diluted Fourth Quarter Fourth Quarter 2019 2018 Net Income - Omnicom Group Inc. $ 415.0 $ 399.2 Diluted Shares (millions) 219.3 225.6 Earnings per Share - Diluted $ 1.89 $ 1.77 Dividends Declared Per Common Share $ 0.65 $ 0.60 February 11, 2020 2
Slide 4: 2019 vs. 2018 P&L Summary (Full Year)
2019 vs. 2018 P&L Summary Full Year Full Year 2019 2018 (b) (c) Revenue $ 14,953.7 $ 15,290.2 Operating Expenses (a) 12,831.4 13,156.7 Operating Profit 2,122.3 2,133.5 Net Interest Expense 184.0 209.2 Income Tax Expense 504.4 492.7 Tax Rate % 26.0% 25.6% Income From Equity Method Investments 2.0 8.9
Slide 5: 2019 vs. 2018 Earnings per Share – Diluted (Full Year)
2019 vs. 2018 Earnings per Share – Diluted Full Year Full Year 2019 2018 (a) Net Income - Omnicom Group Inc. $ 1,339.1 $ 1,326.4 Diluted Shares (millions) 220.9 227.6 Earnings per Share - Diluted $ 6.06 $ 5.83 Dividends Declared Per Common Share $ 2.60 $ 2.40 (a) During the third quarter of 2018, we
Slide 6: 2019 vs. 2018 Non-GAAP Financial Measures - Adjusted
2019 vs. 2018 Non-GAAP Financial Measures - Adjusted for the Impact of Third Quarter 2018 Dispositions, Repositioning Actions and the 2017 Tax Act Full Year 2018 Non-GAAP 2019 2018 (a) (b) Adjusted (a) (b) Operating Profit $ 2,122.3 $ 2,133.5 $ 2,104.5 Net Interest Expense 184.0 209.2 209.2 Income T
Slide 7: 2019 vs. 2018 Non-GAAP Financial Measures - Adjusted
2019 vs. 2018 Non-GAAP Financial Measures - Adjusted for the Impact of Third Quarter 2018 Dispositions, Repositioning Actions and the 2017 Tax Act Full Year 2018 Non-GAAP 2019 2018 (a) Adjusted (a) Net Income - Omnicom Group Inc. $ 1,339.1 $ 1,326.4 $ 1,308.2 Diluted Shares (millions) 220.9 227.6 22
Slide 8: 2019 Total Revenue Change
2019 Total Revenue Change Fourth Quarter Full Year $ %∆ $ %∆ Prior Period Revenue $ 4,086.7 $ 15,290.2 Foreign exchange rate impact (a) (37.0) -0.9% (315.9) -2.1% Acquisition revenue, net of disposition (50.6) -1.2% (445.1) -2.9% revenue (b) Organic growth (c) 142.1 3.5% 424.5 2.8% Current Period Re
Slide 9: 2019 Revenue by Discipline
2019 Revenue by Discipline Healthcare Healthcare Fourth Quarter 7.7% Full Year 7.7% CRM CRM PR PR Execution Execution 8.6% 9.2% & Support & Support 8.5% 9.1% CRM CRM Consumer Consumer Experience Experience 17.0% Advertising Advertising 17.5% 58.2% 56.5% % Organic % Organic $ Mix % Growth Growth (a)
Slide 10: 2019 Revenue by Region
2019 Revenue by Region Fourth Quarter Full Year Latin Middle East Latin Middle East America & Africa America & Africa 2.9% 2.8% 2.7% 2.1% Asia Asia Pacific Pacific 11.0% 11.0% Euro Euro Markets & Markets & Other Other Europe Europe 19.1% United 17.9% United States States 51.9% 53.7% UK UK 9.3% 9.6%
Slide 11: 2019 Revenue by Region
2019 Revenue by Region Fourth Quarter Full Year % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) United States $ 2,150.1 0.7% 2.8% United States $ 8,033.0 0.4% 2.7% Other North Other North 445.8 0.7% 4.2% 124.6 -3.2% -2.3% America America UK 386.4 2.4% 3.3% UK 1,432.3 -1.6% 3.
Slide 12: Revenue by Industry
Revenue by Industry Full Year – 2019 Full Year – 2018 T&E Auto T&E Auto 6% 10% 6% 10% Telcom Telcom 5% 5% Consumer Consumer Products Tech Products 9% 7% 9% Tech 8% Financial Retail Financial Services 5% Services Retail 8% 8% 6% Pharma & Food & Health Food & Pharma & Beverage 14% Beverage Health 13%
Slide 13: Cash Flow Performance
Cash Flow Performance Full Year 2019 2018 Net Income $ 1,435.9 $ 1,440.5 Depreciation and Amortization of Intangible Assets 231.5 264.0 Share-Based Compensation 72.5 70.5 Net gain from dispositions of subsidiaries — (178.4) Impact of 2017 Tax Act — 28.9 Other Items to Reconcile to Net Cash Provided
Slide 14: Cash Flow Performance
Cash Flow Performance Full Year 2019 2018 Free Cash Flow (a) $ 1,730.9 $ 1,641.8 Primary Uses of Cash: Dividends paid to Common Shareholders 564.3 548.5 Dividends paid to Noncontrolling Interest Shareholders 97.3 134.9 Capital Expenditures 102.2 195.7 Acquisition of Businesses and Affiliates, Acquis
Slide 15: Current Credit Picture
Current Credit Picture Full Year 2019 2018 EBITDA (a) $ 2,353.8 $ 2,397.5 Gross Interest Expense on Indebtedness 227.2 241.9 EBITDA / Gross Interest Expense on Indebtedness 10.4 x 9.9 x Total Debt / EBITDA 2.2 x 2.0 x Net Debt (b) / EBITDA 0.4 x 0.5 x Debt Bank Loans (Due Less Than 1 Year) $ 10.1 $
Slide 16: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a): Twelve months ended December 31, 2019 29.5% Twelve months ended December 31, 2018 29.6% Return on Equity (b): Twelve months ended December 31, 2019 49.6% Twelve months ended December 31, 2018 51.4% (a) Return on Invested Capital is After Tax
Slide 17: Supplemental Financial Information
Supplemental Financial Information February 11, 2020 16
Slide 18: Omnicom Debt Structure
Omnicom Debt Structure Short-term Debt $10 2031 Euro Senior Notes $561 2026 Senior 2027 Euro Notes Senior Notes $1,400 $561 2020 Senior Notes $600 2024 Senior Notes $750 2022 Senior Notes $1,250 The above chart sets forth Omnicom’s debt outstanding at December 31, 2019. The amounts reflected above f
Slide 19: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 2026 Senior 2022 Notes $1,400 Senior Notes $1,200 $1,000 2024 2020 Senior Notes 2027 2031 $800 Senior Euro Euro Notes Senior Senior $600 Notes Notes $400 $200 Other Borrowings $0 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 1 -1 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2
Slide 20: 2019 Acquisition Related Expenditures
2019 Acquisition Related Expenditures Full Year Acquisition of Businesses and Affiliates (a) $ 10.0 Acquisition of Additional Noncontrolling Interests (b) 51.4 Contingent Purchase Price Payments (c) 64.6 Total Acquisition Expenditures (d) $ 126.0 (a) Includes acquisitions of a majority interest in a
Slide 21: Condensed Cash Flow
Condensed Cash Flow Full Year 2019 2018 Net Income $ 1,435.9 $ 1,440.5 Share-Based Compensation 72.5 70.5 Depreciation and Amortization of Intangible Assets 231.5 264.0 Other Items to Reconcile to Net Cash Provided by Operating Activities, net (9.0) 16.3 Net gain from dispositions of subsidiaries —
Slide 22: Supplemental Information
Supplemental Information Fourth Quarter Full Year % of % of % of % of 2019 Rev 2018 Rev 2019 Rev 2018 Rev Revenue $ 4,141.2 $ 4,086.7 $14,953.7 $15,290.2 Operating expenses: Salary and service costs 3,034.7 73.3% 2,986.3 73.1% 10,972.2 73.4% 11,306.1 73.9% Occupancy and other costs 306.4 7.4% 292.9
Slide 23: 2018 Operating Expenses – Impact of Net Gain on Dispositions and Repositioning Actions
2018 Operating Expenses – Impact of Net Gain on Dispositions and Repositioning Actions Full Year 2018 - Increase / (Decrease) Repositioning Net Gain on Total Actions Dispositions Operating expenses: Salary and service costs $ 73.7 $ — $ 73.7 Occupancy and other costs 73.5 — 73.5 Net gain on disposit
Slide 24: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2010 through December 31, 2019, Omnicom distributed 108% of Net Income to shareholders through Dividends and Share Repurchases. 108% $12.0 110% $10.9 115% $10.0 $9.5 4.3 117% $8.2 3.7 $8.0 122% $ In Billions $7.1 124% $6.
Slide 25: 2019 vs. 2018 Non-GAAP Financial Measures – EBITA
2019 vs. 2018 Non-GAAP Financial Measures – EBITA Fourth Quarter Full Year 2019 2018 2019 2018 Revenue $ 4,141.2 $ 4,086.7 $ 14,953.7 $ 15,290.2 Operating expenses (a) 3,494.8 3,459.5 12,831.4 13,156.7 Operating Profit 646.4 627.2 2,122.3 2,133.5 Operating Profit Margin % 15.6 % 15.3 % 14.2 % 14.0 %
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 2019 2018 2019 2018 Net Income - Omnicom Group Inc. $ 415.0 $ 399.2 $ 1,339.1 $ 1,326.4 Net Income Attributed to Noncontrolling Interests 34.8 30.5 96.8 114.1 Net Income 449.8 429.7 1,435.9 1,44
Slide 27: 2018 Non-GAAP Financial Measures - Adjusted for Third Quarter Dispositions
2018 Non-GAAP Financial Measures - Adjusted for the Net Gain on Third Quarter Dispositions, Repositioning Actions and Tax Reform Act Adjustments Full Year Non-GAAP 2018 Non-GAAP 2018 Adjustments Adjusted Operating Profit (a) $ 2,133.5 $ 29.0 $ 2,104.5 Net Interest Expense 209.2 — 209.2 Income Tax Ex
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Full Year 2019 2018 Net Cash Provided by Operating Activities $ 1,856.0 $ 1,722.3 Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital 125.1 80.5 Free Cash Flow $ 1,730.9 $ 1,641.8 Full Year 2019 2018 Net Increase (Decrea
Slide 29: Reconciliation of 2018 Non-GAAP Financial Measures - Operating Profit
Reconciliation of 2018 Non-GAAP Financial Measures - Operating Profit Full Year 2019 2018 Net Income - Omnicom Group Inc. $ 1,339.1 $ 1,326.4 Net Income Attributed to Noncontrolling Interests 96.8 114.1 Net Income 1,435.9 1,440.5 Income from Equity Method Investments 2.0 8.9 Income Tax Expense 504.4
Slide 30: Reconciliation of 2018 Non-GAAP Financial Measures - Net Income
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: Disclosure
Disclosure The preceding materials have been prepared for use in the February 11, 2020 conference call on Omnicom’s results of operations for the three and twelve months ended December 31, 2019. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-eve