Omnicom Group Inc. · NYSE:OMC
Omnicom — Q2 2014 Earnings Presentation
30 slides from Omnicom's earnings presentation, Jul 22, 2014
Slide 1: Second Quarter 2014 Results
Second Quarter 2014 Results July 22, 2014 Investor Presentation
Slide 2: 2014 vs. 2013 P&L Summary – Second Quarter
2014 vs. 2013 P&L Summary – Second Quarter Second Quarter 2014 Reported 2013 Reported Revenue $ 3,870.9 $ 3,637.0 EBITA (a) (b) 574.2 548.3 Margin % 14.8% 15.1% Amortization of Intangibles 25.8 25.3 Operating Income (b) $ 548.4 $ 523.0 Margin % 14.2% 14.4% (a) EBITA is a non-GAAP financial measure.
Slide 3: 2014 vs. 2013 P&L Summary – Second Quarter (Operating Income to Net Income)
2014 vs. 2013 P&L Summary – Second Quarter Second Quarter 2014 Reported 2013 Reported Operating Income $ 548.4 $ 523.0 Net Interest Expense 33.7 40.7 Income Taxes (a) 160.3 163.6 Tax Rate % (a) 31.1% 33.9% Income from Equity Method Investments 4.0 2.9 Noncontrolling Interests 33.2 32.1 Net Income -
Slide 4: 2014 vs. 2013 Earnings Per Share – Second Quarter
2014 vs. 2013 Earnings Per Share – Second Quarter Second Quarter 2014 Reported 2013 Reported Net Income - Omnicom Group $ 325.2 $ 289.5 Net Income allocated to Participating Securities (6.3) (7.8) Net Income available for common shares $ 318.9 $ 281.7 Diluted Shares (millions) 258.2 259.2 EPS - Dilu
Slide 5: 2014 vs. 2013 P&L Summary – Year to Date
2014 vs. 2013 P&L Summary – Year to Date Year to Date 2014 Reported 2013 Reported Revenue $ 7,373.0 $ 7,035.9 EBITA (a) (b) 981.3 945.4 Margin % 13.3% 13.4% Amortization of Intangibles 50.2 50.6 Operating Income (b) $ 931.1 $ 894.8 Margin % 12.6% 12.7% (a) EBITA is a non-GAAP financial measure. See
Slide 6: 2014 vs. 2013 P&L Summary – Year to Date (Operating Income to Net Income)
2014 vs. 2013 P&L Summary – Year to Date Year to Date 2014 Reported 2013 Reported Operating Income $ 931.1 $ 894.8 Net Interest Expense 72.7 81.7 Income Taxes (a) 276.5 272.7 Tax Rate % (a) 32.2% 33.5% Income from Equity Method Investments 4.6 6.1 Noncontrolling Interests 55.8 51.8 Net Income - Omni
Slide 7: 2014 vs. 2013 Earnings Per Share – Year to Date
2014 vs. 2013 Earnings Per Share – Year to Date Year to Date 2014 Reported 2013 Reported Net Income - Omnicom Group $ 530.7 $ 494.7 Net Income allocated to Participating Securities (10.4) (13.4) Net Income available for common shares $ 520.3 $ 481.3 Diluted Shares (millions) 259.8 260.7 EPS - Dilute
Slide 8: Total Revenue Change – Second Quarter
2014 Total Revenue Change – Second Quarter 6.4% $213 $(5) $3,871 $26 $3,637 (0.1%) 5.8% 0.7% 2Q 13 FX Impact (a) Net Organic(c) 2Q 14 Acquisitions (b) Revenue (a) To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from the equiva
Slide 9: Total Revenue Change – Year to Date
2014 Total Revenue Change – Year to Date 4.8% $360 $7,373 $4 $(27) $7,036 0.1% (0.4%) 5.1% YTD 2Q 13 FX Impact (a) Net Organic(c) YTD 2Q 14 Acquisitions (b) Revenue (a) To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from the
Slide 10: Revenue by Discipline
2014 Revenue by Discipline Second Quarter Year to Date Specialty Specialty 7.0% 7.1% PR PR 9.2% 9.3% Advertising Advertising 49.3% 50.2% CRM CRM 33.6% 34.3% % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) Advertising $ 1,944.6 10.9% 10.5% Advertising $ 3,638.1 7.0% 7.8% CRM 1
Slide 11: Revenue by Region
2014 Revenue by Region Second Quarter Year to Date Latin Africa Latin Africa America MidEast America MidEast 2.9% 1.6% 2.8% 1.6% Asia Asia Pacific Pacific 10.3% 10.4% North North Europe America Europe 28.6% America 28.6% 56.5% 56.7% July 22, 2014 10
Slide 12: Revenue by Region (Growth Detail)
2014 Revenue by Region Second Quarter Year to Date % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) North America $ 2,184.9 6.6% 7.9% North America $ 4,177.9 4.7% 6.4% Europe 1,108.7 8.3% 2.1% Europe 2,112.3 7.2% 2.2% Asia Pacific 401.5 3.0% 5.1% Asia Pacific 760.5 1.4% 5.4% L
Slide 13: Revenue by Industry
Revenue by Industry Second Quarter – 2014 Second Quarter – 2013 Growth T&E Auto T&E Auto Auto 4.8% 6% 8% 6% 8% Telcom Telcom 5% 6% Food & Beverage 1.6% Tech Consumer Consumer 8% Products Tech Products Consumer Products 2.8% 10% 9% 10% Financial Financial Financial Services 0.5% Retail Services Servi
Slide 14: Cash Flow Performance
Cash Flow Performance Six Months Ended June 30 2014 2013 Net Income $ 586.5 $ 546.5 Depreciation and Amortization Expense 143.3 141.9 Share-Based Compensation Expense 43.9 44.7 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating (14.3) (30.9) Activities, net Free Cash Flow (a) $ 759.
Slide 15: Cash Flow Performance – Uses of Cash
Cash Flow Performance Six Months Ended June 30 2014 2013 Free Cash Flow (a) $ 759.4 $ 702.2 Primary Uses of Cash: Dividends (b) 211.8 106.7 Dividends paid to Noncontrolling Interest Shareholders 66.5 59.9 Capital Expenditures 91.5 69.0 Acquisitions and Payments for Additional Interest in Controlled
Slide 16: Current Credit Picture
Current Credit Picture Twelve Months Ended June 30 2014 Reported 2013 Reported EBITDA (a) $ 2,147.9 $ 2,116.0 Gross Interest Expense 192.1 195.4 EBITDA / Gross Interest Expense 11.2 x 10.8 x Total Debt / EBITDA 1.9 x 1.9 x Net Debt (b) / EBITDA 1.2 x 1.2 x Debt Bank Loans (Due Less Than 1 Year) $ 25
Slide 17: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve Months Ended June 30, 2014 16.9% Twelve Months Ended June 30, 2013 17.5% Return on Equity (b) : Twelve Months Ended June 30, 2014 31.5% Twelve Months Ended June 30, 2013 31.8% (a) Return on Invested Capital is After Tax Reported Opera
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 Q2 2014, Omnicom distributed over 100% of Net Income to shareholders through Dividends and Share Repurchases. 107% 104% $10.0 $9.4 107% $8.9 103% $7.9 Billions $8.0 103% $6.9 92% $5.9 105% 7.6 $6.0 $5.1 In 7.
Slide 19: Supplemental Financial Information
Supplemental Financial Information July 22, 2014 18
Slide 20: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $25 2032 Convert $253 2016 Senior Notes $1,000 2022 Senior Notes $1,250 2019 Senior Notes $500 2020 Senior Notes $1,000 On June 5, 2014, we called our 2032 Convertible Notes for redemption on July 31, 2014 at a redemption price of 100% of the principal amount. As pr
Slide 21: 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 2032 Converts $250 Other Borrowings $0 On June 5, 2014, we called our 2032 Convertible Notes for redemption on July 31, 2014 at a redemption price of 100% of the principal am
Slide 22: Historical Return Trends
Historical Return Trends Return on Equity Average through June 30, 2014 - 25.2% Return on Invested Capital Average through June 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 2011 2012 2
Slide 23: Acquisition Related Expenditures
2014 Acquisition Related Expenditures Year to Date Acquisitions of Businesses and Affiliates (a) $ 50.2 Additional Interest in Controlled Subsidiaries (b) 21.0 Earn-outs on acquisitions completed after January 1, 2009 (c) 43.7 Total Acquisition Expenditures (d) $ 114.9 (a) Includes acquisitions of a
Slide 24: Condensed Cash Flow
Condensed Cash Flow Six Months Ended June 30 2014 2013 Net Income $ 586.5 $ 546.5 Share-Based Compensation Expense 43.9 44.7 Depreciation and Amortization 143.3 141.9 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating Activities, net (14.3) (30.9) Changes in Operating Capital (946.9
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3 Months Ended June 30 12 Months Ended June 30 2014 Reported 2013 Reported 2014 Reported 2013 Reported Revenue $ 3,870.9 $ 3,637.0 $ 14,921.7 $ 14,387.1 Operating Expenses, excluding Depreciation and Amortization 3,250.1 3,043.2 12,773.8 12,271.1 EBITDA 620.8 593.
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Six Months Ended June 30 2014 2013 Net Free Cash Flow $ (269.6) $ (71.2) Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital (946.9) (635.7) Repayment of Convertible Debt - (406.7) Proceeds from Short-term & Long-term Debt, net 18.3 6.9
Slide 27: Supplemental Information
Supplemental Information Second Quarter Year to Date 2014 2013 2014 2013 % % Reported Reported Reported Reported Operating expenses: Salary and service costs $ 2,794.6 $ 2,607.1 7.2% $ 5,417.4 $ 5,148.1 5.2% Office and general expenses: Amortization of Intangibles 25.8 25.3 50.2 50.6 Depreciation 46
Slide 28: Second Quarter Acquisitions – Heimat
Second Quarter Acquisitions Established in 1999, Heimat is a leading full service advertising agency, combining traditional advertising with strong interactive capabilities. The agency’s main focus are German and Central and Eastern European based large blue chip clients to whom the company provides
Slide 29: Second Quarter Acquisitions – Haygarth
Second Quarter Acquisitions Haygarth is a brand strategy and retail agency, specializing in digital retail, shopper and fast moving consumer goods marketing. The agency’s core services include trade and consumer promotions and events, CRM and data analysis, social media/public relations, and design
Slide 30: Disclosure
Disclosure The preceding materials have been prepared for use in the July 22, 2014 conference call on Omnicom’s results of operations for the period ended June 30, 2014. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts. Forward-Looking Statements This presen