Omnicom Group Inc. · NYSE:OMC
Omnicom — Q3 2020 Earnings Presentation
28 slides from Omnicom's earnings presentation, Oct 27, 2020
Slide 1: Third Quarter 2020 Results
Third Quarter 2020 Results October 27, 2020 Investor Presentation
Slide 2: 2020 vs. 2019 P&L Summary Third Quarter
2020 vs. 2019 P&L Summary Third Quarter 1 October 27, 2020 Third Quarter 2020 (a) 2019 Revenue $ 3,206.5 $ 3,623.8 Operating Expenses (b) 2,705.1 3,150.5 Operating Profit 501.4 473.3 Net Interest Expense 48.5 49.3 Income Tax Expense 120.9 112.3 Tax Rate % 26.7 % 26.5 % Income From Equity Method Inve
Slide 3: 2020 vs. 2019 P&L Summary Year to Date
2020 vs. 2019 P&L Summary Year to Date Year to Date 2020 (a) (b) 2019 Revenue $ 9,414.1 $ 10,812.5 Operating Expenses (c) 8,430.0 9,336.6 Operating Profit 984.1 1,475.9 Net Interest Expense 141.5 145.5 Income Tax Expense 240.2 345.5 Tax Rate % 28.5 % 26.0 % Income (Loss) From Equity Method Investmen
Slide 4: Operating Expense Detail
Operating Expense Detail 3 October 27, 2020 Third Quarter Year to Date Revenue Operating expenses: Salary and service costs: Salary and related service costs (a) Third - party service costs (b) Occupancy and other costs Repositioning costs and net loss on dispositions (c) Cost of services Selling, g
Slide 5: 2020 Total Revenue Change
2020 Total Revenue Change Third Quarter Year to Date $ % ∆ $ % ∆ Prior Period Revenue $ 3,623.8 $ 10,812.5 Foreign exchange rate impact (a) 18 .3 0.5% ( 93 . 3 ) - 0 .9% Acquisition revenue, net of disposition revenue (b) ( 11 . 3 ) - 0.3% ( 37 . 9 ) - 0 .4% Organic growth (c) ( 424 . 3 ) - 11.7% (
Slide 6: 2020 Revenue by Discipline
Ad vertising 55.9% CRM Consumer Experience 16.1% CRM Execution & Support 8 . 6 % PR 10.1% Healthcare 9.3% 2020 Revenue by Discipline Ad vertising 55.1% CRM Consumer Experience 16.8% CRM Execution & Support 8 . 7 % PR 10.1% Healthcare 9.3% Third Quarter Year to Date 516 .2 - 18 .0% - 19 .3% CRM Consu
Slide 7: 2020 Revenue by Region
UK 9.9% Euro Markets & Other Europe 17.0% Asia Pacific 11.1% Latin America 2.0% Middle East & Africa 1.4% United States 55.7% Other North America 2.9% Third Quarter UK 10.0% 6 October 27, 2020 Euro Markets & Other Europe 17.3% Asia Pacific 11.5% Latin America 1.9% Middle East & Africa 1.4% United St
Slide 8: 2020 Revenue by Region
2020 Revenue by Region Third Quarter Year to Date $ Mix % Growth % Organic Growth (a) $ Mix % Growth % Organic Growth (a) United States $ 1 , 762 .9 - 11 .6% - 11 .4% United States $ 5 , 244 .7 - 10 .8% - 10 .3% Other North America 91 .8 - 10 .9% - 7 .6% Other North America 271 .3 - 15 .5% - 12 .7%
Slide 9: Revenue by Industry Year to Date
Ot her 7% Se rvices 2% Oil, Gas & Utilities 1% Government 3% Not - for - Profit 1% Education 1% Pharma & Health 16% Re tail 7% Tech 9% Te lcom 6% T&E 7% Au to 10% Co nsumer Products 8% Fi nancial Services 8% Food & Be verage 14% Revenue by Industry Year to Date – 2020 Ot her 8% 8 October 27, 2020 Se
Slide 10: Revenue by Industry Third Quarter 2020
Ot her 7% 9 October 27, 2020 Se rvices 2% Oil, Gas & Utilities 1% Not - for - Profit 1% Government 3% Education 1% Pharma & Health 17% Re tail 7% Tech 10% Te lcom 6% T&E 5% Au to 10% Co nsumer Products 8% Fi nancial Services 8% Food & Be verage 14% Revenue by Industry Third Quarter – 2020 % Mix % Ch
Slide 11: Revenue by Industry Year to Date 2020
Revenue by Industry Year to Date – 2020 Ot her 7% 10 October 27, 2020 Se rvices 2% Oil, Gas & Utilities 1% Not - for - Profit 1% Government 3% Education 1% Pharma & Health 16% Re tail 7% Tech 9% Te lcom 6% T&E 7% Au to 10% Co nsumer Products 8% Fi nancial Services 8% Food & Be verage 14% % Mix % Cha
Slide 12: Cash Flow Performance Nine Months Ended September 2020
Cash Flow Performance Nine Months Ended September 30 2020 2019 Activities, net Net Income $ 592 .3 $ 986 .1 Depreciation and Amortization of Intangible Assets 168 .8 175 .3 Share - Based Compensation 52 .5 53 .6 Repositioning Costs and Net Loss on Dispositions 277 .9 — Other Items to Reconcile to Ne
Slide 13: Cash Flow Performance: Uses of Cash
Cash Flow Performance Nine Months Ended September 30 202 0 2019 Free Cash Flow (a) $ 1 , 135 .3 $ 1 , 208 .1 Primary Uses of Cash: Dividends paid to Common Shareholders 422 .7 422 .5 Dividends paid to Noncontrolling Interest Shareholders 57 .7 71 .6 Capital Expenditures 50 .0 77 .0 Acquisition of Bu
Slide 14: Current Credit Picture
Current Credit Picture 13 October 27, 2020 Twelve Months Ended September 30 2020 2019 EBITDA (a) $ 1,855.5 $ 2 , 339 .7 Total Debt / EBITDA 3 .1 x 2 .2 x Net Debt (b) / EBITDA 1 .4 x 1 .1 x Debt Bank Loans (Due Less Than 1 Year) $ 23.6 $ 7 .9 CP & Borrowings Issued Under Revolver — — USD - denominat
Slide 15: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve months ended September 30, 2020 17.7 % Twelve months ended September 30, 2019 23.0 % Return on Equity (b) : Twelve months ended September 30, 2020 37.7 % Twelve months ended September 30, 2019 54.6 % (a) Return on Invested Capital is
Slide 16: Supplemental Financial Information
Supplemental Financial Information 15 October 27, 2020
Slide 17: Omnicom Debt Structure
Omnicom Debt Structure 16 October 27, 2020 Short - term Debt $24 2030 Senior Notes $600 2030 Senior Notes $600 2026 Senior Notes $1,400 2024 Senior Notes $750 2022 Senior Notes $1,250 2027 Euro Senior Notes $587 2031 Euro Senior Notes $587 The above chart sets forth Omnicom’s debt outstanding at Sep
Slide 18: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 17 October 27, 2020 $1 ,400 $1 ,200 $1 ,000 $800 $600 $400 $200 $0 202 2 2026 S e nior Notes Other borrowings at September 30, 2020 include bank loans of $23.6 million, which are due in less than one year. For purposes of this presentation we have included these borrowi
Slide 19: Net Interest Expense Detail
Net Interest Expense Detail Third Quarter Year to Date 2020 2019 2020 2019 Net Interest expense: Interest expense $ 54 .4 $ 62 .8 $ 166 .6 $ 192 .4 Interest income 5 .9 13 .5 25 .1 46 .9 Net Interest Expense $ 48 .5 $ 49 .3 $ 141 .5 $ 145 .5 18 October 27, 2020
Slide 20: 2020 Acquisition Related Expenditures
2020 Acquisition Related Expenditures Nine Months Ended September 30 Acquisition of Businesses and Affiliates (a) $ 65 .4 Acquisition of Additional Noncontrolling Interests (b) 16 .9 Contingent Purchase Price Payments (c) 25 .4 Total Acquisition Expenditures (d) $ 107 .7 19 October 27, 2020 (a) Incl
Slide 21: Condensed Cash Flow
Condensed Cash Flow 20 October 27, 2020 Nine Months Ended September 30 2020 2019 Net Income $ 592.3 $ 986.1 Share - Based Compensation 52 .5 53 .6 Depreciation and Amortization of Intangible Assets 168 .8 175 .3 Other Items to Reconcile to Net Cash Used in Operating Activities, net 43 .8 ( 6 . 9 ) R
Slide 22: Net Cash Returned to Shareholders through Dividends and Share Repurchases
$ In Billions 6. 8 7. 4 7. 6 4. 3 4. 7 $9.5 3.7 $10.9 $11.4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cumulative Cost of Net Shares Repurchased - Payments for repurchases of common stock less proceeds from stock plans (share repurchases were suspended during the first quarter of 2020 in reac
Slide 23: 2020 Operating Expenses – Impact of Repositioning Actions and Government Wage Programs
2020 Operating Expenses – Impact of Repositioning Actions, Net Loss on Dispositions and Government Wage Programs Third Quarter Year to Date Gov't Wage Programs Tot a l Severance Real Estate Actions Actions O t he r Tot a l Operating expenses (a) (b) : Salary and service costs Salary and related serv
Slide 24: 2020 vs. 2019 Non-GAAP Financial Measures – EBITA
2020 vs. 2019 Non - GAAP Financial Measures – EBITA (a) Additional information regarding our operating expenses can be found on page 3. (b) EBITA is a non - GAAP financial performance measure. Please see page 27 for the definition of this measure and page 24 for the reconciliation of non - GAAP fina
Slide 25: Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA
Reconciliation of Non - GAAP Financial Measures – EBITA and EBITDA Three Months Ended September 30 Nine Months Ended September 30 Twelve Months Ended September 30 2020 2019 2020 2019 2020 2019 Net Income - Omnicom Group Inc. $ 313 .3 $ 290 .2 $ 547.3 $ 924 .1 $ 962.3 $ 1,323.3 Net Income Attributed
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non - GAAP Financial Measures Nine Months Ended September 30 2020 2019 Net Cash Used in Operating Activities $ (661.4) $ (231.9) Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital (1,796.7) (1,440.0) Free Cash Flow $ 1,135.3 $ 1,208.1 Nine Months
Slide 27: Third Quarter Acquisition
Third Quarter Acquisition 26 October 27, 2020 Credera acquired a majority stake in London - based DMW Group. DMW is a leading independent technology consultancy, specializing in the design, delivery, and implementation of data and digital transformation programs. Its people - first and outcome - foc
Slide 28: Disclosure
Disclosure 27 October 27, 2020 The preceding materials have been prepared for use in the October 27, 2020 conference call on Omnicom’s results of operations fo r the three and nine months ended September 30, 2020. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor