Omnicom Group Inc. · NYSE:OMC
Omnicom — Q4 2013 Earnings Presentation
34 slides from Omnicom's earnings presentation, Feb 11, 2014
Slide 1: Fourth Quarter 2013 Results
Fourth Quarter 2013 Results February 11, 2014 Investor Presentation
Slide 2: 2013 vs. 2012 P&L Summary – Fourth Quarter
2013 vs. 2012 P&L Summary – Fourth Quarter Fourth Quarter 2013 2013 2012 Non GAAP (a) Reported Reported Revenue $ 4,058.1 $ 4,058.1 $ 3,944.5 EBITA (a) (b) 589.0 (c) 575.7 573.9 Margin % 14.5% (c) 14.2% 14.5% Amortization of Intangibles 24.5 24.5 25.9 Operating Income (a) $ 564.5 (d) $ 551.2 $ 548.0
Slide 3: 2013 vs. 2012 P&L Summary – Fourth Quarter (Operating Income to Net Income)
2013 vs. 2012 P&L Summary – Fourth Quarter Fourth Quarter 2013 2013 2012 Non GAAP (a) Reported Reported Operating Income (a) $ 564.5 (b) $ 551.2 $ 548.0 Net Interest Expense 39.8 39.8 40.3 Income Taxes (a) 176.3 (c) 176.3 137.3 (e) Tax Rate % 33.6% (c) 34.5% 27.0% Income from Equity Method Investmen
Slide 4: 2013 vs. 2012 Earnings Per Share – Fourth Quarter
2013 vs. 2012 Earnings Per Share – Fourth Quarter Fourth Quarter 2013 2013 2012 Non GAAP (a) Reported Reported Net Income - Omnicom Group (a) $ 313.8 (b) $ 300.5 $ 307.1 Net Income allocated to Participating Securities (a) (7.3) (c) (7.0) (7.2) Net Income available for common shares (a) $ 306.5 (d)
Slide 5: 2013 vs. 2012 P&L Summary – Full Year
2013 vs. 2012 P&L Summary – Full Year Full Year 2013 2013 2012 Non GAAP (a) Reported Reported Revenue $ 14,584.5 $ 14,584.5 $ 14,219.4 EBITA (a) (b) 1,967.5 (c) 1,926.1 1,905.3 Margin % 13.5% (c) 13.2% 13.4% Amortization of Intangibles 100.8 100.8 101.1 Operating Income (a) $ 1,866.7 (d) $ 1,825.3 $
Slide 6: 2013 vs. 2012 P&L Summary – Full Year (Operating Income to Net Income)
2013 vs. 2012 P&L Summary – Full Year Full Year 2013 2013 2012 Non GAAP (a) Reported Reported Operating Income (a) $ 1,866.7 (b) $ 1,825.3 $ 1,804.2 Net Interest Expense 164.4 164.4 144.6 Income Taxes (a) 571.7 (c) 565.2 527.1 (e) Tax Rate % 33.6% (c) 34.0% 31.8% Income from Equity Method Investment
Slide 7: 2013 vs. 2012 Earnings Per Share – Full Year
2013 vs. 2012 Earnings Per Share – Full Year Full Year 2013 2013 2012 Non GAAP (a) Reported Reported Net Income - Omnicom Group (a) $ 1,026.0 (b) $ 991.1 $ 998.3 Net Income allocated to Participating Securities (a) (26.0) (c) (25.1) (22.5) Net Income available for common shares (a) $ 1,000.0 (d) $ 9
Slide 8: Total Revenue Change
2013 Total Revenue Change Fourth Quarter Full Year $ % $ % Prior Period Revenue $ 3,944.5 $ 14,219.4 Foreign Exchange (FX) Impact (a) (24.4) -0.6% (84.3) -0.6% Acquisition/Disposition Revenue (b) (28.6) -0.7% (51.7) -0.3% Organic Revenue (c) 166.6 4.2% 501.1 3.5% Current Period Revenue $ 4,058.1 2.9
Slide 9: Revenue by Discipline
2013 Revenue by Discipline Fourth Quarter Full Year Specialty Specialty 6.9% 7.3% PR PR 8.4% 9.1% Advertising Advertising 49.1% 48.3% CRM CRM 35.6% 35.3% % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) Advertising $ 1,992.4 2.6% 4.1% Advertising $ 7,048.3 3.6% 4.8% CRM 1,445.
Slide 10: Revenue by Region
2013 Revenue by Region Fourth Quarter Full Year Latin Africa Latin Africa America MidEast America MidEast 3.2% 1.6% 3.0% 1.6% Asia Asia Pacific Pacific 10.8% 11.0 % North North America Europe America Europe 54.6% 28.6% 56.0% 29.6% February 11, 2014 9
Slide 11: Revenue by Region
2013 Revenue by Region Fourth Quarter Full Year % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) North America $ 2,213.7 1.5% 3.2% North America $ 8,159.7 2.7% 3.7% Europe 1,202.9 5.2% 2.6% Europe 4,168.5 3.0% 1.4% Asia Pacific 444.5 3.3% 10.1% Asia Pacific 1,580.0 1.4% 6.1% L
Slide 12: Revenue by Geography
2013 Revenue by Geography Fourth Quarter Full Year UK UK 9.2% 9.1% Rest of Rest of World World 23.2% 23.0% Euro Euro Markets Markets 16.9% 16.0% U.S. U.S. 50.7% 51.9% February 11, 2014 11
Slide 13: Revenue by Geography
2013 Revenue by Geography Fourth Quarter Full Year $ Mix $ Growth % Growth $ Mix $ Growth % Growth United States $ 2,058.6 $ 32.0 1.6% United States $ 7,569.7 $ 206.0 2.8% Organic 60.2 3.0% Organic 269.8 3.7% Acquisition (28.2) -1.4% Acquisition (63.8) -0.9% International $ 1,999.5 $ 81.6 4.3% Inter
Slide 14: Revenue by Industry
Revenue by Industry Full Year – 2013 Full Year – 2012 Growth T&E Auto T&E Auto Auto -1.9% 6% 8% 6% 9% Telcom Telcom 6% 6% Food & Beverage 3.9% Consumer Consumer Tech Products Tech Products Consumer Products 8.8% 9% 10% 9% 9% Financial Financial Financial Services -3.4% Services Services Retail Retai
Slide 15: Cash Flow Performance
Cash Flow Performance Full Year 2013 2012 Net Income $ 1,111.6 $ 1,117.5 Depreciation and Amortization Expense 284.8 282.7 Share-Based Compensation Expense 86.3 80.8 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating (25.0) (54.9) Activities, net Free Cash Flow (a) $ 1,457.7 $ 1,426
Slide 16: Cash Flow Performance
Cash Flow Performance Full Year 2013 2012 Free Cash Flow (a) $ 1,457.7 $ 1,426.1 Primary Uses of Cash: Dividends (b) 318.4 397.8 Dividends paid to Noncontrolling Interest Shareholders 100.6 98.4 Capital Expenditures 212.0 226.3 Acquisitions and Payments for Additional Interest in Controlled Subsidia
Slide 17: Current Credit Picture
Current Credit Picture Full Year 2013 Reported 2012 Reported EBITDA (a) $ 2,110.1 $ 2,086.9 Gross Interest Expense 197.2 179.7 EBITDA / Gross Interest Expense 10.7 x 11.6 x Total Debt / EBITDA 1.9 x 2.1 x Net Debt (b) / EBITDA 0.6 x 0.8 x Debt Bank Loans (Due Less Than 1 Year) $ 6 $ 6 CP & Borrowing
Slide 18: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve Months Ended December 31, 2013 18.1% Twelve Months Ended December 31, 2012 18.6% Return on Equity (b) : Twelve Months Ended December 31, 2013 28.1% Twelve Months Ended December 31, 2012 28.7% (a) Return on Invested Capital is After Ta
Slide 19: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases Omnicom’s Revenues and Net Income has doubled since 2002 (a) . From 2002 through 2013, Omnicom distributed 98% of Net Income to shareholders through Dividends and Share Repurchases. $12.0 98% 99% $10.1 $10.0 95% $9.1 Billions
Slide 20: Supplemental Financial Information
Supplemental Financial Information February 11, 2014 19
Slide 21: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $6 2032 Convert $253 2016 Senior Notes $1,000 2022 Senior Notes $1,250 2019 Senior Notes $500 2020 Senior Notes $1,000 The above chart sets forth Omnicom’s debt outstanding at December 31, 2013. The amounts reflected above for the 2016, 2019, 2020 and 2022 Senior No
Slide 22: 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 Convert $250 Other Borrowings $0 Our 2032 Convertible Notes are putable on July 31, 2014 and annually in July thereafter until maturity. Other borrowings at December 31,
Slide 23: Acquisition Related Expenditures
2013 Acquisition Related Expenditures Full Year Acquisitions of Businesses and Affiliates (a) $ 18.3 Additional Interest in Controlled Subsidiaries (b) 8.9 Earn-outs on acquisitions completed prior to January 1, 2009 (c) 14.5 Earn-outs on acquisitions completed after January 1, 2009 (c) 70.5 Total A
Slide 24: Condensed Cash Flow
Condensed Cash Flow Full Year 2013 2012 Net Income $ 1,111.6 $ 1,117.5 Share-Based Compensation Expense 86.3 80.8 Depreciation and Amortization 284.8 282.7 Gain on Remeasurement of Equity Interest in Affiliates (1.6) (2.1) Impairment Charge on Equity Interest in Egyptian Affiliate, net 10.7 29.2 Oth
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Fourth Quarter 2013 Merger 2013 Reported Expenses Non GAAP EBITA $ 575.7 $ 13.3 $ 589.0 Operating Income 551.2 13.3 564.5 Income Tax Expense 176.3 - 176.3 Net Income - Omnicom Group Inc. 300.5 13.3 313.8 Net Income allocated to participating securities 7.0 0.3 7.3
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3 Months Ended December 31 Full Year 2013 Reported 2012 Reported 2013 Reported 2012 Reported Revenue $ 4,058.1 $ 3,944.5 $ 14,584.5 $ 14,219.4 Operating Expenses, excluding Depreciation and Amortization 3,434.9 3,324.4 12,474.4 12,132.5 EBITDA 623.2 620.1 2,110.1
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Full Year 2013 2012 Net Free Cash Flow $ 245.9 $ (316.7) Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital 351.3 25.2 Repayment of Convertible Debt (406.7) - Proceeds from Short-term & Long-term Debt, net (0.4) 1,269.9 Other Financing
Slide 28: Supplemental Information
Supplemental Information Fourth Quarter Full Year 2013 2012 2013 2012 % % Reported Reported Reported Reported Operating expenses: Salary and service costs $ 2,991.1 $ 2,895.5 3.3% $ 10,724.4 $ 10,406.8 3.1% Office and general expenses: Amortization of Intangibles 24.5 25.9 100.8 101.1 Depreciation 4
Slide 29: Fourth Quarter Acquisitions: ICON Singapore
Fourth Quarter Acquisitions Established in 2005, ICON Singapore was the largest independently owned public relations consultancy in the Singapore market. ICON Singapore offers clients strategic counsel in the areas of corporate communications, marketing communications, media relations, social media,
Slide 30: Fourth Quarter Acquisitions: Redhanded Communications Group
Fourth Quarter Acquisitions Redhanded Communications Group is an integrated marketing and communications agency, specializing in messaging for Rural and Regional Australia. Focusing on agribusiness, food and health related industries, Redhanded has been delivering stand out creative advertising, as
Slide 31: Fourth Quarter Acquisitions: HMNS Being
Fourth Quarter Acquisitions HMNS Being provides integrated creative services to its clients, including advertising, digital and design, focused in particular on corporate brands activities. With offices in Rome and Milan, Italy, HMNS Being will be part of the TBWA\Worldwide network. February 11, 201
Slide 32: Fourth Quarter Acquisitions: OPENCO
Fourth Quarter Acquisitions OPENCO is a full service, integrated communication agency founded in 2008 and servicing clients across the African continent. OPENCO’s media-agnostic approach is supported by a core service offering encompassing strategy development, brand development, digital engagement
Slide 33: Fourth Quarter Acquisitions: Nunez LLC
Fourth Quarter Acquisitions Mercury Public Affairs has acquired a controlling interest in Nunez LLC, a government consultancy agency. Nunez provides strategic consulting services for corporate, non-profit, trade and advocacy groups at the intersection of media, politics and government. Agency servic
Slide 34: Conference call notice and forward-looking statements
The preceding materials have been prepared for use in the February 11, 2014 conference call on Omnicom’s results of operations for the period ended December 31, 2013. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts. Forward-Looking Statements This presentat