Omnicom Group Inc. · NYSE:OMC
Omnicom — Q1 2014 Earnings Presentation
31 slides from Omnicom's earnings presentation, Apr 22, 2014
Slide 1: First Quarter 2014 Results
First Quarter 2014 Results April 22, 2014 Investor Presentation
Slide 2: 2014 vs. 2013 P&L Summary – First Quarter
2014 vs. 2013 P&L Summary – First Quarter First Quarter 2014 2014 2013 Non GAAP (a) Reported Reported Revenue $ 3,502.2 $ 3,502.2 $ 3,398.9 EBITA (a) (b) 414.1 (c) 407.1 397.1 Margin % 11.8% (c) 11.6% 11.7% Amortization of Intangibles 24.4 24.4 25.4 Operating Income (a) $ 389.7 (d) $ 382.7 $ 371.7 M
Slide 3: 2014 vs. 2013 P&L Summary – First Quarter (Net Income)
2014 vs. 2013 P&L Summary – First Quarter First Quarter 2014 2014 2013 Non GAAP (a) Reported Reported Operating Income (a) $ 389.7 (b) $ 382.7 $ 371.7 Net Interest Expense 39.0 39.0 40.9 Income Taxes (a) 116.5 (c) 116.3 109.2 Tax Rate % 33.2% (c) 33.8% 33.0% Income from Equity Method Investments 0.6
Slide 4: 2014 vs. 2013 Earnings Per Share – First Quarter
2014 vs. 2013 Earnings Per Share – First Quarter First Quarter 2014 2014 2013 Non GAAP (a) Reported Reported Net Income - Omnicom Group (a) $ 212.3 (b) $ 205.5 $ 205.1 Net Income allocated to Participating Securities (a) (4.2) (c) (4.1) (5.4) Net Income available for common shares (a) $ 208.1 (d) $
Slide 5: 2014 Total Revenue Change
2014 Total Revenue Change 3.0% $147 $3,502 $(22) $(22) $3,399 (0.7%) (0.6%) 4.3% 1Q 13 FX Impact (a) Net Organic(c) 1Q 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 equivalent prior p
Slide 6: 2014 Revenue by Discipline – First Quarter
2014 Revenue by Discipline First Quarter Specialty 7.2% PR 9.3% % Organic $ Mix % Growth Growth (a) Advertising $ 1,700.6 2.9% 4.9% CRM 1,223.5 4.3% 4.2% Advertising 48.6% PR 325.4 2.2% 1.2% Specialty 252.7 -1.3% 5.2% CRM 34.9% (a) “Organic Growth” reflects the year-over-year increase or decrease in
Slide 7: 2014 Revenue by Region – First Quarter
2014 Revenue by Region First Quarter Latin Africa America MidEast 2.6% 1.6% Asia Pacific % Organic 10.3% $ Mix % Growth Growth (a) North America $ 1,993.0 2.8% 4.8% Europe 1,003.6 6.0% 2.3% Asia Pacific 359.1 -0.4% 5.7% North Europe America Latin America 90.8 -7.4% 7.4% 28.6% 56.9% Africa Mid East 5
Slide 8: 2014 Revenue by Geography – First Quarter
2014 Revenue by Geography First Quarter $ Mix $ Growth UK United States $ 1,864.0 $ 72.4 Rest of 9.6% Organic 100.6 World Acquisition (28.2) 21.5% International $ 1,638.2 $ 30.9 Organic 46.9 Acquisition 6.2 FX (22.2) Euro Markets 15.7% % Organic $ Mix % Growth Growth (a) U.S. United States $ 1,864.0
Slide 9: Revenue by Industry
Revenue by Industry First Quarter – 2014 First Quarter – 2013 April 22, 2014 8 Growth T&E Auto T&E Auto Auto 2.3% 5% 8% 5% 8% Telcom Telcom 6% 7% Food & Beverage 3.3% Consumer Consumer Tech Products Tech Products Consumer Products 1.3% 9% 9% 9% 10% Financial Financial Financial Services 1.2% Service
Slide 10: Cash Flow Performance
Cash Flow Performance $22 $71 $9 $228 Primary Uses of Cash (a) 312 $312 298.9 $131 Sources of Free 228 Cash Flow $42 $16 181.3 $9 114.1 $114 Income & Other Flow (b) CapEx Cash Depreciation Dividends (a) Cash Free -Based (a) Net Net Flow Net Share Share Amortization Compensation Free Acquisitions, Re
Slide 11: Current Credit Picture
Current Credit Picture Twelve Months Ended March 31 2014 Reported 2013 Reported EBITDA (a) $ 2,120.9 $ 2,097.9 Gross Interest Expense 195.8 190.2 EBITDA / Gross Interest Expense 10.8 x 11.0 x Total Debt / EBITDA 1.9 x 2.1 x Net Debt (b) / EBITDA 0.9 x 1.1 x Debt Bank Loans (Due Less Than 1 Year) $ 8
Slide 12: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve Months Ended March 31, 2014 17.1% Twelve Months Ended March 31, 2013 17.3% Return on Equity (b) : Twelve Months Ended March 31, 2014 29.0% Twelve Months Ended March 31, 2013 30.1% (a) Return on Invested Capital is After Tax Reported O
Slide 13: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2004 through Q1 2014, Omnicom distributed over 100% of Net Income to shareholders through Dividends and Share Repurchases. 103% 104% $10.0 107% $9.1 $8.9 103% $7.9 Billions $8.0 103% $6.9 92% $5.9 105% $6.0 $5.1 7.0 In 7.
Slide 14: Supplemental Financial Information
Supplemental Financial Information April 22, 2014 13
Slide 15: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $8 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 March 31, 2014. The amounts reflected above for the 2016, 2019, 2020 and 2022 Senior Notes
Slide 16: 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 and we have the right to redeem t
Slide 17: Historical Return Trends
Historical Return Trends ROE (a) 30.8% 30.6% 31% 30.1% 30.1% 29.2% 29% 29.0% 27.9% 28.1% 27.1% 27% 25% 23% 21% ROIC (b) 19% 17.5% 17.3% 17.4% 17.3% 16.4% 16.7% 16.7% 17.0% 17% 17.1% 15% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 (a) Return on Equity (“ROE”) is Reported Net Income for the
Slide 18: 2014 Acquisition Related Expenditures
2014 Acquisition Related Expenditures Year to Date Acquisitions of Businesses and Affiliates (a) $ 11.8 Additional Interest in Controlled Subsidiaries (b) 8.4 Earn-outs on acquisitions completed after January 1, 2009 (c) 7.8 Total Acquisition Expenditures (d) $ 28.0 (a) Includes acquisitions of a ma
Slide 19: Condensed Cash Flow
Condensed Cash Flow Three Months Ended March 31 2014 2013 Net Income $ 228.0 $ 224.8 Share-Based Compensation Expense 21.6 22.1 Depreciation and Amortization 70.9 71.1 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating Activities, net (8.5) (15.9) Changes in Operating Capital (742.3
Slide 20: Cash Flow Performance
Cash Flow Performance Three Months Ended March 31 2014 2013 Net Income $ 228.0 $ 224.8 Depreciation and Amortization Expense 70.9 71.1 Share-Based Compensation Expense 21.6 22.1 Other Non-Cash Items to Reconcile to Net Cash Provided by Operating (8.5) (15.9) Activities, net Free Cash Flow (a) $ 312.
Slide 21: Cash Flow Performance (Primary Uses of Cash)
Cash Flow Performance Three Months Ended March 31 2014 2013 Free Cash Flow (a) $ 312.0 $ 302.1 Primary Uses of Cash: Dividends (b) 105.9 -Dividends paid to Noncontrolling Interest Shareholders 24.8 23.0 Capital Expenditures 42.5 38.2 Acquisitions and Payments for Additional Interest in Controlled Su
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures First Quarter 2014 Merger 2014 Reported Expenses Non GAAP EBITA $ 407.1 $ 7.0 $ 414.1 Operating Income 382.7 7.0 389.7 Income Tax Expense 116.3 0.2 116.5 Net Income - Omnicom Group Inc. 205.5 6.8 212.3 Net Income allocated to participating securities 4.1 0.1 4.2 N
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3 Months Ended March 31 12 Months Ended March 31 2014Reported 2013Reported © 2014Reported 2013 Reported Revenue S$ 35022 $ 3,398.9 $ 146878 $ 143111 Operating Expenses, excluding Depreciation and Amortization 3,048.6 2,956.1 12,5669 12,213.2 EBITDA 453.6 4428 2120
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Three Months Ended March 31 2014 2013 Net Free Cash Flow $ 114.1 $ (14.7) Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital (742.3) (511.8) Proceeds from Short-term & Long-term Debt, net 1.7 5.4 Other Financing Activities, net (3.2) (9
Slide 25: Supplemental Information
Supplemental Information First Quarter 2014 Reported 2013 Reported % Operating expenses: Salary and service costs $ 2,622.8 $ 2,541.0 3.2% Office and general expenses: Amortization of Intangibles 24.4 25.4 Depreciation 46.5 45.7 Merger expenses (a) 7.0 -Other office and general expenses 418.8 415.1
Slide 26: First Quarter Acquisitions
First Quarter Acquisitions Established in 2006, Mood is an integrated agency specializing in brand activation. In addition to its founding core competencies of promotions, events and point-of-sale marketing, Mood also has expanded its offerings to include digital and traditional advertising, as well
Slide 27: First Quarter Acquisitions
First Quarter Acquisitions Established in 2009, 22feet Communications specializes in digital creative solutions for its clients. Its service offerings include end-to-end digital and mobile branding and marketing solutions including strategy and consulting, web design, web development, media planning
Slide 28: First Quarter Acquisitions
First Quarter Acquisitions Established in 1990, HMKM is an award-winning and HMKM internationally acclaimed retail design consultancy, specializing in interior design, architecture, graphic design, and art direction. HMKM is well-known for creating premium, high-end retail concepts to a growing clie
Slide 29: First Quarter Acquisitions
First Quarter Acquisitions Founded in 2011, Mobile5 specializes in the strategy, design and development of mobile marketing and advertising services. Mobile5 creates mobile rich media advertising campaigns globally and develops apps for its blue chip roster of clients. Its breadth of expertise exten
Slide 30: First Quarter Acquisitions
First Quarter Acquisitions Media Interactive was founded in 2002 to provide digital media planning and buying services. The company has evolved and expanded its scope of services to now include a full suite of digital services: online campaigns, social and online media, web site development and desi
Slide 31: Disclosure
Disclosure The preceding materials have been prepared for use in the April 22, 2014 conference call on Omnicom’s results of operations for the period ended March 31, 2014. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts. Forward-Looking Statements This pres