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 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 Investments 2.9 0.5 Net
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 (c) Operating Expenses 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 Third Quarter Year to Date % of % of % of % of 2020 Rev 2019 Rev 2020 Rev 2019 Rev Revenue $ 3,206.5 $ 3,623.8 $ 9,414.1 $ 10,812.5 Operating expenses: Salary and service costs: Salary and related service 1,501.1 46.8 % 1,724.5 47.6 % 4,568.2 48.5 % 5,050.7 46.7 % costs (a)
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% (1,267.2) -11.7% Current Pe
Slide 6: 2020 Revenue by Discipline
2020 Revenue by Discipline Third Quarter Healthcare Year to Date Healthcare 9.3% 9.3% PR PR CRM 10.1% CRM 10.1% Execution Execution & Support & Support 8.6% 8.7% CRM CRM Consumer Consumer Advertising Advertising Experience 55.9% Experience 55.1% 16.1% 16.8% % Organic % Organic $ Mix % Growth Growth
Slide 7: 2020 Revenue by Region
2020 Revenue by Region Third Quarter Year to Date Latin Middle East Latin Middle East America & Africa America & Africa 1.9% 1.4% 2.0% 1.4% Asia Asia Pacific Pacific 11.5% 11.1% Euro Euro Markets & Markets & Other Other Europe Europe United States United States 17.3% 17.0% 55.0% 55.7% UK UK 9.9% 10.
Slide 8: 2020 Revenue by Region
2020 Revenue by Region Third Quarter Year to Date % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth 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% UK 319.3 -7.7% -12.5% UK
Slide 9: Revenue by Industry
Revenue by Industry Year to Date – 2020 Year to Date – 2019 T&E Auto Auto 7% 10% 10% T&E Telcom 8% Consumer 6% Products Consumer 9% Products Telcom 8% 6% Tech 9% Financial Services Financial Tech 9% Services 7% 8% Retail 7% Retail 7% Food & Food & Beverage Beverage 14% 14% Pharma & Health Pharma & 1
Slide 10: Revenue by Industry – Third Quarter 2020
Revenue by Industry Third Quarter – 2020 % Change excluding T&E FX rate Auto Telcom 5% % Mix impact (a) 10% 6% Food & Beverage 14 % (10.7)% Consumer Consumer Products 8% (14.7)% Products Tech Pharma & Health 17 % 4.6 % 10% 8% Financial Services 8% (17.4)% Financial Technology 10 % 17.8 % Services Au
Slide 11: Revenue by Industry – 2020
Revenue by Industry Year to Date – 2020 % Change excluding T&E Auto FX rate 7% 10% % Mix impact (a) Telcom Food & Beverage 14 % (13.5)% 6% Consumer Consumer Products 8% (20.4)% Products 8% Pharma & Health 16 % (0.6)% Tech 9% Financial Services 8% (19.4)% Financial Technology 9% 7.0 % Services Auto 1
Slide 12: Cash Flow Performance
Cash Flow Performance Nine Months Ended September 30 2020 2019 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 Net Cash Used in Operating
Slide 13: Cash Flow Performance
Cash Flow Performance Nine Months Ended September 30 2020 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 Businesses and
Slide 14: Current Credit Picture
Current Credit Picture 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-denominated Senior Notes (c) 4,600.0 4,
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 Af
Slide 16: Supplemental Financial Information
Supplemental Financial Information October 27, 2020 15
Slide 17: Omnicom Debt Structure
Omnicom Debt Structure Short-term Debt $24 2031 Euro 2030 Senior Notes Senior Notes $600 $587 2027 Euro 2030 Senior Notes Senior Notes $600 $587 2022 Senior Notes 2026 Senior $1,250 Notes $1,400 2024 Senior Notes $750 The above chart sets forth Omnicom’s debt outstanding at September 30, 2020. The a
Slide 18: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 2026 Senior 2022 Notes $1,400 Senior Notes $1,200 $1,000 2024 Senior 2027 2031 $800 Notes 2030 Euro Euro Senior Senior Senior Notes Notes Notes $600 $400 $200 Other Borrowings $0 28 9 27 8 26 7 25 6 24 5 23 4 22 3 21 2 20 1 31 0 30 1 29 0 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -
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 October 27, 2020 18
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 (a) Includes acquisitions of a m
Slide 21: Condensed Cash Flow
Condensed Cash Flow 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) Repositioning costs and net loss
Slide 22: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2010 through September 30, 2020, Omnicom distributed 108% of Net Income to shareholders through dividends and share repurchases. 108% 108% $12.5 $11.4 110% $10.9 115% $9.5 4.7 $10.0 4.3 117% 3.7 122% $7.5 $ In Billions 7.
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 Severance Real Estate Programs Total Actions Actions Other Total Operating expenses (a) (b): Salary and service costs Salary and related service cost
Slide 24: 2020 vs. 2019 Non-GAAP Financial Measures – EBITA
2020 vs. 2019 Non-GAAP Financial Measures – EBITA Third Quarter Year to Date 2020 2019 2020 2019 Revenue $ 3,206.5 $ 3,623.8 $ 9,414.1 $ 10,812.5 Operating expenses (a) 2,705.1 3,150.5 8,430.0 9,336.6 Operating Profit 501.4 473.3 984.1 1,475.9 Operating Profit Margin % 15.6 % 13.1 % 10.5 % 13.6 % Ad
Slide 25: Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA
Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA Three Months Ended Nine Months Ended Twelve Months Ended September 30 September 30 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 to No
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 En
Slide 27: Third Quarter Acquisition
Third Quarter Acquisition 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-focused approach drives succe
Slide 28: Disclosure
Disclosure The preceding materials have been prepared for use in the October 27, 2020 conference call on Omnicom’s results of operations for the three and nine months ended September 30, 2020. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-event