Omnicom Group Inc. · NYSE:OMC
Omnicom — Q3 2016 Earnings Presentation
26 slides from Omnicom's earnings presentation, Oct 18, 2016
Slide 1: Third Quarter 2016 Results
Third Quarter 2016 Results October 18, 2016 Investor Presentation
Slide 2: 2016 vs. 2015 P&L Summary
2016 vs. 2015 P&L Summary Third Quarter Third Quarter 2016 2015 Revenue $ 3,791.1 $ 3,706.6 (a) Operating Expenses 3,338.0 3,278.3 Operating Income 453.1 428.3 Margin % 12.0% 11.6% Addback: Amortization of Intangibles 29.0 26.4 EBITA (b) $ 482.1 $ 454.7 Margin % 12.7% 12.3% (a) Additional informatio
Slide 3: 2016 vs. 2015 P&L Summary (continued)
2016 vs. 2015 P&L Summary (continued) Third Quarter Third Quarter 2016 2015 Operating Income $ 453.1 $ 428.3 Net Interest Expense 42.0 35.9 Income Taxes 134.3 128.9 Tax Rate % 32.7% 32.8% Income from Equity Method Investments 1.4 3.2 Noncontrolling Interests 24.4 27.4 Net Income - Omnicom Group $ 25
Slide 4: 2016 vs. 2015 P&L Summary (continued)
2016 vs. 2015 P&L Summary (continued) Third Quarter Third Quarter 2016 2015 Net Income - Omnicom Group $ 253.8 $ 239.3 Net Income allocated to participating securities (1.2) (2.5) Net Income available for common shares $ 252.6 $ 236.8 Diluted Shares (millions) 238.7 244.4 EPS - Diluted $ 1.06 $ 0.97
Slide 5: 2016 vs. 2015 P&L Summary
2016 vs. 2015 P&L Summary Year to Date Year to Date 2016 2015 Revenue $ 11,175.1 $ 10,981.1 (a) Operating Expenses 9,768.1 9,636.5 Operating Income 1,407.0 1,344.6 Margin % 12.6% 12.2% Addback: Amortization of Intangibles 85.7 80.8 EBITA (b) $ 1,492.7 $ 1,425.4 Margin % 13.4% 13.0% (a) Additional in
Slide 6: 2016 vs. 2015 P&L Summary (continued)
2016 vs. 2015 P&L Summary (continued) Year to Date Year to Date 2016 2015 Operating Income $ 1,407.0 $ 1,344.6 Net Interest Expense 127.0 104.7 Income Taxes 417.7 406.9 Tax Rate % 32.6% 32.8% Income from Equity Method Investments 4.0 6.2 Noncontrolling Interests 68.0 76.9 Net Income - Omnicom Group
Slide 7: 2016 vs. 2015 P&L Summary (continued)
2016 vs. 2015 P&L Summary (continued) Year to Date Year to Date 2016 2015 Net Income - Omnicom Group $ 798.3 $ 762.3 Net Income allocated to participating securities (4.8) (9.0) Net Income available for common shares $ 793.5 $ 753.3 Diluted Shares (millions) 239.6 245.8 EPS - Diluted $ 3.31 $ 3.06 D
Slide 8: 2016 Total Revenue Change
2016 Total Revenue Change Third Quarter Year to Date $ %∆ $ %∆ Prior Period Revenue $ 3,706.6 $ 10,981.1 Foreign Exchange (FX) Impact (a) (49.9) -1.3% (209.1) -1.9% Acquisition/Disposition Revenue (b) 15.3 0.4% 24.3 0.3% Organic Revenue (c) 119.1 3.2% 378.8 3.4% Current Period Revenue $ 3,791.1 2.3%
Slide 9: Revenue by Region
2016 Revenue by Region Third Quarter Year to Date Latin Africa Latin Africa America MidEast America MidEast 3.0% 1.8% 2.5% 1.7% Asia Asia Pacific Pacific 11.0% 10.5% Euro Euro Markets & Markets & Other Other Europe Europe 15.9% North North 15.6% America America UK 59.4% 60.0% UK 9.4% 9.2% October 18
Slide 10: Revenue by Region
2016 Revenue by Region Third Quarter Year to Date % % Organic Organic (a) $ Mix % Growth Growth $ Mix % Growth Growth(a) North America $ 2,253.9 1.4% 1.7% North America $ 6,706.9 2.1% 3.1% UK 347.9 -10.4% 5.2% UK 1,048.6 -5.3% 3.6% Euro & Other Europe 590.7 2.0% 2.0% Euro & Other Europe 1,773.4 1.9%
Slide 11: Revenue by Discipline
2016 Revenue by Discipline Third Quarter Year to Date Specialty Specialty 7.0% 7.3% PR PR 9.2% 9.1% Advertising Advertising 52.0% 52.3% CRM CRM 31.8% 31.3% % Organic % Organic (a) (a) $ Mix % Growth Growth $ Mix % Growth Growth Advertising $ 1,972.8 3.6% 3.6% Advertising $ 5,841.8 4.6% 6.4% CRM 1,20
Slide 12: Revenue by Industry
Revenue by Industry Year to Date – 2016 Year to Date – 2015 T&E Auto T&E Auto 7% 8% 6% 8% Telcom Telcom 5% 5% Consumer Consumer Products Products Tech 10% Tech 10% 9% 10% Financial Financial Services Services Retail 7% 7% Retail 6% 7% Food & Food & Pharma & Beverage Beverage 13% Pharma & 13% Health
Slide 13: Cash Flow Performance
Cash Flow Performance Nine Months Ended September 30 2016 2015 Net Income $ 866.3 $ 839.2 Depreciation and Amortization Expense 220.3 218.7 Share-Based Compensation Expense 69.8 75.4 Other Items to Reconcile to Net Cash Provided by Operating (55.7) 4.6 Activities, net (a) Free Cash Flow $ 1,100.7 $
Slide 14: Cash Flow Performance
Cash Flow Performance Nine Months Ended September 30 2016 2015 Free Cash Flow (a) $ 1,100.7 $ 1,137.9 Primary Uses of Cash: Dividends 374.2 373.9 Dividends paid to Noncontrolling Interest Shareholders 71.1 86.7 Capital Expenditures 100.5 145.6 Acquisition of Businesses and Affiliates, Acquisition of
Slide 15: Current Credit Picture
Current Credit Picture Twelve Months Ended September 30 2016 2015 EBITDA (a) $ 2,275.1 $ 2,219.8 Gross Interest Expense 204.7 175.8 EBITDA / Gross Interest Expense 11.1 x 12.6 x Total Debt / EBITDA 2.2 x 2.1 x Net Debt (b) / EBITDA 1.3 x 1.4 x Debt Bank Loans (Due Less Than 1 Year) $ 25 $ 10 CP & Bo
Slide 16: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve Months Ended September 30, 2016 19.4% Twelve Months Ended September 30, 2015 18.1% Return on Equity (b): Twelve Months Ended September 30, 2016 47.1% Twelve Months Ended September 30, 2015 39.6% (a) Return on Invested Capital is After
Slide 17: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2006 through September 30, 2016, Omnicom distributed 110% of Net Income to shareholders through Dividends and Share Repurchases. 110% 110% $12.0 $10.4 110% $9.6 $10.0 107% $8.5 110% $ In Billions $7.4 $8.0 106% $6.4 8.1 1
Slide 18: Supplemental Financial Information
Supplemental Financial Information October 18, 2016 17
Slide 19: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $25 2019 Senior Notes $500 2026 Senior 2020 Senior Notes Notes $1,400 $1,000 2024 Senior 2022 Senior Notes Notes $750 $1,250 The above chart sets forth Omnicom’s debt outstanding at September 30, 2016. The amounts reflected above for the 2019, 2020, 2022, 2024 and 2
Slide 20: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 2026 Senior 2022 Notes $1,400 Senior Notes $1,200 2020 Senior Notes $1,000 2024 Senior $800 Notes 2019 Senior $600 Notes $400 $200 Other Borrowings $0 Other borrowings at September 30, 2016 include short-term borrowings of $25 million which are due in less than one year
Slide 21: Acquisition Related Expenditures
2016 Acquisition Related Expenditures Year to Date (a) Acquisition of Businesses and Affiliates $ 268.5 (b) Acquisition of Additional Noncontrolling Interests 59.8 (c) Contingent Purchase Price Payments 93.6 (d) Total Acquisition Expenditures $ 421.9 (a) Includes acquisitions of a majority interest
Slide 22: Condensed Cash Flow
Condensed Cash Flow Nine Months Ended September 30 2016 2015 Net Income $ 866.3 $ 839.2 Share-Based Compensation Expense 69.8 75.4 Depreciation and Amortization 220.3 218.7 Other Items to Reconcile to Net Cash Provided by Operating Activities, net (55.7) 4.6 Changes in Operating Capital (784.1) (697
Slide 23: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 3 Months Ended September 30 9 Months Ended September 30 12 Months Ended September 30 2016 2015 2016 2015 2016 2015 Revenue $ 3,791.1 $ 3,706.6 $ 11,175.1 $ 10,981.1 $ 15,328.4 $ 15,176.2 Operating Expenses, excluding Depreciation 3,264.9 3,206.5 9,547.8
Slide 24: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Nine Months Ended September 30 2016 2015 Free Cash Flow $ 1,100.7 $ 1,137.9 Items excluded from Free Cash Flow: Changes in Operating Capital (784.1) (697.1) Net Cash Provided by Operating Actvities $ 316.6 $ 440.8 Nine Months Ended September 30 2016 2015
Slide 25: Supplemental Information
Supplemental Information Third Quarter Year to Date % of % of % of % of 2016 Rev 2015 Rev 2016 Rev 2015 Rev Revenue $ 3,791.1 $ 3,706.6 $ 11,175.1 $ 10,981.1 Operating expenses: Salary and service costs 2,855.3 75.3% 2,799.8 75.5% 8,304.5 74.3% 8,159.8 74.3% Occupancy and other expenses 305.5 8.1% 3
Slide 26: Disclosure
Disclosure The preceding materials have been prepared for use in the October 18, 2016 conference call on Omnicom’s results of operations for the period ended September 30, 2016. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-events-and-filings/.