Omnicom Group Inc. · NYSE:OMC
Omnicom — Q2 2016 Earnings Presentation
29 slides from Omnicom's earnings presentation, Jul 14, 2016
Slide 1: Second Quarter 2016 Results
Second Quarter 2016 Results July 14, 2016 Investor Presentation
Slide 2: 2016 vs. 2015 P&L Summary - Second Quarter
2016 vs. 2015 P&L Summary Second Quarter Second Quarter 2016 2015 Revenue $ 3,884.9 $ 3,805.3 Operating Expenses (a) 3,323.1 3,266.7 Operating Income 561.8 538.6 Margin % 14.5% 14.2% Addback: Amortization of Intangibles 28.5 27.1 EBITA (b) $ 590.3 $ 565.7 Margin % 15.2% 14.9% (a) Additional informat
Slide 3: 2016 vs. 2015 P&L Summary (continued) - Second Quarter
2016 vs. 2015 P&L Summary (continued) Second Quarter Second Quarter 2016 2015 Operating Income $ 561.8 $ 538.6 Net Interest Expense 44.8 34.6 Income Taxes 167.9 165.3 Tax Rate % 32.5% 32.8% Income from Equity Method Investments 2.8 4.0 Noncontrolling Interests 25.8 28.8 Net Income - Omnicom Group $
Slide 4: 2016 vs. 2015 P&L Summary (continued) - Second Quarter
2016 vs. 2015 P&L Summary (continued) Second Quarter Second Quarter 2016 2015 Net Income - Omnicom Group $ 326.1 $ 313.9 Net Income allocated to Participating Securities (2.0) (3.9) Net Income available for common shares $ 324.1 $ 310.0 Diluted Shares (millions) 239.0 245.7 EPS - Diluted $ 1.36 $ 1.
Slide 5: 2016 vs. 2015 P&L Summary - Year to Date
2016 vs. 2015 P&L Summary Year to Date Year to Date 2016 2015 Revenue $ 7,384.0 $ 7,274.5 Operating Expenses (a) 6,430.1 6,358.2 Operating Income 953.9 916.3 Margin % 12.9% 12.6% Addback: Amortization of Intangibles 56.8 54.5 EBITA (b) $ 1,010.7 $ 970.8 Margin % 13.7% 13.3% (a) Additional informatio
Slide 6: 2016 vs. 2015 P&L Summary (continued) - Year to Date
2016 vs. 2015 P&L Summary (continued) Year to Date Year to Date 2016 2015 Operating Income $ 953.9 $ 916.3 Net Interest Expense 84.9 68.8 Income Taxes 283.4 278.0 Tax Rate % 32.6% 32.8% Income from Equity Method Investments 2.6 3.0 Noncontrolling Interests 43.7 49.5 Net Income - Omnicom Group $ 544.
Slide 7: 2016 vs. 2015 P&L Summary (continued) - Year to Date
2016 vs. 2015 P&L Summary (continued) Year to Date Year to Date 2016 2015 Net Income - Omnicom Group $ 544.5 $ 523.0 Net Income allocated to Participating Securities (3.6) (6.7) Net Income available for common shares $ 540.9 $ 516.3 Diluted Shares (millions) 240.1 246.6 EPS - Diluted $ 2.25 $ 2.09 D
Slide 8: Total Revenue Change
2016 Total Revenue Change Second Quarter Year to Date $ %∆ $ %∆ Prior Period Revenue $ 3,805.3 $ 7,274.5 (a) Foreign Exchange (FX) Impact (62.6) -1.6% (159.2) -2.2% (b) Acquisition/Disposition Revenue 13.2 0.3% 9.0 0.1% (c) Organic Revenue 129.0 3.4% 259.7 3.6% Current Period Revenue $ 3,884.9 2.1%
Slide 9: Revenue by Region
2016 Revenue by Region Second Quarter Year to Date Latin Africa Latin Africa America MidEast America MidEast 2.5% 1.6% 2.4% 1.6% Asia Asia Pacific Pacific 10.3% 10.2% Euro Euro Markets & Markets & Other Other Europe Europe 16.2% 16.0% North North America UK America UK 60.0% 60.3% 9.5% 9.4% July 14,
Slide 10: Revenue by Region
2016 Revenue by Region Second Quarter Year to Date % Organic % Organic (a) (a) $ Mix % Growth Growth $ Mix % Growth Growth North America $ 2,329.7 2.1% 3.2% North America $ 4,453.0 2.4% 3.8% UK 363.7 -2.2% 3.3% UK 700.7 -2.5% 2.8% Euro & Other Europe 630.1 3.8% 4.3% Euro & Other Europe 1,182.8 1.8%
Slide 11: Revenue by Discipline
2016 Revenue by Discipline Second Quarter Year to Date Specialty Specialty 7.5% 7.4% PR PR 9.0% 9.1% Advertising Advertising 53.2% 52.4% CRM CRM 30.3% 31.1% % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) Advertising $ 2,066.0 6.1% 7.7% Advertising $ 3,869.1 5.1% 7.8% CRM 1,1
Slide 12: Revenue by Industry
Revenue by Industry Year to Date – 2016 Year to Date – 2015 Telcom 4% T&E T&E Auto Auto 7% 8% 6% 8% Telcom 5% Consumer Consumer Products Products Tech Tech 9% 10% 9% 9% Financial Financial Services Retail Services Retail 7% 6% 7% 7% Food & Pharma & Food & Beverage Pharma & Health Beverage 13% Health
Slide 13: Cash Flow Performance
Cash Flow Performance Six Months Ended June 30 2016 2015 Net Income $ 588.2 $ 572.5 Depreciation and Amortization Expense 147.2 147.0 Share-Based Compensation Expense 46.3 49.3 Other Non-Cash Items to Reconcile to Net Cash Used in Operating (59.7) (12.0) Activities, net Free Cash Flow (a) $ 722.0 $
Slide 14: Cash Flow Performance
Cash Flow Performance Six Months Ended June 30 2016 2015 Free Cash Flow (a) $ 722.0 $ 756.8 Primary Uses of Cash: Dividends 242.9 250.5 Dividends paid to Noncontrolling Interest Shareholders 52.0 61.1 Capital Expenditures 77.9 106.7 Acquisition of Businesses and Affiliates, Acquisition of Additional
Slide 15: Current Credit Picture
Current Credit Picture Twelve Months Ended June 30 2016 2015 EBITDA (a) $ 2,249.1 $ 2,227.3 Gross Interest Expense 197.4 172.4 EBITDA / Gross Interest Expense 11.4 x 12.9 x Total Debt / EBITDA 2.2 x 2.0 x (b) Net Debt / EBITDA 1.6 x 1.4 x Debt Bank Loans (Due Less Than 1 Year) $ 12 $ 14 CP & Borrowi
Slide 16: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve Months Ended June 30, 2016 18.4% Twelve Months Ended June 30, 2015 17.6% Return on Equity (b): Twelve Months Ended June 30, 2016 45.3% Twelve Months Ended June 30, 2015 35.9% (a) Return on Invested Capital is After Tax Reported Operat
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 June 30, 2016, Omnicom distributed over 110% of Net Income to shareholders through Dividends and Share Repurchases. 111% 110% $12.0 110% $10.1 $9.6 $10.0 107% $8.5 110% $ In Billions $7.4 $8.0 106% $6.4 106%
Slide 18: Supplemental Financial Information
Supplemental Financial Information July 14, 2016 17
Slide 19: Omnicom Debt Structure
Omnicom Debt Structure Bank Loans $12 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 June 30, 2016. The amounts reflected above for the 2019, 2020, 2022, 2024 and 2026 S
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 June 30, 2016 include short-term borrowings of $12 million which are due in less than one year. For
Slide 21: Acquisition Related Expenditures
2016 Acquisition Related Expenditures Year to Date (a) Acquisition of Businesses and Affiliates $ 267.0 (b) Acquisition of Additional Noncontrolling Interests 44.6 (c) Contingent Purchase Price Payments 48.1 Total Acquisition Expenditures (d) $ 359.7 (a) Includes acquisitions of a majority interest
Slide 22: Condensed Cash Flow
Condensed Cash Flow Six Months Ended June 30 2016 2015 Net Income $ 588.2 $ 572.5 Share-Based Compensation Expense 46.3 49.3 Depreciation and Amortization 147.2 147.0 Other Non-Cash Items to Reconcile to Net Cash Used in Operating Activities, net (59.7) (12.0) Changes in Operating Capital (1,113.1)
Slide 23: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 3 Months Ended June 30 6 Months Ended June 30 12 Months Ended June 30 2016 2015 2016 2015 2016 2015 Revenue $ 3,884.9 $ 3,805.3 $ 7,384.0 $ 7,274.5 $ 15,243.9 $ 15,219.3 Operating Expenses, excluding Depreciation and 3,250.1 3,194.0 6,282.9 6,211.2 12,99
Slide 24: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Six Months Ended June 30 2016 2015 Free Cash Flow $ 722.0 $ 756.8 Items excluded from Free Cash Flow: Changes in Operating Capital (1,113.1) (808.8) Net Cash Used in Operating Actvities $ (391.1) $ (52.0) Six Months Ended June 30 2016 2015 Net Free Cash
Slide 25: Supplemental Information
Supplemental Information Second Quarter Year to Date % of % of % of % of 2016 Rev 2015 Rev 2016 Rev 2015 Rev Revenue $ 3,884.9 $ 3,805.3 $ 7,384.0 $ 7,274.5 Operating expenses: Salary and service costs 2,824.6 72.7% 2,762.9 72.6% 5,449.2 73.8% 5,360.0 73.7% Occupancy and other expenses 314.6 8.1% 32
Slide 26: Second Quarter Acquisition
Second Quarter Acquisition Founded in 2004, Rabin Martin is a strategy consulting firm that assists its clients, especially major healthcare corporations and international NGOs, to become recognized leaders in public health, both for the purpose of cultivating, strengthening and advancing reputation
Slide 27: Second Quarter Acquisition
Second Quarter Acquisition Established in 2005, BioPharm Communications is a leading communications agency that specializes in proprietary, multichannel marketing programs to physicians and healthcare practitioners for pharmaceutical and biotechnology clients. With advanced analytic capabilities, Bi
Slide 28: Second Quarter Acquisition
Second Quarter Acquisition Omnicom Media Group has acquired a controlling interest in its affiliate in Switzerland, Omnicom Media Group Schweiz AG. OMG Switzerland is a market-leading full service media agency with approximately 110 employees. OMG Switzerland leverages the strength of the OMG networ
Slide 29: Disclosure
Disclosure The preceding materials have been prepared for use in the July 14, 2016 conference call on Omnicom’s results of operations for the period ended June 30, 2016. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-events-and-filings/. Forward