Omnicom Group Inc. · NYSE:OMC
Omnicom — Q2 2020 Earnings Presentation
34 slides from Omnicom's earnings presentation, Jul 28, 2020
Slide 1: Second Quarter 2020 Results
Second Quarter 2020 Results July 28, 2020 Investor Presentation
Slide 2: 2020 vs. 2019 P&L Summary - Second Quarter
2020 vs. 2019 P&L Summary Second Quarter Second Quarter 2020 (a) 2019 Revenue $ 2,800.7 $ 3,719.8 Operating Expenses (b) 2,738.2 3,146.1 Operating Profit 62.5 573.7 Net Interest Expense 47.2 50.2 Income Tax Expense 21.9 130.6 Tax Rate % 143.1% 24.9% Income (Loss) From Equity Method Investments (7.8)
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) 2019 Revenue $ 6,207.6 $ 7,188.7 Operating Expenses (b) 5,724.9 6,186.1 Operating Profit 482.7 1,002.6 Net Interest Expense 93.0 96.2 Income Tax Expense 119.3 233.2 Tax Rate % 30.6% 25.7% Income (Loss) From Equity Method Investments (13.0)
Slide 4: Operating Expense Detail
Operating Expense Detail Second Quarter Year to Date % of % of % of % of 2020 Rev 2019 Rev 2020 Rev 2019 Rev Revenue $ 2,800.7 $ 3,719.8 $ 6,207.6 $ 7,188.7 Operating expenses: Salary and service costs: Salary and related service 1,424.7 50.9 % 1,660.2 44.6 % 3,067.1 49.4 % 3,326.2 46.3 % costs Thir
Slide 5: Impact of Second Quarter Repositioning Actions
2020 Operating Expenses – Impact of Second Quarter Repositioning Actions and Net Loss on Dispositions Second Quarter and Year to Date Severance Real Estate Net Loss on Actions Actions Dispositions Total Operating expenses (a): Salary and service costs Salary and related service costs $ — $ — $ — $ —
Slide 6: Non-GAAP Measures Adjusted for Q2 2020 Repositioning Actions
2020 Non-GAAP Financial Measures - Adjusted for the Impact of Second Quarter 2020 Repositioning Actions and Net Loss on Dispositions Second Quarter Non-GAAP Non-GAAP 2020 (a) Adjustments 2020 Adjusted Operating Profit $ 62.5 $ 277.9 $ 340.4 Net Interest Expense 47.2 — 47.2 Income Tax Expense 21.9 54
Slide 7: Non-GAAP Measures Adjusted vs. 2019 - Second Quarter
2020 vs. 2019 Non-GAAP Financial Measures - Adjusted for the Impact of Second Quarter 2020 Repositioning Actions and Net Loss on Dispositions Second Quarter Non-GAAP 2020 2020 (a) Adjusted 2019 Operating Profit $ 62.5 $ 340.4 $ 573.7 Net Interest Expense 47.2 47.2 50.2 Income Tax Expense 21.9 76.7 1
Slide 8: Non-GAAP Measures Adjusted - Year to Date
2020 Non-GAAP Financial Measures - Adjusted for the Impact of Second Quarter 2020 Repositioning Actions and Net Loss on Dispositions Year to Date Non-GAAP Non-GAAP 2020 (a) Adjustments 2020 Adjusted Operating Profit $ 482.7 $ 277.9 $ 760.6 Net Interest Expense 93.0 — 93.0 Income Tax Expense 119.3 54
Slide 9: Non-GAAP Measures Adjusted vs. 2019 - Year to Date
2020 vs. 2019 Non-GAAP Financial Measures - Adjusted for the Impact of Second Quarter 2020 Repositioning Actions and Net Loss on Dispositions Year to Date Non-GAAP 2020 2020 (a) Adjusted 2019 Operating Profit $ 482.7 $ 760.6 $ 1,002.6 Net Interest Expense 93.0 93.0 96.2 Income Tax Expense 119.3 174.
Slide 10: Total Revenue Change
2020 Total Revenue Change Second Quarter Year to Date $ %∆ $ %∆ Prior Period Revenue $ 3,719.8 $ 7,188.7 Foreign exchange rate impact (a) (61.6) -1.7% (111.6) -1.6% Acquisition revenue, net of disposition revenue (b) (2.7) -0.1% (26.6) -0.4% Organic growth (c) (854.8) -23.0% (842.9) -11.7% Current P
Slide 11: Revenue by Discipline
2020 Revenue by Discipline Second Quarter Year to Date Healthcare Healthcare 10.7% 9.3% PR PR 10.1% 10.6% CRM CRM Execution Execution Advertising & Support & Support 8.8% Advertising 53.5% 54.7% 8.1% CRM CRM Consumer Consumer Experience Experience 17.1% 17.1% % Organic % Organic $ Mix % Growth Growt
Slide 12: Revenue by Region
2020 Revenue by Region Second Quarter Year to Date Latin Middle East Latin Middle East America & Africa America & Africa 2.0% 1.2% 2.0% 1.5% Asia Asia Pacific Pacific 11.4% 10.9% Euro Euro Markets & Markets & Other Other Europe Europe 16.5% United 16.8% United States States 56.7% 56.1% UK UK 9.5% 9.
Slide 13: Revenue by Region
2020 Revenue by Region Second Quarter Year to Date % Organic % Organic $ Mix % Growth Growth (a) $ Mix % Growth Growth (a) United States $ 1,587.4 -20.8% -20.7% United States $ 3,481.7 -10.5% -9.8% Other North 76.6 -32.3% -29.6% Other North 179.6 -17.7% -15.1% America America UK 265.5 -26.5% -23.7%
Slide 14: Revenue by Industry
Revenue by Industry Year to Date – 2020 Year to Date – 2019 Auto Auto T&E 10% 10% 8% T&E 8% Consumer Telcom Consumer Products 6% Products Telcom 9% 8% 5% Tech Financial 8% Financial Tech Services Services 7% 9% 8% Retail 6% Retail 7% Food & Food & Beverage Beverage 14% 14% Pharma & Pharma & Health H
Slide 15: Revenue by Industry - Second Quarter
Revenue by Industry Second Quarter – 2020 % Change excluding T&E Auto FX rate Telcom 6% 9% % Mix impact (a) 6% Food and Beverage 14% (26.3)% Consumer Products Consumer Products 9% (27.3)% Tech 9% Pharma & Health 18% (2.8)% 9% Financial Services 8% (28.1)% Financial Technology 9% (3.4)% Services Reta
Slide 16: Revenue by Industry - Year to Date
Revenue by Industry Year to Date – 2020 % Change excluding T&E Auto FX rate 8% 10% % Mix impact (a) Telcom Food and Beverage 14% (14.9)% 6% Consumer Products Consumer Products 8% (22.1)% 8% Pharma & Health 16% (3.1)% Tech Financial Financial Services 8% (20.5)% 8% Services Technology 8% 1.7 % 8% Aut
Slide 17: Cash Flow Performance
Cash Flow Performance Six Months Ended June 30 2020 2019 Net Income $ 257.4 $ 673.9 Depreciation and Amortization of Intangible Assets 114.1 117.4 Share-Based Compensation 34.9 34.3 Repositioning Costs and Net Loss on Dispositions 277.9 — Other Items to Reconcile to Net Cash Used in Operating 39.3 (
Slide 18: Cash Flow Performance - Uses of Cash
Cash Flow Performance Six Months Ended June 30 2020 2019 Free Cash Flow (a) $ 723.6 $ 813.7 Primary Uses of Cash: Dividends paid to Common Shareholders 282.9 280.4 Dividends paid to Noncontrolling Interest Shareholders 35.2 46.1 Capital Expenditures 33.6 48.8 Acquisition of Businesses and Affiliates
Slide 19: Current Credit Picture
Current Credit Picture Twelve Months Ended June 30 2020 2019 EBITDA (a) $ 1,830.6 $ 2,376.8 Total Debt / EBITDA 3.1 x 2.3 x Net Debt (b) / EBITDA 1.3 x 1.1 x Debt Bank Loans (Due Less Than 1 Year) $ 6.4 $ 16.1 CP & Borrowings Issued Under Revolver — — 2019 OFL Short-term Euro Notes (c) — 592.4 USD-d
Slide 20: Historical Returns
Historical Returns Return on Invested Capital (ROIC) (a): Twelve months ended June 30, 2020 17.8% Twelve months ended June 30, 2019 23.3% Return on Equity (b): Twelve months ended June 30, 2020 38.9% Twelve months ended June 30, 2019 56.3% (a) Return on Invested Capital is After Tax Reported Operati
Slide 21: Supplemental Financial Information
Supplemental Financial Information July 28, 2020 20
Slide 22: Omnicom Debt Structure
Omnicom Debt Structure Short-term Debt $6 2031 Euro 2030 Senior Senior Notes Notes $600 $562 2027 Euro 2030 Senior Senior Notes Notes $562 $600 2022 Senior Notes 2026 Senior $1,250 Notes $1,400 2024 Senior Notes $750 The above chart sets forth Omnicom’s debt outstanding at June 30, 2020. The amounts
Slide 23: Omnicom Debt Maturity Profile
Omnicom Debt Maturity Profile 2026 Senior 2022 Notes $1,400 Senior Notes $1,200 $1,000 2024 Senior Notes 2027 2030 2030 2031 $800 Euro Senior Senior Euro Senior Notes Notes Senior $600 Notes Notes $400 $200 Other Borrowings $0 20 0 21 1 22 2 23 3 24 4 25 5 26 6 27 7 28 8 29 9 30 0 31 1 -2 -2 -2 -2 -
Slide 24: Net Interest Expense Detail
Net Interest Expense Detail Second Quarter Year to Date 2020 2019 2020 2019 Net Interest expense: Interest expense $ 53.7 $ 66.6 $ 112.2 $ 129.6 Interest income 6.5 16.4 19.2 33.4 Net Interest Expense $ 47.2 $ 50.2 $ 93.0 $ 96.2 July 28, 2020 23
Slide 25: Supplemental Prior Period Information
Supplemental Prior Period Information 2020 2019 Full Q1 Q2 Q1 Q2 Q3 Q4 Year Revenue $ 3,406.9 $ 2,800.7 $ 3,468.9 $ 3,719.8 $ 3,623.8 $ 4,141.2 $ 14,953.7 Operating expenses: Salary and service costs: Salary and related service 1,642.4 1,424.7 1,666.0 1,660.2 1,724.5 1,844.5 6,895.2 costs Third-part
Slide 26: Acquisition Related Expenditures
2020 Acquisition Related Expenditures Six Months Ended June 30 Acquisition of Businesses and Affiliates (a) $ — Acquisition of Additional Noncontrolling Interests (b) 16.7 Contingent Purchase Price Payments (c) 12.8 Total Acquisition Expenditures (d) $ 29.5 (a) Includes acquisitions of a majority in
Slide 27: Condensed Cash Flow
Condensed Cash Flow Six Months Ended June 30 2020 2019 Net Income $ 257.4 $ 673.9 Share-Based Compensation 34.9 34.3 Depreciation and Amortization of Intangible Assets 114.1 117.4 Other Items to Reconcile to Net Cash Used in Operating Activities, net 39.3 (11.9) Repositioning costs and net loss on d
Slide 28: Net Cash Returned to Shareholders through Dividends and Share Repurchases
Net Cash Returned to Shareholders through Dividends and Share Repurchases From 2010 through June 30, 2020, Omnicom distributed 110% of Net Income to shareholders through dividends and share repurchases. 110% 108% $12.0 110% $10.9 $11.1 115% 4.6 $10.0 $9.5 4.3 117% $8.2 3.7 122% $8.0 $ In Billions $7
Slide 29: Non-GAAP Financial Measures - EBITA
2020 vs. 2019 Non-GAAP Financial Measures – EBITA Second Quarter Year to Date 2020 2019 2020 2019 Revenue $ 2,800.7 $ 3,719.8 $ 6,207.6 $ 7,188.7 Operating expenses (a) 2,738.2 3,146.1 5,724.9 6,186.1 Operating Profit 62.5 573.7 482.7 1,002.6 Operating Profit Margin % 2.2% 15.4% 7.8% 13.9% Add back:
Slide 30: Reconciliation of Non-GAAP Measures - EBITA and EBITDA
Reconciliation of Non-GAAP Financial Measures – EBITA and EBITDA Three Months Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 2020 2019 2020 2019 2020 2019 Net Income (Loss) - Omnicom Group Inc. $ (24.2) $ 370.7 $ 234.0 $ 633.9 $ 939.2 $ 1,332.0 Net Income (Loss) Attributed to Non
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Six Months Ended June 30 2020 2019 Net Cash Used in Operating Activities $ (862.2) $ (492.9) Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital (1,585.8) (1,306.6) Free Cash Flow $ 723.6 $ 813.7 Six Months Ended June 30
Slide 32: Reconciliation of Non-GAAP Measures - Operating Profit
Reconciliation of Non-GAAP Financial Measures – Operating Profit Second Quarter Year to Date 2020 2019 2020 2019 Operating Profit $ 62.5 $ 573.7 $ 482.7 $ 1,002.6 Net loss on dispositions of subsidiaries 25.1 — 25.1 — Repositioning actions 252.8 — 252.8 — Operating Profit, Non-GAAP 2020 Adjusted $ 3
Slide 33: Reconciliation of 2020 Non-GAAP Measures - Net Income
Reconciliation of 2020 Non-GAAP Financial Measures - Net Income - Omnicom Group Inc. Three Months Six Months Ended June 30, Ended June 30, 2020 2020 Net Income (Loss) - Omnicom Group Inc., as reported $ (24.2) $ 234.0 Net loss on dispositions, before income tax expense 25.1 25.1 Repositioning action
Slide 34: Disclosure
Disclosure The preceding materials have been prepared for use in the July 28, 2020 conference call on Omnicom’s results of operations for the three and six months ended June 30, 2020. The call will be archived on the Internet at http://investor.omnicomgroup.com/investor-relations/news-events-and-fil