0000029989false00000299892024-02-062024-02-060000029989omc:CommonStock0.15ParValueMember2024-02-062024-02-060000029989omc:A0800SeniorNotesDueJuly82027Member2024-02-062024-02-060000029989omc:A1.400SeniorNotesdueJuly82031Member2024-02-062024-02-060000029989omc:A2250SeniorNotesDueNovember222033Member2024-02-062024-02-06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 6, 2024
OMNICOM GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
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New York | 1-10551 | 13-1514814 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
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280 Park Avenue, New York, NY | 10017 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 415-3600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Common Stock, par value $0.15 per share | OMC | New York Stock Exchange |
| 0.800% Senior Notes due 2027 | OMC/27 | New York Stock Exchange |
| 1.400% Senior Notes due 2031 | OMC/31 | New York Stock Exchange |
| 2.250% Senior Notes due 2033 | OMC/33 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 6, 2024, Omnicom Group Inc. (“Omnicom” or the “Company”) published an earnings release reporting its financial results for the three and twelve months ended December 31, 2023. A copy of the earnings release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein in its entirety.
Item 7.01. Regulation FD Disclosure.
On February 6, 2024, Omnicom hosted an earnings call and posted on its website a related investor presentation in connection with publishing its financial results for the three and twelve months ended December 31, 2023. A copy of the presentation is furnished as Exhibit 99.2 and is incorporated by reference herein in its entirety.
The information under Items 2.02 and 7.01 above (including Exhibits 99.1 and 99.2 hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. Additionally, the submission of the information set forth in this Item 7.01 is not deemed an admission as to the materiality of any information that is required to be disclosed solely by Regulation FD.
Forward-Looking Statements.
Certain statements in the exhibits to this Current Report on Form 8-K constitute contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues affecting the distribution of our clients’ products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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| Exhibit Number | | Description |
| 99.1 | | |
| 99.2 | | |
| 104 | | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Omnicom Group Inc. |
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| By: | /s/ Andrew L. Castellaneta |
| | Name: | Andrew L. Castellaneta |
| | Title: | Senior Vice President, Chief Accounting Officer |
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Date: February 6, 2024 | | | |
OMNICOM REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS
2023 Fourth Quarter:
Revenue of $4,060.9 million, with organic growth of 4.4%
Operating income of $646.7 million; $661.2 million non-GAAP adjusted
Operating income margin of 15.9%; 16.3% non-GAAP adjusted
Diluted earnings per share of $2.13; $2.20 non-GAAP adjusted
2023 Full Year:
Revenue of $14,692.2 million, with organic growth of 4.1%
Operating income of $2,104.7 million; $2,231.9 million non-GAAP adjusted
Operating income margin of 14.3%; 15.2% non-GAAP adjusted
Diluted earnings per share of $6.91; $7.41 non-GAAP adjusted
NEW YORK, February 6, 2024 - Omnicom (NYSE: OMC) today announced results for the quarter and full year ended December 31, 2023.
"Omnicom finished 2023 with 4.4% organic revenue growth in the fourth quarter and 4.1% for the year. Looking out to full year 2024, we are set up well with solid fundamentals, tremendous opportunities in digital commerce and retail media from our Flywheel acquisition, and momentum in new business wins,” said John Wren, Chairman and Chief Executive Officer of Omnicom. “Our accelerated investments in analytics and AI will enhance our ability to drive the best outcomes for our clients, while shareholders remain supported by our profitable operations and balanced deployment of capital through dividends, acquisitions, and share repurchases."
Fourth Quarter 2023 Results
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| Three Months Ended December 31, | | | | | |
| $ in millions, except per share amounts | 2023 | | Non-GAAP Adj.3 | | Non-GAAP 2023 Adj. | | | 2022 | | | | | |
| Revenue | $ | 4,060.9 | | | $ | — | | | $ | 4,060.9 | | | | $ | 3,868.2 | | | | | | |
| Operating Income | 646.7 | | | 14.5 | | | 661.2 | | | | 642.7 | | | | | | |
| Operating Income Margin | 15.9 | % | | | | 16.3 | % | | | 16.6 | % | | | | | |
Net Income 1 | 425.7 | | | 13.0 | | | 438.7 | | | | 429.8 | | | | | | |
Net Income per Share - Diluted 1 | $ | 2.13 | | | | | $ | 2.20 | | | | $ | 2.09 | | | | | | |
EBITA2 | 668.1 | | | 14.5 | | | 682.6 | | | | 662.7 | | | | | | |
EBITA Margin2 | 16.5 | % | | | | 16.8 | % | | | 17.1 | % | | | | | |
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Notes: 1) Net Income and Net Income per Share for Omnicom Group Inc. 2) See non-GAAP reconciliations starting on page 11. 3) Included in the fourth quarter of 2023 within selling, general and administrative expenses are acquisition transaction costs of $14.5 million ($13.0 million after tax) primarily related to the purchase of Flywheel Digital, which closed on January 2, 2024.
280 Park Avenue, New York, NY 10017. Tel (212) 415-3672
Revenues
Reported revenue in the fourth quarter of 2023 increased $192.7 million, or 5.0%, to $4,060.9 million.
Worldwide revenue growth in the fourth quarter of 2023 compared to the fourth quarter of 2022 was led by an increase in organic growth of $171.3 million, or 4.4%. The impact of foreign currency translation increased revenue by $47.0 million, or 1.2%. Acquisition revenue, net of disposition revenue, reduced revenue by $25.6 million, or 0.7%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines.
Organic growth by discipline in the fourth quarter of 2023 compared to the fourth quarter of 2022 was as follows: 9.3% for Advertising & Media, 3.6% for Healthcare, and 1.0% for Commerce & Branding, partially offset by declines of 8.0% for Experiential, 2.9% for Public Relations, 1.1% for Precision Marketing, and 0.4% for Execution & Support.
Organic growth by region in the fourth quarter of 2023 compared to the fourth quarter of 2022 was as follows: 14.1% for Euro Markets & Other Europe, 10.9% for Asia Pacific, 5.8% for the United Kingdom, 13.7% for Latin America, and 0.6% for the United States, partially offset by declines of 17.3% for the Middle East & Africa, and 1.3% for Other North America.
Expenses
Operating expenses increased $188.7 million, or 5.9%, to $3,414.2 million in the fourth quarter of 2023 compared to the fourth quarter of 2022.
Salary and service costs increased $162.0 million, or 5.8%, to $2,954.0 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs and freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs increased $52.7 million, or 2.8%, to $1,906.1 million, primarily due to an increase in headcount as a result of organic growth and acquisitions, partially offset by our disposition activity earlier in the year. Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost and which we are required to include in revenue. Third-party service costs increased $97.5 million, or 12.4%, to $884.0 million, and third-party incidental costs increased $11.8 million, or 7.8%, to $163.9 million, both as a result of organic growth and our acquisitions. Third-party service costs were less impacted by our disposition activity.
Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, decreased $3.5 million, or 1.2%, to $290.9 million, due to a decrease in rent expense, partially offset by an increase in other occupancy expenses.
SG&A expenses increased $31.1 million, or 36.8%, to $115.6 million, primarily due to an increase in professional fees and $14.5 million of acquisition transaction costs related primarily to our Flywheel Digital acquisition, which closed on January 2, 2024.
Operating Income
Operating income increased $4.0 million, or 0.6%, to $646.7 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. The related operating income margin was 15.9% compared to 16.6% for the fourth quarter of 2022. In the fourth quarter of 2023, non-GAAP adjusted operating income of $661.2 million increased 2.9%, and the non-GAAP adjusted operating income margin was 16.3%.
Interest Expense, net
Net interest expense in the fourth quarter of 2023 increased $0.9 million to $26.8 million compared to the fourth quarter of 2022. Interest income decreased $2.7 million to $25.8 million, primarily due to lower average cash and short-term investment balances compared to the fourth quarter of 2022.
Income Taxes
Our effective tax rate of 26.5% in the fourth quarter of 2023 was flat with the rate in the fourth quarter of 2022.
Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income - Omnicom Group Inc. for the fourth quarter of 2023 decreased $4.1 million, or 1.0%, to $425.7 million compared to the fourth quarter of 2022. Diluted shares outstanding for the fourth quarter of 2023 decreased 2.8% to 199.5 million from 205.2 million in the fourth quarter of 2022 as a result of net share repurchases. Diluted net income per share of $2.13 increased $0.04, or 1.9%, from $2.09 per share. In the fourth quarter of 2023, non-GAAP adjusted diluted earnings per share of $2.20 increased 5.3%.
EBITA
EBITA increased $5.4 million, or 0.8%, to $668.1 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. The related EBITA margin was 16.5% compared to 17.1% for the fourth quarter of 2022. In the fourth quarter of 2023, non-GAAP adjusted EBITA of $682.6 million increased 3.0%, and the non-GAAP adjusted EBITA margin was 16.8%.
Full Year 2023 Results
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| Twelve Months Ended December 31, |
| $ in millions, except per share amounts | 2023 | | Non-GAAP Adj.3 | | Non-GAAP 2023 Adj. | | | 2022 | | | Non-GAAP Adj.3 | | Non-GAAP 2022 Adj. |
| Revenue | $ | 14,692.2 | | | $ | — | | | $ | 14,692.2 | | | | $ | 14,289.1 | | | | $ | — | | | $ | 14,289.1 | |
| Operating Income | 2,104.7 | | | 127.2 | | | 2,231.9 | | | | 2,083.3 | | | | 113.4 | | | 2,196.7 | |
| Operating Income Margin | 14.3 | % | | | | 15.2 | % | | | 14.6 | % | | | | | 15.4 | % |
Net Income 1 | 1,391.4 | | | 102.6 | | | 1,494.0 | | | | 1,316.5 | | | | 118.2 | | | 1,434.7 | |
Net Income per Share - Diluted 1 | $ | 6.91 | | | | | $ | 7.41 | | | | $ | 6.36 | | | | | | $ | 6.93 | |
EBITA2 | 2,185.0 | | | 127.2 | | | 2,312.2 | | | | 2,163.6 | | | | 113.4 | | | 2,277.0 | |
EBITA Margin2 | 14.9 | % | | | | 15.7 | % | | | 15.1 | % | | | | | 15.9 | % |
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Notes: 1) Net Income and Net Income per Share for Omnicom Group Inc. 2) See non-GAAP reconciliations starting on page 11. 3) For the year ended December 31, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs of $191.5 million ($145.5 million after tax) related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain of $78.8 million ($55.9 million after tax) on disposition of certain of our research businesses in the Execution & Support discipline. Included in the fourth quarter of 2023 within selling, general and administrative expenses are acquisition transaction costs of $14.5 million ($13.0 million after tax) primarily related to the purchase of Flywheel Digital in January 2024. The net aggregate impact to Operating Income for the year ended December 31, 2023 was a reduction of $127.2 million ($102.6 million after tax). The net aggregate effect of these items for the year ended December 31, 2023 to diluted net income per share - Omnicom Group Inc. was a decrease of $0.50. For the year ended December 31, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022, as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income - Omnicom Group Inc. by $118.2 million and diluted net income per share - Omnicom Group Inc. by $0.57.
Revenues
Reported revenue in 2023 increased $403.1 million, or 2.8%, to $14,692.2 million.
Worldwide revenue growth in 2023 compared to 2022 was led by an increase in organic growth of $584.5 million, or 4.1%. The impact of foreign currency translation reduced revenue by $28.3 million, or 0.2%. Acquisition revenue, net of disposition revenue, reduced revenue by $153.1 million, or 1.1%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines.
Organic growth by discipline in 2023 compared to 2022 was as follows: 6.5% for Advertising & Media, 3.8% for Healthcare, 3.1% for Precision Marketing, 3.0% for Experiential, and 1.2% for Commerce & Branding, partially offset by declines of 1.0% for Execution & Support and 0.8% for Public Relations.
Organic growth by region in 2023 compared to 2022 was as follows: 2.6% for the United States, 7.2% for Euro Markets & Other Europe, 6.0% for Asia Pacific, 4.7% for the United Kingdom, 13.0% for Latin America, and 3.0% for Other North America, partially offset by a decline of 5.8% for Middle East & Africa.
Expenses
Operating expenses increased $381.7 million, or 3.1%, to $12,587.5 million in 2023 compared to 2022. Included in operating expenses for 2023 is the net impact of the gain on disposition of certain of our research businesses in our Execution & Support discipline of $78.8 million and repositioning costs related to real estate and other exit charges and severance costs of $191.5 million.
Salary and service costs increased $375.3 million, or 3.6%, to $10,701.2 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs and freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs increased $14.9 million, or 0.2%, to $7,212.8 million, primarily due to an increase in headcount as a result of organic growth and acquisitions, partially offset by our disposition activity earlier in the year. Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost and which we are required to include in revenue. Third-party service costs increased $332.4 million, or 12.9%, to $2,917.9 million, and third-party incidental costs increased $28.0 million, or 5.2%, to $570.5 million, both as a result of organic growth and our acquisitions for the year. Third-party service costs were less impacted by our disposition activity.
Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, were flat due to increases in other occupancy expenses, offset by lower rent.
SG&A expenses increased $15.2 million, or 4.0%, to $393.7 million, primarily due to an increase in professional fees, including $14.5 million of acquisition transaction costs primarily related to our Flywheel acquisition, which closed on January 2, 2024.
Operating Income
Operating income increased $21.4 million, or 1.0%, to $2,104.7 in 2023 compared to 2022. The related operating income margin was 14.3% compared to 14.6% for 2022. In 2023, non-GAAP adjusted operating income of $2,231.9 million increased 1.6%, and the non-GAAP adjusted operating income margin was 15.2%.
Interest Expense, net
Net interest expense in 2023 decreased $26.1 million to $111.8 million compared to 2022. Interest income increased $36.0 million to $106.7 million, primarily due to higher interest rates on cash balances and short-term investment balances compared to 2022.
Income Taxes
Our effective tax rate of 26.3% in 2023 decreased from 28.1% in 2022. The higher effective tax rate for 2022
was primarily due to the result of the non-deductibility of $113.4 million in charges recorded in the first quarter
of 2022 arising from the effects of the war in Ukraine, as well as an additional increase in income tax
expense of $4.8 million related to the disposition of our businesses in Russia.
Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income - Omnicom Group Inc. in 2023 increased $74.9 million, or 5.7%, to $1,391.4 compared to 2022. Diluted shares outstanding for 2023 decreased 2.7% to 201.4 million from 207.0 million in 2022 as a result of net share repurchases. Diluted net income per share increased $0.55, or 8.6%, to $6.91 per share. In 2023, non-GAAP adjusted diluted earnings per share of $7.41 increased 6.9%.
EBITA
EBITA increased $21.4 million, or 1.0%, to $2,185.0 million in 2023 compared to 2022. The related EBITA margin was 14.9% compared to 15.1% for 2022. In 2023, non-GAAP adjusted EBITA of $2,312.2 million increased 1.5%, and the non-GAAP adjusted EBITA margin was 15.7%.
Risks and Uncertainties
Current global economic challenges, including geopolitical events, international hostilities, acts of terrorism, public health crises, high inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness, and other developments.
Definitions - Components of Revenue Change
We use certain terms in describing the components of the change in revenue above.
Foreign exchange rate impact: calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue.
Acquisition revenue, net of disposition revenue: Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date, and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the description above.
Organic growth: calculated by subtracting the foreign exchange rate impact component and the acquisition revenue, net of disposition revenue component from total revenue growth.
Conference Call
Omnicom will host a conference call to review its financial results on Tuesday, February 6, 2024 at 4:30 p.m. Eastern Time. Participants can listen to the conference call by calling 844-291-6362 (domestic) or 234-720-6995 (international), along with access code 1468163. The call will also be simulcast and archived on our investor relations website.
Corporate Responsibility
At Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. Please explore our website (omnicomgroup.com/corporate-responsibility) for highlights of our progress across the areas on which we focus: Empower People, Protect Our Planet, Lead Responsibly.
About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.
Contact
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| Investors: | Gregory Lundberg | greg.lundberg@omnicomgroup.com |
| Media: | Joanne Trout | joanne.trout@omnicomgroup.com |
Non-GAAP Financial Measures
We present financial measures determined in accordance with generally accepted accounting principles in the United States (“GAAP”) and adjustments to the GAAP presentation (“Non-GAAP”), which we believe are meaningful for understanding our performance. EBITA is defined as operating income before interest, taxes, and amortization of intangible assets, and EBITA margin is defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). We also use Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITA, Adjusted EBITA Margin, Adjusted Income Tax Expense, Adjusted Net Income – Omnicom Group Inc. and Adjusted Net Income per diluted share – Omnicom Group Inc. as additional operating performance measures. We believe these measures are useful in evaluating the impact of certain items on operating performance and allow for comparability between reporting periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies.
Forward-Looking Statements
Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore,
you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues affecting the distribution of our clients’ products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended
December 31, | | |
| 2023 | | 2022 | | | | | | | | |
| Revenue | $ | 4,060.9 | | | $ | 3,868.2 | | | | | | | | | |
| Operating Expenses: | | | | | | | | | | | |
| Salary and service costs | 2,954.0 | | | 2,792.0 | | | | | | | | | |
| Occupancy and other costs | 290.9 | | | 294.4 | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Cost of services | 3,244.9 | | | 3,086.4 | | | | | | | | | |
Selling, general and administrative expenses1 | 115.6 | | | 84.5 | | | | | | | | | |
| Depreciation and amortization | 53.7 | | | 54.6 | | | | | | | | | |
| Total operating expenses | 3,414.2 | | | 3,225.5 | | | | | | | | | |
| Operating Income | 646.7 | | | 642.7 | | | | | | | | | |
| Interest Expense | 52.6 | | | 54.4 | | | | | | | | | |
| Interest Income | 25.8 | | | 28.5 | | | | | | | | | |
| Income Before Income Taxes and Income From Equity Method Investments | 619.9 | | | 616.8 | | | | | | | | | |
| Income Tax Expense | 164.2 | | | 163.5 | | | | | | | | | |
| Income From Equity Method Investments | 2.1 | | | 2.6 | | | | | | | | | |
| Net Income | 457.8 | | | 455.9 | | | | | | | | | |
| Net Income Attributed To Noncontrolling Interests | 32.1 | | | 26.1 | | | | | | | | | |
| Net Income - Omnicom Group Inc. | $ | 425.7 | | | $ | 429.8 | | | | | | | | | |
| Net Income Per Share - Omnicom Group Inc.: | | | | | | | | | | | |
| Basic | $ | 2.15 | | | $ | 2.11 | | | | | | | | | |
| Diluted | $ | 2.13 | | | $ | 2.09 | | | | | | | | | |
| | | | | | | | | | | |
| Revenue | $ | 4,060.9 | | | $ | 3,868.2 | | | | | | | | | |
| Operating Margin % | 15.9 | % | | 16.6 | % | | | | | | | | |
| EBITA | $ | 668.1 | | | $ | 662.7 | | | | | | | | | |
| EBITA Margin % | 16.5 | % | | 17.1 | % | | | | | | | | |
| | | | | | | | | | | |
| Dividends Declared Per Common Share | $ | 0.70 | | | $ | 0.70 | | | | | | | | | |
1) Included in the fourth quarter of 2023 within selling, general and administrative expenses are acquisition transaction costs of $14.5 million ($13.0 million after tax), primarily related to the purchase of Flywheel Digital in January 2024.
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | |
| | | Full Year |
| | | | | | | 2023 | | 2022 | | |
| Revenue | | | | | | | $ | 14,692.2 | | | $ | 14,289.1 | | | |
| Operating Expenses: | | | | | | | | | | | |
| Salary and service costs | | | | | | | 10,701.2 | | | 10,325.9 | | | |
| Occupancy and other costs | | | | | | | 1,168.8 | | | 1,168.6 | | | |
Real estate and other repositioning costs1 | | | | | | | 191.5 | | | — | | | |
Charges arising from the effects of the war in Ukraine2 | | | | | | | — | | | 113.4 | | | |
| | | | | | | | | | | |
Gain on disposition of subsidiary1 | | | | | | | (78.8) | | | — | | | |
| Cost of services | | | | | | | 11,982.7 | | | 11,607.9 | | | |
Selling, general and administrative expenses1 | | | | | | | 393.7 | | | 378.5 | | | |
| Depreciation and amortization | | | | | | | 211.1 | | | 219.4 | | | |
Total operating expenses1,2 | | | | | | | 12,587.5 | | | 12,205.8 | | | |
| Operating Income | | | | | | | 2,104.7 | | | 2,083.3 | | | |
| Interest Expense | | | | | | | 218.5 | | | 208.6 | | | |
| Interest Income | | | | | | | 106.7 | | | 70.7 | | | |
| Income Before Income Taxes and Income From Equity Method Investments | | | | | | | 1,992.9 | | | 1,945.4 | | | |
Income Tax Expense1,2 | | | | | | | 524.9 | | | 546.8 | | | |
| Income From Equity Method Investments | | | | | | | 5.2 | | | 5.2 | | | |
Net Income1,2 | | | | | | | 1,473.2 | | | 1,403.8 | | | |
| Net Income Attributed To Noncontrolling Interests | | | | | | | 81.8 | | | 87.3 | | | |
Net Income - Omnicom Group Inc.1,2 | | | | | | | $ | 1,391.4 | | | $ | 1,316.5 | | | |
| Net Income Per Share - Omnicom Group Inc.: | | | | | | | | | | | |
| Basic | | | | | | | $ | 6.98 | | | $ | 6.40 | | | |
Diluted1,2 | | | | | | | $ | 6.91 | | | $ | 6.36 | | | |
| | | | | | | | | | | |
| Revenue | | | | | | | $ | 14,692.2 | | | $ | 14,289.1 | | | |
| Operating Margin % | | | | | | | 14.3 | % | | 14.6 | % | | |
| EBITA | | | | | | | $ | 2,185.0 | | | $ | 2,163.6 | | | |
| EBITA Margin % | | | | | | | 14.9 | % | | 15.1 | % | | |
| | | | | | | | | | | |
| Dividends Declared Per Common Share | | | | | | | $ | 2.80 | | | $ | 2.80 | | | |
1) For the year ended December 31, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs of $191.5 million ($145.5 million after tax) related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain of $78.8 million ($55.9 million after tax) on disposition of certain of our research businesses in the Execution & Support discipline. Included in the year ended December 31, 2023 within selling, general and administrative expenses are acquisition transaction costs of $14.5 million ($13.0 million after tax) primarily related to the purchase of Flywheel Digital in January 2024. The net aggregate impact to Operating Income for the year ended December 31, 2023 was a reduction of $127.2 million ($102.6 million after tax). The net aggregate effect of these items for the year ended December 31, 2023 to diluted net income per share - Omnicom Group Inc. was a decrease of $0.50.
2) For the year ended December 31, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022, as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income - Omnicom Group Inc. by $118.2 million and diluted net income per share - Omnicom Group Inc. by $0.57.
OMNICOM GROUP INC. AND SUBSIDIARIES
DETAIL OF OPERATING EXPENSES
(Unaudited)
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
December 31, | | | | | | |
| 2023 | | 2022 | | | | | | | | |
| Revenue | $ | 4,060.9 | | | | | $ | 3,868.2 | | | | | | | | | | | |
| Operating Expenses: | | | | | | | | | | | | | | | |
| Salary and service costs: | | | | | | | | | | | | | | | |
| Salary and related costs | 1,906.1 | | | | | 1,853.4 | | | | | | | | | | | |
Third-party service costs1 | 884.0 | | | | | 786.5 | | | | | | | | | | | |
Third-party incidental costs2 | 163.9 | | | | | 152.1 | | | | | | | | | | | |
| Total salary and service costs | 2,954.0 | | | | | 2,792.0 | | | | | | | | | | | |
| Occupancy and other costs | 290.9 | | | | | 294.4 | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Cost of services | 3,244.9 | | | | | 3,086.4 | | | | | | | | | | | |
Selling, general and administrative expenses3 | 115.6 | | | | | 84.5 | | | | | | | | | | | |
| Depreciation and amortization | 53.7 | | | | | 54.6 | | | | | | | | | | | |
| Total operating expenses | 3,414.2 | | | | | 3,225.5 | | | | | | | | | | | |
| Operating Income | $ | 646.7 | | | | | $ | 642.7 | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Full Year | | | | |
| | | | | 2023 | | 2022 | | | | |
| Revenue | | | | | | | $ | 14,692.2 | | | $ | 14,289.1 | | | | | | | |
| Operating Expenses: | | | | | | | | | | | | | | | |
| Salary and service costs: | | | | | | | | | | | | | | | |
| Salary and related costs | | | | | | | 7,212.8 | | | 7,197.9 | | | | | | | |
Third-party service costs1 | | | | | | | 2,917.9 | | | 2,585.5 | | | | | | | |
Third-party incidental costs2 | | | | | | | 570.5 | | | 542.5 | | | | | | | |
| Total salary and service costs | | | | | | | 10,701.2 | | | 10,325.9 | | | | | | | |
| Occupancy and other costs | | | | | | | 1,168.8 | | | 1,168.6 | | | | | | | |
| | | | | | | | | | | | | | | |
| Real estate and other repositioning costs | | | | | | | 191.5 | | | — | | | | | | | |
| Charges arising from the effects of the war in Ukraine | | | | | | | — | | | 113.4 | | | | | | | |
| Gain on disposition of subsidiary | | | | | | | (78.8) | | | — | | | | | | | |
| | | | | | | | | | | | | | | |
| Cost of services | | | | | | | 11,982.7 | | | 11,607.9 | | | | | | | |
Selling, general and administrative expenses3 | | | | | | | 393.7 | | | 378.5 | | | | | | | |
| Depreciation and amortization | | | | | | | 211.1 | | | 219.4 | | | | | | | |
| Total operating expenses | | | | | | | 12,587.5 | | | 12,205.8 | | | | | | | |
| Operating Income | | | | | | | $ | 2,104.7 | | | $ | 2,083.3 | | | | | | | |
| | | | | | | | | | | | | | | |
1) Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients.
2) Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs which we bill back to the
client directly at our cost and which we are required to include in revenue.
3) Included in the three and twelve months ended December 31, 2023 within selling, general and administrative expenses are acquisition
transaction costs of $14.5 million ($13.0 million after tax), primarily related to the purchase of Flywheel Digital in January 2024.
OMNICOM GROUP INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
December 31, | | Full Year |
| 2023 | | 2022 | | 2023 | | 2022 |
| Net Income - Omnicom Group Inc. | $ | 425.7 | | | $ | 429.8 | | | $ | 1,391.4 | | | $ | 1,316.5 | |
| Net Income Attributed To Noncontrolling Interests | 32.1 | | | 26.1 | | | 81.8 | | | 87.3 | |
| Net Income | 457.8 | | | 455.9 | | | 1,473.2 | | | 1,403.8 | |
| Income From Equity Method Investments | 2.1 | | | 2.6 | | | 5.2 | | | 5.2 | |
| Income Tax Expense | 164.2 | | | 163.5 | | | 524.9 | | | 546.8 | |
| Income Before Income Taxes and Income From Equity Method Investments | 619.9 | | | 616.8 | | | 1,992.9 | | | 1,945.4 | |
| Interest Expense | 52.6 | | | 54.4 | | | 218.5 | | | 208.6 | |
| Interest Income | 25.8 | | | 28.5 | | | 106.7 | | | 70.7 | |
| Operating Income | 646.7 | | | 642.7 | | | 2,104.7 | | | 2,083.3 | |
| Add back: Amortization of intangible assets | 21.4 | | | 20.0 | | | 80.3 | | | 80.3 | |
| Earnings before interest, taxes and amortization of intangible assets (“EBITA”) | $ | 668.1 | | | $ | 662.7 | | | $ | 2,185.0 | | | $ | 2,163.6 | |
| | | | | | | |
| Real estate and other repositioning costs | — | | | — | | | 191.5 | | | — | |
| Charges arising from the effects of the war in Ukraine | — | | | — | | | — | | | 113.4 | |
| Gain on disposition of subsidiary | — | | | — | | | (78.8) | | | — | |
| Acquisition transaction costs | 14.5 | | | — | | | 14.5 | | | — | |
| EBITA - Adjusted | $ | 682.6 | | | $ | 662.7 | | | $ | 2,312.2 | | | $ | 2,277.0 | |
| | | | | | | |
| Revenue | $ | 4,060.9 | | | $ | 3,868.2 | | | $ | 14,692.2 | | | $ | 14,289.1 | |
| | | | | | | |
| EBITA | $ | 668.1 | | | $ | 662.7 | | | $ | 2,185.0 | | | $ | 2,163.6 | |
| EBITA Margin % | 16.5 | % | | 17.1 | % | | 14.9 | % | | 15.1 | % |
| EBITA - Adjusted | $ | 682.6 | | | $ | 662.7 | | | $ | 2,312.2 | | | $ | 2,277.0 | |
| EBITA Margin % - Adjusted | 16.8 | % | | 17.1 | % | | 15.7 | % | | 15.9 | % |
The above table reconciles the U.S. GAAP financial measure of Net Income - Omnicom Group Inc. to EBITA (defined as earnings before interest, taxes and amortization of intangible assets) and EBITA Margin (defined as EBITA divided by revenue) for the periods presented. The above table also presents non-GAAP adjustments to EBITA to present EBITA - Adjusted for the periods presented. We use EBITA and EBITA Margin as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization of intangible assets arising from acquisitions). Accordingly, we believe EBITA and EBITA Margin are useful measures for investors to evaluate the performance of our business.
OMNICOM GROUP INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, |
| Reported 2023 | | Non-GAAP Adj. | | Non-GAAP 2023 Adj. | | | Reported 2022 | | Non-GAAP Adj. | | Non-GAAP 2022 Adj. |
| Revenue | $ | 4,060.9 | | | $ | — | | | $ | 4,060.9 | | | | $ | 3,868.2 | | | $ | — | | | $ | 3,868.2 | |
| | | | | | | | | | | | |
Operating Expenses2 | 3,414.2 | | | (14.5) | | | 3,399.7 | | | | 3,225.5 | | | — | | | 3,225.5 | |
| Operating Income | 646.7 | | | 14.5 | | | 661.2 | | | | 642.7 | | | — | | | 642.7 | |
| Operating Income Margin % | 15.9 | % | | | | 16.3 | % | | | 16.6 | % | | | | 16.6 | % |
| | | | | | | | | | | | |
| Add back: Amortization of intangible assets | 21.4 | | | — | | | 21.4 | | | | 20.0 | | | — | | | 20.0 | |
EBITA1 | $ | 668.1 | | | $ | 14.5 | | | $ | 682.6 | | | | $ | 662.7 | | | $ | — | | | $ | 662.7 | |
EBITA Margin %1 | 16.5 | % | | | | 16.8 | % | | | 17.1 | % | | | | 17.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Full Year |
| Reported 2023 | | Non-GAAP Adj. (2) | | Non-GAAP 2023 Adj. | | | Reported 2022 | | Non-GAAP Adj. (2) | | Non-GAAP 2022 Adj. |
| Revenue | $14,692.2 | | $ | — | | | $ | 14,692.2 | | | | $ | 14,289.1 | | | $ | — | | | $ | 14,289.1 | |
| | | | | | | | | | | | |
Operating Expenses2 | 12,587.5 | | | (127.2) | | | 12,460.3 | | | | 12,205.8 | | | (113.4) | | | 12,092.4 | |
| Operating Income | 2,104.7 | | | 127.2 | | | 2,231.9 | | | | 2,083.3 | | | 113.4 | | | 2,196.7 | |
| Operating Income Margin % | 14.3 | % | | | | 15.2 | % | | | 14.6 | % | | | | 15.4 | % |
| | | | | | | | | | | | |
| Add back: Amortization of intangible assets | 80.3 | | | — | | | 80.3 | | | | 80.3 | | | — | | | 80.3 | |
EBITA1 | $ | 2,185.0 | | | $ | 127.2 | | | $ | 2,312.2 | | | | $ | 2,163.6 | | | $ | 113.4 | | | $ | 2,277.0 | |
EBITA Margin %1 | 14.9 | % | | | | 15.7 | % | | | 15.1 | % | | | | 15.9 | % |
1) See Non-GAAP reconciliation on page 11. 2) For the full year ended December 31, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs of $191.5 million ($145.5 million after tax) related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain of $78.8 million ($55.9 million after tax) on disposition of certain of our research businesses in the Execution & Support discipline. Included in the three and twelve months ended December 31, 2023 within selling, general and administrative expenses are acquisition transaction costs of $14.5 million ($13.0 million after tax) primarily related to the purchase of Flywheel Digital in January 2024. The net aggregate impact to Operating Income for the full year ended December 31, 2023 was a reduction of $127.2 million ($102.6 million after tax). The net aggregate effect of these items in the full year ended December 31, 2023 to diluted net income per share - Omnicom Group Inc. was a decrease of $0.50.
For the full year ended December 31, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022, as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income - Omnicom Group Inc. by $118.2 million and diluted net income per share - Omnicom Group Inc. by $0.57.
OMNICOM GROUP INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | | Full Year |
| 2023 | | 2022 | | | 2023 | | 2022 |
| Operating Income - Reported | $ | 646.7 | | | $ | 642.7 | | | | $ | 2,104.7 | | | $ | 2,083.3 | |
| Real estate and other repositioning costs | — | | | — | | | | 191.5 | | | — | |
| Charges arising from the effects of the war in Ukraine | — | | | — | | | | — | | | 113.4 | |
| Gain on disposition of subsidiary | — | | | — | | | | (78.8) | | | — | |
| Acquisition transaction costs | 14.5 | | | — | | | | 14.5 | | | — | |
| Non-GAAP Operating Income - Adjusted | $ | 661.2 | | | $ | 642.7 | | | | $ | 2,231.9 | | | $ | 2,196.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Full Year |
| 2023 | | 2022 | | | | 2023 | | 2022 | | |
| Income Tax Expense - Reported | $ | 164.2 | | | $ | 163.5 | | | | | $ | 524.9 | | | $ | 546.8 | | | |
| Income tax expense related to: | | | | | | | | | | | |
| Real estate and other repositioning costs | — | | | — | | | | | 46.0 | | | — | | | |
| Charges arising from the effects of the war in Ukraine | — | | | — | | | | | — | | | (4.8) | | | |
| Gain on disposition of subsidiary | — | | | — | | | | | (22.9) | | | — | | | |
| Acquisition transaction costs | 1.5 | | | — | | | | | 1.5 | | | — | | | |
| Non-GAAP Income Tax Expense- Adjusted | $ | 165.7 | | | $ | 163.5 | | | | | $ | 549.5 | | | $ | 542.0 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | | Full Year |
| 2023 | | 2022 | | | 2023 | | 2022 |
| Net Income | Net Income per Share- Diluted | | Net Income | Net Income per Share- Diluted | | | Net Income | Net Income per Share- Diluted | | Net Income | Net Income per Share- Diluted |
| Net Income - Omnicom Group Inc. - Reported | $ | 425.7 | | $ | 2.13 | | | $ | 429.8 | | $ | 2.09 | | | | $ | 1,391.4 | | $ | 6.91 | | | $ | 1,316.5 | | $ | 6.36 | |
| Real estate and other repositioning costs | — | | — | | | — | | — | | | | 145.5 | | 0.72 | | | — | | — | |
| Charges arising from the effects of the war in Ukraine | — | | — | | | — | | — | | | | — | | — | | | 118.2 | | 0.57 | |
| Gain on disposition of subsidiary | — | | — | | | — | | — | | | | (55.9) | | (0.28) | | | — | | — | |
| Acquisition transaction costs | 13.0 | | 0.07 | | | — | | — | | | | 13.0 | | 0.06 | | | — | | — | |
Non-GAAP Net Income - Omnicom Group Inc. - Adjusted1 | $ | 438.7 | | $ | 2.20 | | | $ | 429.8 | | $ | 2.09 | | | | $ | 1,494.0 | | $ | 7.41 | | | $ | 1,434.7 | | $ | 6.93 | |
1) Diluted Shares for the three months ended December 31, 2023 and 2022 in millions were 199.5 and 205.2, respectively. Diluted Shares for the full year ended December 31, 2023 and 2022 in millions were 201.4 and 207.0, respectively.
The above tables reconcile GAAP financial measures of Operating Income, Income Tax Expense, and Net Income - Omnicom Group Inc., to adjusted Non-GAAP financial measures of Non-GAAP Operating Income - Adjusted, Non-GAAP Income Tax Expense - Adjusted, and Non-GAAP Net Income-Omnicom Group Inc. - Adjusted for the periods presented. Management believes excluding the real estate and other repositioning costs and acquisition transaction costs, partially offset by a gain on the disposition of certain of our research businesses in 2023 and excluding the charge arising from the effects of the war in Ukraine in 2022, provides investors with a better picture of the performance of the business during the periods presented.
2023 Fourth Quarter & Full Year February 6, 2024
2 Highlights Revenue • 4.4% organic revenue growth in Q4 2023 • Advertising & Media, led by the performance of our global media businesses, had 9.3% organic growth in Q4 2023 • Full-year 2024 total organic revenue growth estimated to be 3.5% to 5.0% Income • Adjusted operating income $661.2 million, up 2.9% yr/yr in Q4. Adjusted EBITA $682.6 million, up 3.0% yr/yr in Q4(i) • 16.3% operating income margin and 16.8% adjusted EBITA margin in Q4(i) • $2.20 in Q4 non-GAAP adjusted diluted EPS, +5.3%(i) Business update • New global business wins create a positive tailwind for 2024 • Flywheel Digital acquisition (Jan 2, 2024) is a significant opportunity to drive growth for clients in digital commerce and retail media • Omni applying GenAI to proprietary and client data to deliver intelligent insights mining, performance optimization, campaign recalibration, and creative automation Capital allocation • $570.8 million share repurchases and $633.6 million in common dividends for full year 2023 • 40.5% Return on Equity and 25.8% Return on Invested Capital for the 12 months ended December 31, 2023 (i) See Non-GAAP reconciliations on pages 19 - 22.
3 Fourth Quarter Full Year 2023 2022 2023 2022 Revenue $ 4,060.9 $ 3,868.2 $ 14,692.2 $ 14,289.1 Operating Expenses (a) 3,414.2 3,225.5 12,587.5 12,205.8 Operating Income 646.7 642.7 2,104.7 2,083.3 Net Interest Expense 26.8 25.9 111.8 137.9 Income Tax Expense(b) 164.2 163.5 524.9 546.8 Income from Equity Method Investments 2.1 2.6 5.2 5.2 Net Income Attributed to Noncontrolling Interests 32.1 26.1 81.8 87.3 Net Income - Omnicom Group Inc.(a)(b) $ 425.7 $ 429.8 $ 1,391.4 $ 1,316.5 Diluted Shares 199.5 205.2 201.4 207.0 Net Income per Share - Diluted(a)(b) $ 2.13 $ 2.09 $ 6.91 $ 6.36 Dividends Declared Per Common Share $ 0.70 $ 0.70 $ 2.80 $ 2.80 Income Statement Summary In millions except per share amounts. See Notes (a) and (b) on page 13.
4 Revenue Change Fourth Quarter Full Year $ % ∆ $ % ∆ Prior Period Revenue $ 3,868.2 $ 14,289.1 Foreign exchange rate impact(1) 47.0 1.2 % (28.3) (0.2) % Acquisition revenue, net of disposition revenue(2) (25.6) (0.7) % (153.1) (1.1) % Organic growth(3) 171.3 4.4 % 584.5 4.1 % Current Period Revenue $ 4,060.9 5.0 % $ 14,692.2 2.8 % In millions. See Definitions (1) though (3) on page 13.
5 Revenue by Discipline Fourth Quarter Revenue % of Rev % Growth % Organic Growth(3) Advertising & Media $ 2,294.0 56.5 % 11.1 % 9.3 % Precision Marketing 360.8 8.9 % 0.2 % (1.1) % Commerce & Branding 222.0 5.5 % 1.9 % 1.0 % Experiential 205.9 5.1 % (7.8) % (8.0) % Execution & Support 207.6 5.1 % (19.8) % (0.4) % Public Relations 417.4 10.3 % 3.5 % (2.9) % Healthcare 353.2 8.6 % 3.7 % 3.6 % Total $ 4,060.9 100.0 % 5.0 % 4.4 % Full Year Revenue % of Rev % Growth % Organic Growth(3) Advertising & Media $ 7,891.2 53.7 % 6.2 % 6.5 % Precision Marketing 1,473.5 10.0 % 3.3 % 3.1 % Commerce & Branding 853.7 5.8 % 0.7 % 1.2 % Experiential 651.4 4.4 % 2.5 % 3.0 % Execution & Support 880.8 6.0 % (17.7) % (1.0) % Public Relations 1,578.9 10.7 % 1.7 % (0.8) % Healthcare 1,362.7 9.4 % 3.1 % 3.8 % Total $ 14,692.2 100.0 % 2.8 % 4.1 % In millions. See Definitions (1) though (3) on page 13.
6 Fourth Quarter Revenue % of Rev % Growth % Organic Growth(3) United States $ 1,940.0 47.8 % (0.6) % 0.6 % Other North America 122.2 3.0 % (3.2) % (1.3) % United Kingdom 423.6 10.4 % 10.7 % 5.8 % Euro Markets & Other Europe 829.0 20.4 % 18.0 % 14.1 % Asia Pacific 506.8 12.5 % 9.6 % 10.9 % Latin America 128.8 3.2 % 23.7 % 13.7 % Middle East & Africa 110.5 2.7 % (19.8) % (17.3) % Total $ 4,060.9 100.0 % 5.0 % 4.4 % Revenue by Region Full Year Revenue % of Rev % Growth % Organic Growth(3) United States $ 7,471.6 50.9 % 1.4 % 2.6 % Other North America 479.4 3.3 % (1.9) % 3.0 % United Kingdom 1,587.3 10.8 % 4.0 % 4.7 % Euro Markets & Other Europe 2,679.6 18.2 % 7.9 % 7.2 % Asia Pacific 1,777.9 12.1 % 1.8 % 6.0 % Latin America 386.8 2.6 % 17.6 % 13.0 % Middle East & Africa 309.6 2.1 % (10.7) % (5.8) % Total $ 14,692.2 100.0 % 2.8 % 4.1 % In millions. See Definitions (1) though (3) on page 13.
7 Fourth Quarter Full Year 2023 2022 2023 2022 Pharmaceuticals and Healthcare 17% 18% 16% 16% Food and Beverage 15% 14% 15% 14% Auto 11% 10% 12% 10% Technology 8% 10% 8% 11% Consumer Products 9% 7% 8% 8% Financial Services 7% 8% 8% 7% Travel & Entertainment 6% 7% 6% 7% Retail 7% 6% 6% 6% Telecommunications 4% 4% 4% 5% Government 4% 3% 4% 3% Services 3% 3% 3% 2% Oil, Gas & Utilities 2% 2% 2% 2% Education 1% 1% 1% 1% Not-for-Profit 1% 1% 1% 1% Other 5% 6% 6% 7% Total 100% 100% 100% 100% Revenue by Industry Sector Note: Prior year period amounts conform to the current period presentation.
8 Operating Expense Detail Fourth Quarter Full Year 2023 % of Rev 2022 % of Rev 2023 % of Rev 2022 % of Rev Revenue $ 4,060.9 $ 3,868.2 $ 14,692.2 $ 14,289.1 Operating expenses: Salary and related costs 1,906.1 46.9 % 1,853.4 47.9 % 7,212.8 49.1 % 7,197.9 50.4 % Third-party service costs(c) 884.0 21.8 % 786.5 20.3 % 2,917.9 19.9 % 2,585.5 18.1 % Third-party incidental costs(d) 163.9 4.0 % 152.1 3.9 % 570.5 3.9 % 542.5 3.8 % Total salary and service costs 2,954.0 2,792.0 10,701.2 10,325.9 Occupancy and other costs 290.9 7.2 % 294.4 7.6 % 1,168.8 8.0 % 1,168.6 8.2 % Repositioning costs(a) — — % — — % 191.5 1.3 % — — % Gain on disposition of subsidiary(a) — — % — — % (78.8) (0.5) % — — % Charges arising from the effects of the war in Ukraine(a) — — % — — % — — % 113.4 0.8 % Cost of services 3,244.9 3,086.4 11,982.7 11,607.9 Selling, general and administrative expenses(a) 115.6 2.8 % 84.5 2.2 % 393.7 2.7 % 378.5 2.6 % Depreciation and amortization 53.7 1.4 % 54.6 1.4 % 211.1 1.4 % 219.4 1.5 % Total operating expenses 3,414.2 84.1 % 3,225.5 83.4 % 12,587.5 85.7 % 12,205.8 85.4 % Operating Income $ 646.7 $ 642.7 $ 2,104.7 $ 2,083.3 In millions. See Notes on page 13.
9 Fourth Quarter Full Year Reported 2023 Non-GAAP Adjustments Non-GAAP Adjusted 2023 Reported 2022 Reported 2023 Non-GAAP Adjustments Non-GAAP Adjusted 2023 Reported 2022 Non-GAAP Adjustments Non-GAAP Adjusted 2022 Revenue $ 4,060.9 $ — $ 4,060.9 $ 3,868.2 $ 14,692.2 $ — $ 14,692.2 $ 14,289.1 $ — $ 14,289.1 Operating Expenses: Real estate and other repositioning costs(a) — — (191.5) — Charges arising from the effects of the war in Ukraine(a) — — — (113.4) Gain on disposition of subsidiary(a) — — 78.8 — Acquisition transaction costs(a) (14.5) — (14.5) — Operating Expenses(a) 3,414.2 (14.5) 3,399.7 3,225.5 12,587.5 (127.2) 12,460.3 12,205.8 (113.4) 12,092.4 Operating Income(a) 646.7 14.5 661.2 642.7 2,104.7 127.2 2,231.9 2,083.3 113.4 2,196.7 Operating Income Margin % 15.9 % 16.3 % 16.6 % 14.3 % 15.2 % 14.6 % 15.4 % Net Interest Expense 26.8 — 26.8 25.9 111.8 — 111.8 137.9 — 137.9 Income Tax Expense(b) 164.2 1.5 165.7 163.5 524.9 24.6 549.5 546.8 (4.8) 542.0 Income Tax Rate 26.5 % 26.1 % 26.5 % 26.3 % 25.9 % 28.1 % 26.3 % Income from Equity Method Investments 2.1 — 2.1 2.6 5.2 — 5.2 5.2 — 5.2 Net Income Attributed to Noncontrolling Interests 32.1 — 32.1 26.1 81.8 — 81.8 87.3 — 87.3 Net Income - Omnicom Group Inc.(a)(b) $ 425.7 $ 13.0 $ 438.7 $ 429.8 $ 1,391.4 $ 102.6 $ 1,494.0 $ 1,316.5 $ 118.2 $ 1,434.7 Net Income per Share - Diluted(a)(b) $ 2.13 $ 0.07 $ 2.20 $ 2.09 $ 6.91 $ 0.50 $ 7.41 $ 6.36 $ 0.57 $ 6.93 EBITA $ 668.1 $ 14.5 $ 682.6 $ 662.7 $ 2,185.0 $ 127.2 $ 2,312.2 $ 2,163.6 $ 113.4 $ 2,277.0 EBITA Margin % 16.5 % 16.8 % 17.1 % 14.9 % 15.7 % 15.1 % 15.9 % Income Statement Summary - Non-GAAP Adjusted In millions except per share amounts. See Notes on page 13 and Non-GAAP reconciliations on pages 19 - 22.
10 Cash Flow Performance Year Ended December 31, 2023 2022 Free Cash Flow(4) $ 1,884.8 $ 1,770.5 Primary Uses of Cash: Dividends paid to Common Shareholders 562.7 581.1 Dividends paid to Noncontrolling Interest Shareholders 70.9 79.5 Capital Expenditures 78.4 78.2 Acquisition payments, including payment of contingent purchase price obligations, and acquisition of additional noncontrolling interests 248.6 330.2 Stock Repurchases, net of Proceeds from Stock Plans 535.2 594.0 Primary Uses of Cash(4) 1,495.8 1,663.0 Net Free Cash Flow(4) $ 389.0 $ 107.5 In millions. See Definition on page 13 and Non-GAAP reconciliations on pages 19 - 22.
11 Credit & Liquidity $ Millions Year Ended December 31, 2023 2022 EBITDA(5) $ 2,315.8 $ 2,302.7 Total Debt / EBITDA 2.4 x 2.4 x Net Debt(6) / EBITDA 0.5 x 0.5 x Debt Bank Loans (Due Less Than 1 Year) $ 10.9 $ 16.9 USD-denominated Senior Notes 4,150.0 4,150.0 EUR-denominated Senior Notes 1,106.0 1,069.8 GBP-denominated Senior Notes 413.9 392.0 Other (30.3) (34.6) Total Debt $ 5,650.5 $ 5,594.1 Cash and Equivalents 4,432.0 4,281.8 Short Term Investments — 60.7 Net Debt(6) $ 1,218.5 $ 1,251.6 In millions. See Definitions on page 13 and Non-GAAP reconciliations on pages 19 - 22.
12 Historical Returns Return on Invested Capital (ROIC)(7) Return on Equity(8) Twelve months ended December 31, 2023 25.8 % Twelve months ended December 31, 2023 40.5 % Twelve months ended December 31, 2022 27.7 % Twelve months ended December 31, 2022 40.4 % In millions. See Definitions on page 13.
13 Notes (a) For the year ended December 31, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs of $191.5 million ($145.5 million after tax) related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain of $78.8 million ($55.9 million after tax) on disposition of certain of our research businesses in the Execution & Support discipline. Included in the three and twelve months ended December 31, 2023 within selling, general and administrative expenses are acquisition transaction costs of $14.5 million, primarily related to the purchase of Flywheel Digital in January 2024. The net aggregate impact to Operating Income for the year ended December 31, 2023 was a reduction of $127.2 million ($102.6 million after tax). The net aggregate effect of these items for the year ended December 31, 2023 to diluted net income per share - Omnicom Group Inc. was a decrease of $0.50. (b) Income tax includes impacts related to a gain on the disposition of certain of our research businesses in the Execution & Support discipline, repositioning costs, and charges arising from the effects of the war in Ukraine, as discussed above. (c) Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. (d) Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs which we bill back to the client directly at our cost and which we are required to include in revenue. (e) Constant Dollar ("C$") expense is calculated by translating the current period’s local currency expense using the prior period average exchange rates to derive current period C$ expense. The foreign exchange rate impact is the difference between the current period expense in U.S. Dollars and the current period C$ expense. Financial Definitions (1) Foreign exchange rate impact: calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue. (2) Acquisition revenue, net of disposition revenue: Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date, and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the presentation on page 4. (3) Organic growth: calculated by subtracting the foreign exchange rate impact, and the acquisition revenue, net of disposition revenue components from total revenue growth. (4) See page 19 for the reconciliation of non-GAAP financial measures, which reconciles Free Cash Flow to the Net Cash Used in Operating Activities and Net Free Cash Flow to the Net Increase (Decrease) in Cash and Cash Equivalents for the periods presented on page 10. The Free Cash Flow, Primary Uses of Cash and Net Free Cash Flow amounts presented on page 10 are non-GAAP liquidity measures. See page 23 for the definition of Net Free Cash Flow. (5) EBITA and EBITDA are non-GAAP performance measures. See page 23 for the definition of these measures and page 20 for the reconciliation of Non-GAAP financial measures. (6) Net Debt is a non-GAAP liquidity measure. See page 23 for the definition of this measure, which is reconciled in the table on page 11. (7) Return on Invested Capital is After Tax Reported Operating Income (a non-GAAP performance measure – see page 23 for the definition of this measure and page 19 for the reconciliation of non-GAAP financial measures) divided by the average of Invested Capital at the beginning and the end of the period (book value of all long-term liabilities, including those related to operating leases, short-term interest bearing debt, the short-term liability related to operating leases plus shareholders’ equity less cash, cash equivalents, short-term investments, and operating lease right of use assets). (8) Return on Equity is Reported Net Income for the given period divided by the average of shareholders’ equity at the beginning and end of the period. (9) The Free Cash Flow amounts presented on page 17 are non-GAAP liquidity measures. See page 23 for the definition of this measure and page 19 for the reconciliation of the non-GAAP financial measures, which reconciles Free Cash Flow to the Net Cash Used in Operating Activities for the periods presented on page 17.
14 Appendix
15 Acquisition - Coffee & TV • November 2023 • A global, full-service, artist-led creative studio with locations in London, Los Angeles, and New York • Award-winning specialists in visual effect, design, and color across advertising, long-form, episodic and feature films • www.coffeeand.tv
16 Acquisition - Flywheel Digital "By connecting Flywheel Commerce Cloud's product and transaction data with Omni's audience and behavioral data, we are poised to offer an end- to-end set of services that outpaces the competition. We aim to empower our clients to automate, optimize, and measure their digital commerce and media spend within an increasingly complex marketplace." – Duncan Painter CEO, Flywheel Digital • Announced October 30, 2023, closed January 2, 2024 • e-commerce operations, retail media execution, and market intelligence across the world's leading digital marketplaces • Uniquely positions Omnicom to seamlessly integrate offerings across retail and brand media, digital and in-store commerce, and precision marketing • Over 2,000 professionals • Net cash purchase price of approximately $845 million
17 Free Cash Flow Year Ended December 31, 2023 2022 Net Income $ 1,473.2 $ 1,403.8 Depreciation and Amortization of Intangible Assets 211.1 219.4 Share-Based Compensation 84.8 81.7 Real estate and other repositioning costs 191.5 — Gain on disposition of subsidiary (78.8) — Non-cash charge related to the effects of the war in Ukraine — 65.8 Other Items to Reconcile to Net Cash Used in Operating Activities, net 3.0 (0.2) Free Cash Flow(9) $ 1,884.8 $ 1,770.5 In millions. See Definition on page 13 and non-GAAP reconciliations on pages 19 - 22.
18 Operating Expense Detail - Constant $ Fourth Quarter Full Year 2023 2023 C$(e) 2022 2023 2023 C$(e) 2022 Operating expenses: Salary and related costs $ 1,906.1 $ 1,876.9 $ 1,853.4 $ 7,212.8 $ 7,215.7 $ 7,197.9 Third-party service costs(c) 884.0 876.4 786.5 2,917.9 2,921.4 2,585.5 Third-party incidental costs(d) 163.9 163.5 152.1 570.5 575.7 542.5 Salary and service costs 2,954.0 2,916.8 2,792.0 10,701.2 10,712.8 10,325.9 Occupancy and other costs 290.9 286.1 294.4 1,168.8 1,171.9 1,168.6 Real estate and other repositioning costs(a) — — — 191.5 191.5 — Charges arising from the effects of the war in Ukraine(a) — — — — — 113.4 Gain on disposition of subsidiary(a) — — — (78.8) (78.8) — Cost of services 3,244.9 3,202.9 3,086.4 11,982.7 11,997.4 11,607.9 Selling, general and administrative expenses(a) 115.6 114.5 84.5 393.7 394.0 378.5 Depreciation and amortization 53.7 53.0 54.6 211.1 211.1 219.4 Total operating expenses $ 3,414.2 $ 3,370.4 $ 3,225.5 $ 12,587.5 $ 12,602.5 $ 12,205.8 In millions. See Notes on page 13.
19 Non-GAAP Reconciliations Year Ended December 31, 2023 2022 Net Cash Used in Operating Activities $ 1,421.9 $ 926.5 Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital (462.9) (844.0) Free Cash Flow $ 1,884.8 $ 1,770.5 Net Increase (Decrease) in Cash and Cash Equivalents $ 150.2 $ (1,035.0) Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital (462.9) (844.0) Proceeds from (purchase of) short-term investments 60.8 (61.4) Proceeds from disposition of subsidiary and other 190.0 35.5 Changes in Short-term Debt, net (8.7) 8.9 Other financing, net (55.0) (62.9) Effect of foreign exchange rate changes on cash and cash equivalents 37.0 (218.6) Net Free Cash Flow $ 389.0 $ 107.5 Year Ended December 31, 2023 2022 Reported Operating Income $ 2,104.7 $ 2,083.3 Effective Tax Rate for the applicable period 26.3 % 28.1 % Income Taxes on Reported Operating Income 553.5 585.4 After Tax Reported Operating Income $ 1,551.2 $ 1,497.9 In millions
20 Non-GAAP Reconciliations In millions The above table reconciles the GAAP financial measure of Net Income – Omnicom Group Inc. to the non-GAAP financial measures of EBITDA and EBITA for the periods presented. EBITDA and EBITA, which are defined on page 23, are non-GAAP financial measures within the meaning of applicable SEC rules and regulations. Our credit facility defines EBITDA as earnings before deducting interest expense, income taxes, depreciation and amortization, and excludes certain other one-time items. Our credit facility uses EBITDA to measure our compliance with covenants, such as our leverage ratios, as presented on page 11 of this presentation. Adjusted EBITA and EBITA Margin- Adjusted are non-GAAP measures and management believes excluding the real estate and other repositioning costs and acquisition transaction costs, partially offset by a gain on the disposition of a subsidiary in 2023 and excluding the charge arising from the effects of the war in Ukraine in 2022, provides investors with a better picture of the performance of the business during the periods presented. See page 23 for definition of non-GAAP financial measures. Three Months Ended Year Ended December 31 December 31 2023 2022 2023 2022 Net Income - Omnicom Group Inc. $ 425.7 $ 429.8 $ 1,391.4 $ 1,316.5 Net Income Attributed to Noncontrolling Interests 32.1 26.1 81.8 87.3 Income From Equity Method Investments 2.1 2.6 5.2 5.2 Income Tax Expense 164.2 163.5 524.9 546.8 Income Before Income Taxes and Income From Equity Method Investments 619.9 616.8 1,992.9 1,945.4 Net Interest Expense 26.8 25.9 111.8 137.9 Operating Income 646.7 642.7 2,104.7 2,083.3 Amortization of Intangible Assets 21.4 20.0 80.3 80.3 EBITA 668.1 662.7 2,185.0 2,163.6 Depreciation 32.3 34.6 130.8 139.1 EBITDA $ 700.4 $ 697.3 $ 2,315.8 $ 2,302.7 EBITA $ 668.1 $ 662.7 $ 2,185.0 $ 2,163.6 Real estate and other repositioning costs — — 191.5 — Charges arising from the effects of the war in Ukraine — — — 113.4 Gain on disposition of subsidiary — — (78.8) — Acquisition transaction costs 14.5 — 14.5 — EBITA - Adjusted $ 682.6 $ 662.7 $ 2,312.2 $ 2,277.0 Revenue $ 4,060.9 $ 3,868.2 $ 14,692.2 $ 14,289.1 EBITA $ 668.1 $ 662.7 $ 2,185.0 $ 2,163.6 EBITA Margin % 16.5 % 17.1 % 14.9 % 15.1 % EBITA - Adjusted $ 682.6 $ 662.7 $ 2,312.2 $ 2,277.0 EBITA Margin % - Adjusted 16.8 % 17.1 % 15.7 % 15.9 %
21 Non-GAAP Reconciliations In millions The above table reconciles the GAAP financial measure of Operating Income to adjusted Non-GAAP financial measure of Non-GAAP Operating Income - Adjusted for the periods presented. Management believes excluding the real estate and other repositioning costs and acquisition transaction costs, partially offset by a gain on the disposition of a subsidiary in 2023 and excluding the charge arising from the effects of the war in Ukraine in 2022, provides investors with a better picture of the performance of the business during the periods presented. Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 Net Income - Omnicom Group Inc.- Reported $ 425.7 $ 429.8 $ 1,391.4 $ 1,316.5 Net Income Attributed To Noncontrolling Interests 32.1 26.1 81.8 87.3 Income From Equity Method Investments 2.1 2.6 5.2 5.2 Income Tax Expense 164.2 163.5 524.9 546.8 Income Before Income Taxes and Income From Equity Method Investments 619.9 616.8 1,992.9 1,945.4 Net Interest Expense 26.8 25.9 111.8 137.9 Operating Income - Reported 646.7 642.7 2,104.7 2,083.3 Real estate and other repositioning costs — — 191.5 — Charges arising from the effects of the war in Ukraine — — — 113.4 Gain on disposition of subsidiary — — (78.8) — Acquisition transaction costs 14.5 — 14.5 — Non-GAAP Operating Income - Adjusted $ 661.2 $ 642.7 $ 2,231.9 $ 2,196.7
22 Fourth Quarter Full Year 2023 2022 2023 2022 Net Income - Omnicom Group Inc. - Reported $ 425.7 $ 429.8 $ 1,391.4 $ 1,316.5 Impact on Net Income related to: Real estate and other repositioning costs — — 145.5 — Charges arising from the effects of the war in Ukraine — — — 118.2 Gain on disposition of subsidiary — — (55.9) — Acquisition Transaction Costs 13.0 — 13.0 — Net Income - Omnicom Group Inc. - Adjusted $ 438.7 $ 429.8 $ 1,494.0 $ 1,434.7 Diluted Shares 199.5 205.2 201.4 207.0 Net Income per Share - Omnicom Group Inc. - Adjusted $ 2.20 $ 2.09 $ 7.41 $ 6.93 Non-GAAP Reconciliations In millions The above table reconciles the GAAP financial measure of Net Income-Omnicom Group Inc., to the adjusted Non-GAAP financial measure of Net Income-Omnicom Group Inc.-Adjusted for the periods presented. Management believes excluding the real estate and other repositioning costs and acquisition transaction costs, partially offset by a gain on the disposition of a subsidiary in 2023, and excluding the charge arising from the effects of the war in Ukraine in 2022, provides investors with a better picture of the performance of the business during the periods presented.
23 Disclosures The preceding materials have been prepared for use in the February 6, 2024 conference call on Omnicom’s results of operations for the three and twelve months ended December 31, 2023. The call will be archived on the Internet at http:// investor.omnicomgroup.com Forward-Looking Statements Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues affecting the distribution of our clients’ products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. Non-GAAP Financial Measures We present financial measures determined in accordance with generally accepted accounting principles in the United States (“GAAP”) and adjustments to the GAAP presentation (“Non-GAAP”), which we believe are meaningful for understanding our performance. EBITA is defined as operating income before interest, taxes, and amortization of intangible assets, and EBITA margin is defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non- cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). We also use Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITA, Adjusted EBITA Margin, Adjusted Income Tax Expense, Adjusted Net Income – Omnicom Group Inc. and Adjusted Net Income per diluted share – Omnicom Group Inc. as additional operating performance measures. Free Cash Flow is defined as net income plus depreciation, amortization, share based compensation expense plus/(less) other items to reconcile to net cash (used in) provided by operating activities. We believe Free Cash Flow is a useful measure of liquidity to evaluate our ability to generate excess cash from our operations. Primary Uses of Cash, defined as dividends to common shareholders, dividends paid to non-controlling interest shareholders, capital expenditures, cash paid on acquisitions, payments for additional interest in controlled subsidiaries and stock repurchases, net of the proceeds from our stock plans, and excludes changes in operating capital and other investing and financing activities, including commercial paper issuances and redemptions used to fund working capital changes. We believe this liquidity measure is useful in identifying the significant uses of our cash. Net Free Cash Flow is defined as Free Cash Flow less the Primary Uses of Cash. Net Free Cash Flow is one of the metrics used by us to assess our sources and uses of cash and was derived from our consolidated statements of cash flows. We believe that this liquidity measure is meaningful for understanding our primary sources and primary uses of that cash flow. EBITDA is defined as operating profit before interest, taxes, depreciation and amortization of intangible assets. Net Debt is defined as total debt less cash, cash equivalents and short-term investments. We believe net debt, together with the comparable GAAP measures, reflects one of the liquidity metrics used by us to assess our cash management. We believe these measures are useful in evaluating the impact of certain items on operating performance and allow for comparability between reporting periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies. Other Information All dollar amounts are in millions except for per share figures. The information contained in this document has not been audited, although some data has been derived from Omnicom’s historical financial statements, including its audited financial statements. In addition, industry, operational, and other non-financial data contained in this document have been derived from sources that we believe to be reliable, but we have not independently verified such information, and we do not, nor does any other person, assume responsibility for the accuracy or completeness of that information. Certain amounts in prior periods have been reclassified to conform to our current presentation. The inclusion of information in this presentation does not mean that such information is material or that disclosure of such information is required.
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Cover
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Feb. 06, 2024 |
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| Entity Registrant Name |
OMNICOM GROUP INC.
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| Entity Incorporation, State or Country Code |
NY
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| Entity Information, Former Legal or Registered Name |
Not Applicable
|
| Entity Tax Identification Number |
13-1514814
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| Entity Address, Address Line One |
280 Park Avenue
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| Entity Address, City or Town |
New York
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| Entity Address, State or Province |
NY
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| Entity Address, Postal Zip Code |
10017
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| City Area Code |
212
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| Local Phone Number |
415-3600
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| Title of 12(b) Security |
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OMC
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| Security Exchange Name |
NYSE
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