EX-99.1 3 e17128ex99-1.htm CONFERENCE PRESENTATION

 

OmnicomGroup

Merrill Lynch 2004
Advertising/Marketing, Education & Information
Conference

March 2, 2004

 
   

 

 

Forward-Looking Statements

Certain of the statements in this document constitute forward-looking statements. These statements relate to future events or future financial performance and involve known and unknown risks and other factors that may cause our actual or our industry’s results, levels of activity or achievement to be materially different from those expressed or implied by any forward-looking statements. These risks and uncertainties include, but are not limited to, our future financial condition and results of operations, changes in general economic conditions, competitive factors, changes in client communication requirements, the hiring and retention of human resources and our international operations, which are subject to the risks of currency fluctuations and exchange controls. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of those terms or other comparable terminology. These statements are only present expectations. Actual events or results may differ materially.

Other Information

The historical financial information contained in this document has not been audited, although some of it has been derived from Omnicom’s historical financial statements, including its audited financial statements. In addition, industry and other non-financial data contained in this document has been derived from sources 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.


The inclusion of information in this presentation does not mean that such information is material or that disclosure of such information is required.

 
OmnicomGroup    1

 

 

Who We Are

The World’s Leading
Advertising and Marketing
Communications Services
Group

 
OmnicomGroup    2

 

 

 



Traditional Media
Advertising		 Customer Relationship
Management		 Public
Relations		 Specialty
Communications

30 Advertising & Marketing Disciplines

150+ Strategic Brand Platforms

1500+ Individual Agencies

 
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Long-Term Trends Unchanged

Client-Specific Trends
• Desire to manage brands on a pan-regional or global basis
• Reduction in service partners
•   Greater coordination of advertising with other marketing initiatives
• Renewed client M&A activity

Industry-Specific Trends
• Industry consolidation
• Creation of pan-regional and global Marketing Services Networks
• Continued unbundling of media planning and buying from creative services
• Media fragmentation and PVRs

 
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Factors Impacting 2004

• Clients shifting focus to top-line growth

• Increase in new business activity

• Increase in media spending  - US Elections
Olympics
European Football Championship

• Corporate merger activity picking up

• Economic climate improving

 
OmnicomGroup   5

 

 

Objectives

• Continue to increase our investment in training and development of our people

• Maintain the leadership positions of our brands

• Achieve double digit Revenue and Net Income growth

• Make selective accretive acquisitions that allow us to further extend our strategic advantages

• Improve our operating margins

• Increase the flexibility of our cost structure

• Use free cashflow to enhance shareholder value

 
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Financial Review

 
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2003

Financial Results

 
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2003 Performance

    Full Year
    2003
  2002
  % Change
                  
Revenue $8,621.4 $7,536.3 14.4 %
  
Operating Income 1,164.7 1,104.1 5.5 %
% Margin 13.5% 14.7%
  
Net Interest Expense 42.8 30.5
   
Profit Before Tax 1,121.9 1,073.6 4.5 %
% Margin 13.0% 14.2%
  
Taxes 380.9 375.6
% Tax Rate 34.0% 35.0%
      
Profit After Tax 741.0 698.0 6.2 %
  
Equity in Affiliates/
Min. Interest		 (65.1 ) (54.5 )
   
Net Income $   675.9 $   643.5 5.0 %
   
Earnings per Share 3.59 3.44 4.4 %
               
               

OmnicomGroup    9

2003 Total Revenue Growth

                           
  Total Company
  United States
  International
 

$

 

%

 

$

 

%

 

$

 

%

Prior Period Revenue

$7,536.3

$4,284.6

 

 

$3,251.7  

Foreign Exchange Impact(a)

465.6 6.2%

—

 

—

465.6 14.3%

Acquisition Revenue(b)

271.7 3.6%

174.7

 

4.1%

97.0 3.0%

Organic Revenue(c)

347.8 4.6%

261.5

 

6.1%

86.2 2.7%
 
 

Current Period Revenue

$8,621.4 14.4%

$4,720.9

 

10.2%

$3,900.5 20.0%
 
 
 
 
 
 

(a)   To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from the equivalent prior period to arrive at constant currency revenue. The FX impact equals the difference between the current period revenue in U.S. dollars and the current period revenue in constant currency.
(b)   Acquisition revenue is the aggregate of the applicable prior period revenue of the acquired businesses. Netted against this number is the revenue of any business included in the prior period reported revenue that was disposed of subsequent to the prior period.
(c)   Organic revenue is calculated by subtracting both the acquisition revenue and the FX impact from total revenue growth.

OmnicomGroup    10

2003 Revenue Mix

    Revenue Mix by Discipline – Full Year  
   

$ Mix

Growth

 
 

Advertising

3,739.7

 

14.1%

 

CRM

2,918.6

 

20.5%

 

PR

955.1

 

3.7%

 

Specialty

1,008.0

  9.9%

 


    Revenue Mix by Geography – Full Year  
   

$ Mix

Growth

 
 

United States

4,720.9

10.2%

   
 

Euro Markets

1,789.9

22.6%

   
 

United Kingdom

941.9

15.9%

   
 

Other

1,168.7

19.4%

 

 

 

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Historical Performance

 

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Financial Performance(a)

Revenue Operating Income
   

Net Income Earnings Per Share
   

(a)   2001 results are adjusted to assume that the cessation of goodwill amortization occurred on January 1, 2001.
Note: “Growth” is the year-over-year growth from the prior period.

 

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Revenue


Note:   “Growth” is the year-over year growth from the prior period.

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Operating Income


Note:   2001 results are adjusted to assume that the cessation of goodwill amortization occurred on January 1, 2001. “Growth” is the year-over year growth from the prior period.

 
OmnicomGroup   15


 

Net Income


Note:   2001 results are adjusted to assume that the cessation of goodwill amortization occurred on January 1, 2001. “Growth” is the year-over year growth from the prior period.

 

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Earnings Per Share



Note:   2001 results are adjusted to assume that the cessation of goodwill amortization occurred on January 1, 2001. “Growth” is the year-over year growth from the prior period.

 
OmnicomGroup   17


 

Long-Term Consistent Growth

By maintaining the exceptional balance and diversity of its portfolio of companies and clients, Omnicom has been able to achieve consistent top-line and bottom-line performance.

Compound Annual Growth

1 YR

3YR

5YR

7YR

10YR

15YR

             
Revenue 14.4% 11.9% 16.1% 18.4% 19.0% 16.4%
 
Operating Income 5.5% 9.9% 15.8% 19.9% 21.3% 19.1%
 
Net Income 5.0% 15.8% 18.9% 21.2% 23.0% 20.9%
 
Earnings Per Share 4.4% 14.5% 16.4% 18.1% 18.5% 15.9%

Note:   In performing CAGR calculations above, 2001 results are adjusted to assume that the cessation of goodwill amortization occurred on January 1, 2001.


OmnicomGroup   18


 

Competitive Position

Analysis

 

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2003 Revenue Mix by Discipline

 

OMC

WPP

IPG*

PUB

Trad. Media Advertising

$3,739.7

 

$3,166.2

 

$3,762.0

 

$2,405.3

     Relative Size to OMC

  

 85%

 

101%

 

64%

Marketing $4,881.7   $2,398.8   $2,116.5   $1,967.9
     Relative Size to OMC 49%   43%   40%
Market Research N/A   $1,150.8   N/A   N/A
  
Total

  $8,621.4

 

$6,715.8

 

$5,878.5

 

$4,373.21

     Relative Size to OMC

  

78%

 

68%

 

51%


Note:   Financial results for WPP shown in US$ using 2003 average daily exchange rate of $1.636 / 1 GBP. Financial results for Publicis shown in US$ using 2003 average daily exchange rate of $1.132 / 1 Euro.
*   IPG full year results are calculated using 9 mos. actual and YTD percentage breakdown by discipline applied to FY ‘03 First Call consensus estimate.

 
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2003 Revenue Mix by Geography

OMC

WPP

IPG*

PUB

U.S. $4,720.9 $2,745.7 $3,363.9 $1,966.4
     Relative Size to OMC       58% 71% 42%
Euro Markets $1,789.9 $1,765.5 N/A N/A
     Relative Size to OMC     99%        
UK $   941.9   $1,087.5   N/A   N/A
     Relative Size to OMC 115%
Euro & UK $2,731.8   $2,853.0   $1,650.0   $1,746.6
     Relative Size to OMC 104%   60%   64%
Asia/Other $1,168.7   $1,117.1   $864.6   $660.2
     Relative Size to OMC     96% 74% 56%
  
Total $8,621.4   $6,715.8   $5,878.5   $4,373.2
     Relative Size to OMC      78%   68%   51%

Note:   Financial results for WPP shown in US$ using 2003 average daily exchange rate of $1.636 / 1 GBP. Financial results for Publicis shown in US$ using 2003 average daily exchange rate of $1.132 / 1 Euro.
*   IPG full year results are calculated using 9 mos. actual and YTD percentage breakdown by geography applied to FY ‘03 First Call consensus estimate.

 
OmnicomGroup   21


 

Omnicom

Credit and Liquidity

 

OmnicomGroup   22 


 

 


Debt Analysis

      December 31,
     

2003

 

2002

Operating Income (EBIT) (a)

$1,165    $1,104   

Net Interest Expense (a)

$  42.8   $  30.5  

EBIT / Net Interest

27.2 x 36.2 x

Total Debt / EBIT

0.9 x 1.2 x
 
   

  Bank Loans (Due Less Than 1 Year)

$    42 $    50  
   

  $835 Million Revolver Due 11/14/05

—   —  
   

  CP issued under 364 Day Facility (b)

—   —  
   

  5.20% Euro Notes Due 6/24/05 (c)

192   160  
   

  $850 Million Convertible Notes Due 2/7/31

847   850  
   

  $900 Million Convertible Notes Due 7/31/32

892   900  
   

  $600 Million Convertible Notes Due 6/15/33

600   —  
   

  Loan Notes and Sundry (various through 2012)

18   71  
 
 
 

Total Debt

$2,591   $2,031  
           
    Cash and Short Term Investments 1,547   696  
 
 
 

Net Debt

$1,044
  $1,335
 
         

(a)   “Operating Income (EBIT)” and “Net Interest Expense” calculations shown are for the years ended as specified. Although our bank agreements reference EBITDA, we have used EBIT for this presentation because EBITDA is a non-GAAP measure.
(b)   The underlying $1.2 billion 364 Day Credit facility expires 11/12/04 plus one-year term out at Omnicom’s option.
(c)   The change in the outstanding balance is the result of changes in the Euro to U.S. dollar currency exchange rate. The Euro balance outstanding as of December 31, 2003 and 2002 was €152.4.

OmnicomGroup    23

Liquidity Analysis

  Omnicom believes it has ample liquidity to meet all foreseeable business and capital requirements.

         

As of December 31, 2003

     

Total Amount
of Facility

Outstanding

Available

Committed Facilities

           
 

364 Day Revolving Credit Facility(a)

$1,200

 

$ —

 

$1,200

 
 

3 Year Revolving Credit Facility

835

 

—

 

835

 
 

Other Committed Credit Facilities

42

 

42

 

—

 
 
 
 
 

Total Committed Facilities

2,077

 

42

 

2,035

 

Uncommitted Facilities(b)

391

 

—

 

—

(b)
 
 
 
 

Total Credit Facilities

$2,468

 

$ 42

 

$2,035

 
         
   

Cash & Short Term Investments

1,547

 
     
 
   

Total Liquidity Available

$3,582

 

(a)   The underlying $1.2 billion 364 Day Credit facility expires 11/12/04 plus one-year term out at Omnicom’s option.
(b)   Uncommitted facilities in the U.S., U.K. and Canada. These amounts are excluded for purposes of this analysis.

OmnicomGroup    24