EX-99.2 4 e38493ex99_2.htm INVESTOR PRESENTATION MATERIALS

Exhibit 99.2

       Investor Presentation

 

 

 

     First Quarter 2010 Results

     April 20, 2010


Disclosure

The following materials have been prepared for use in the April 20, 2010 conference call on Omnicom’s results of operations for the period ended March 31, 2010. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts.

Forward-Looking Statements

Certain of the statements in this document constitute forward -looking statements within the meaning of the Private Securities Litigation Act of 1995. In addition, from time to time, we or our representatives have made or may make forward -looking statements, orally or in writing. 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, global economic conditions and renewed turmoil in the credit markets, losses on media purchases on behalf of clients, reductions in client spending and/or a slowdown in client payments, competitive factors, changes in client communication requirements, the hiring and retention of personnel, our ability to attract new clients and retain existing clients, changes in government regulations impacting our advertising and marketing strategies, risks associated with assumptions we make in connection with our critical accounting estimates, legal proceedings, settlements, investigations and claims, and our international operations, which are subject to the risks of currency fluctuations and foreign 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 our present expectations. Actual events or results may differ. We undertake no obligation to update or revise any forward -looking statement, except as required by law.

Other Information

All dollar amounts are in millions except for per share amounts. The following 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, operational and other non-financial data contained in this document have 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. 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.

      April 20, 2010 1

2010 vs. 2009 P&L Summary

  First Quarter
  2010    2009    % D
 
 
 
Revenue $ 2,920.0     $ 2,746.6     6.3 %
 
     
Operating Income (a)   291.0       282.4     3.0 %
 
     
% Margin   10.0 %     10.3 %      
 
     
Net Interest Expense   24.1       21.4        
 
     
Income Before Tax   266.9       261.0     2.3 %
 
     
% Margin   9.1 %     9.5 %      
 
     
Taxes   90.7       88.7        
 
     
% Tax Rate   34.0 %     34.0 %      
 
     
Income from Equity Method Investments   4.7       5.9        
 
     
Net Income   180.9       178.2        
 
     
Less: Net Income Attributed to Noncontrolling Interests   17.5       13.7        
 
     
Net Income - Omnicom Group $ 163.4     $ 164.5     -0.7 %
 
 
     
Diluted Net Income per Common Share - Omnicom Group (b) $ 0.52     $ 0.53     -1.9 %

(a)      Operating income includes depreciation and amortization expense of $62.0 million and $55.8 million for the three months ended March 31, 2010 and 2009, respectively.
(b)      See page 19 for supplemental earnings per share information.

      April 20, 2010 2

2010 Total Revenue Change

     First Quarter
    $   % D
   
Prior Period Revenue   $ 2,746.6          
 
 
Foreign Exchange (FX) Impact (a)     117.0       4.3 %
 
 
Acquisition Revenue (b)     (3.8 )     -0.1 %
 
 
Organic Revenue (c)     60.2       2.1 %
 
 
Current Period Revenue   $ 2,920.0       6.3 %
 
 

(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.

      April 20, 2010 3

2010 Revenue by Discipline

  $ Mix
   % Change (a)
   % Organic
Change (b)
Advertising $ 1,288.8   5.6 %   -0.3 %
 
 
CRM   1,091.1   8.6 %   4.3 %
 
 
PR   275.5   5.9 %   2.4 %
 
 
Specialty   264.6   1.2 %   5.4 %

(a)      “Change” is the year-over-year increase or decrease from the prior period.
(b)       “Organic Change” reflects the year-over-year increase or decrease in revenue from the prior period, excluding the FX Impact and Acquisition Revenue, as defined on page 3.

      April 20, 2010 4

2010 Revenue by Geography



     $ Mix
   $ Change(a)
United States   $ 1,592.8   $ 60.5  
 
 
Organic           77.8  
 
 
Acquisition           (17.3 )
 
 
International   $ 1,327.2   $ 112.9  
 
 
Organic           (17.6 )
 
 
Acquisition           13.5  
 
 
FX           117.0  

     $ Mix
  % Change(a)
  % Organic
Change(b)
United States   $ 1,592.8    3.9 %    5.1 %
 
 
 
Euro Currency Markets     574.3   0.7 %   -5.1 %
 
 
 
United Kingdom     249.1   8.0 %   -0.6 %
 
 
 
Other     503.8   21.8 %   3.2 %

(a)      “Change” is the year-over-year increase or decrease from the prior period.
(b)       “Organic Change” reflects the year-over-year increase or decrease in revenue from the prior period, excluding the FX Impact and Acquisition Revenue, as defined on page 3.

      April 20, 2010 5

Cash Flow – GAAP Presentation (condensed)

     Three Months Ended
March 31,
  2010
   2009
Net Income   $ 180.9     $ 178.2  
 
   
    Share-Based Compensation Expense     19.1       14.5  
 
   
    Depreciation and Amortization     62.0       55.8  
 
   
    Other Non-Cash Items to Reconcile to Net Cash Used in Operating Activities, net     (1.1 )     (2.8 )
 
   
    Other Changes in Operating Capital     (538.8 )     (474.1 )
 
   
Net Cash Used in Operating Activities     (277.9 )     (228.4 )
 
   
 
    Capital Expenditures     (25.2 )     (23.3 )
 
   
    Acquisitions     (19.6 )     (1.7 )
 
   
    Proceeds from Sale of Investments, net     1.1       3.8  
 
   
Net Cash Used in Investing Activities     (43.7 )     (21.2 )
 
   
 
    Dividends     (46.9 )     (46.7 )
 
   
(Repayments of)/Proceeds from Short-term Debt, net     (2.8 )     28.3  
 
   
    Proceeds from Long-term Debt, net     0.2       505.5  
 
   
    Repayment of Convertible Debt     (5.9 )     (841.8 )
 
   
    Stock Repurchases     (249.6 )     (1.8 )
 
   
    Proceeds from Stock Plans     10.6       0.2  
 
   
    Payments to Noncontrolling Interests     (3.0 )     (1.4 )
 
   
    Other Financing Activities, net     (31.8 )     (14.2 )
 
   
Net Cash Used in Financing Activities     (329.2 )     (371.9 )
 
   
                 
Effect of exchange rate changes on cash and cash equivalents     (35.8 )     (63.4 )
 
   
Net Decrease in Cash and Cash Equivalents   $ (686.6 )   $ (684.9 )
 
   

      April 20, 2010 6

Current Credit Picture

    12 Months Ended
March 31,
   2010
   2009
EBITDA (a)   $ 1,632     $ 1,856  
 
 
Gross Interest Expense (a)     125.1       126.0  
 
 
EBITDA / Gross Interest Expense     13.0 x     14.7 x
 
 
Total Debt / EBITDA     1.4 x     1.5 x
 
 
Debt                
 
 
Bank Loans (Due Less Than 1 Year)   $ 30     $ 44  
 
 
CP Issued Under $2.5B Revolver Due 6/23/11     -       30  
 
 
Borrowings Under $2.5B Revolver Due 6/23/11     -       475  
 
 
Convertible Notes Due 2/7/31     -       6  
 
 
Convertible Notes Due 7/31/32 (b)     253       727  
 
 
Convertible Notes Due 7/1/38 (c)     467       467  
 
 
Senior Notes Due 4/15/16     997       997  
 
 
Senior Notes Due 7/15/19     497       -  
 
 
Other Debt     1       18  
 
 
Total Debt   $ 2,245     $ 2,764  
 
 
Cash and Short Term Investments     908       427  
 
 
Net Debt   $ 1,337     $ 2,337  
 
 

(a)      “EBITDA” and “Gross Interest Expense” calculations shown are for the twelve months ending March 31. EBITDA is defined as operating income before interest, taxes, depreciation and amortization. Although EBITDA is a non-GAAP measure, we believe EBITDA is more meaningful for purposes of this analysis because the financial covenants in our credit facilities are based on EBITDA (see reconciliation of Operating Income to EBITDA on page 21).
(b)      The next put date for our convertible notes due 2032 is August 2, 2010.
(c)      The next put date for our convertible notes due 2038 is June 15, 2010.

      April 20, 2010 7

Current Liquidity Picture

      As of March 31, 2010
  Total Amount
of Facility
   Outstanding
   Available
Committed Facilities                  
 
 
 
    Revolver & Commercial Paper (a) $ 2,500   $ -   $ 2,500  
 
 
 
    Other Committed Credit Facilities   30     30     -  
 
 
 
Total Committed Facilities   2,530     30     2,500  
 
 
 
Uncommitted Facilities (b)   379     -     - (b)
 
 
 
Total Credit Facilities $ 2,909   $ 30   $ 2,500  
 
 
 
    Cash and Short Term Investments               908  
 
 
 
    Total Liquidity Available             $ 3,408  
         
 

(a)      Credit facility expires June 23, 2011.
(b)      Represents uncommitted facilities primarily outside the United States. These amounts are excluded from our available liquidity for purposes of this presentation.

      April 20, 2010 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Omnicom Debt Structure

     Supplemental Information

Omnicom Debt Structure



The above chart sets forth Omnicom’s debt outstanding at March 31, 2010. The amounts reflected above for the 2016 and 2019 Senior Notes represent the principal amount of these notes at maturity on April 15, 2016 and July 15, 2019, respectively.

      April 20, 2010 10

Omnicom Debt Structure

The Bank Facility and Commercial Paper Program together provide liquidity in the event any convertible notes are put. We believe that we will then have flexibility to refinance in different debt capital markets.



Our 2038 Convertible Notes are putable in June 2010, 2013, 2018, 2023 and annually thereafter until maturity. Our 2032 Convertible Notes are putable in August 2010 and annually in July thereafter until maturity.

For purposes of this presentation we have included the following borrowings as of March 31, 2010 as outstanding through June 2011, the date of expiration of our five-year credit facility: short-term borrowings of $30 million and other debt of $1 million.

      April 20, 2010 11

Senior Notes Due 2019

Principal Amount $500 Million
Co - Issuers Omnicom Group, Omnicom Finance, Omnicom Capital
Date July 1, 2009
Maturity July 15, 2019
Security Unsecured, pari passu with Bank Facility
Coupon 6.25%
Spread Over Comparable Treasury at Issue 2.75%
  Moody’s: Baa1
Rating S&P: A-
  Fitch: A-

      April 20, 2010 12

Senior Notes Due 2016

Principal Amount $1 Billion
Co - Issuers Omnicom Group, Omnicom Finance, Omnicom Capital
Date March 29, 2006
Maturity April 15, 2016
Security Unsecured, pari passu with Bank Facility
Coupon 5.90%
Spread Over Comparable Treasury at Issue 1.30%
  Moody’s: Baa1
Rating S&P: A-
  Fitch: A-

      April 20, 2010 13

2032 Convertible Notes
Principal Amount $253 Million
Co - Issuers Omnicom Group, Omnicom Finance, Omnicom Capital
Date March 6, 2002
Maturity July 31, 2032, with a put in August 2010 and annually in
July thereafter until maturity
Security Unsecured, pari passu with Bank Facility
Coupon 0.00%
Conversion Price $55
  Moody’s: Baa1
Rating S&P: A-
  Fitch: A-

      April 20, 2010 14

2038 Convertible Notes

Principal Amount $467 Million
Co - Issuers Omnicom Group, Omnicom Finance, Omnicom Capital
Date June 10, 2003
Maturity June 15, 2038 with puts in June of 2010, 2013, 2018, 2023
and annually thereafter until maturity
Security Unsecured, pari passu with Bank Facility
Coupon 0.00%
Conversion Price $51.50
  Moody’s: Baa1
Rating S&P: A-
  Fitch: A-

      April 20, 2010 15

Current Bank Credit Facility

Amount $2.5 Billion

Type

Unsecured Revolving Credit

Maturity 5 Years – June 2011
Facility Fee 13BP per annum
Drawn Rate Libor +17BP
Covenants -Maximum Debt to EBITDA 3:1
  -Minimum Interest Coverage 5:1

      April 20, 2010 16

Current Omnicom Credit Ratings

      Moody’s S&P Fitch
Long Term Ratings   Baa1 A- A-
Short Term Ratings   P2 A2 F2
Outlook   Stable Negative Stable

Note: Reflects credit ratings as of April 19, 2010.

      April 20, 2010 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Supplemental Financial Information


2010 vs. 2009 Earnings Per Share

  First Quarter
  2010
   2009
Net Income per Common Share - Omnicom Group:              
 
Basic $ 0.53     $ 0.53  
 
Diluted   0.52       0.53  
 
               
Earnings Available for Common Shares:              
 
Net Income - Omnicom Group $ 163.4     $ 164.5  
 
Earnings Allocated to Participating Securities   (1.7 )     (2.2 )
 
Earnings Available for Common Shares $ 161.7     $ 162.3  
 
 
Weighted Average Shares (millions):              
 
Basic   306.4       307.5  
 
Diluted   311.0       307.6  
 
Dividend Declared per Share $ 0.20     $ 0.15  

      April 20, 2010 19

Acquisition Related Expenditures

     First Quarter 2010
New Subsidiary Acquisitions (a)   $ 5
 
Affiliates to Subsidiaries (b)     4
 
Affiliates (c)     -
 
Existing Subsidiaries (d)     3
 
Earn-outs (e)     11
 
Total Acquisition Expenditures (f)   $ 23
   

(a)      Includes acquisitions of a majority interest in agencies resulting in their consolidation.
(b)      Includes acquisitions of additional equity interests in existing affiliate agencies resulting in their majority ownership and consolidation.
(c)      Includes acquisitions of less than a majority interest in agencies in which Omnicom did not have a prior equity interest and the acquisition of additional interests in existing affiliated agencies that did not result in majority ownership.
(d)      Includes the acquisition of additional equity interests in already consolidated subsidiary agencies which are recorded to Equity – Noncontrolling Interest.
(e)      Includes additional consideration paid for acquisitions completed in prior periods.
(f)      Total Acquisition Expenditures figure is net of cash acquired.

      April 20, 2010 20

Reconciliation of non-GAAP Measure

     12 Months Ended March 31,
  2010
   2009
EBITDA   $ 1,632.3   $ 1,855.6
 
 
Depreciation     189.3     180.6
 
 
Amortization     59.5     54.1
 
 
Operating Income     1,383.5     1,620.9
 
 
Net Interest Expense     103.5     84.6
 
 
Income Before Tax     1,280.0     1,536.3
 
 
Taxes     435.6     516.2
 
 
Income from Equity Method Investments     29.6     39.8
 
 
Net Income     874.0     1,059.9
 
 
Less: Net Income Attributed to Noncontrolling Interests     82.1     103.9
 
 
Net Income - Omnicom Group   $ 791.9   $ 956.0
 
 

The covenants contained in our credit facility are based on the EBITDA ratios as presented on pages 7 & 16 of this presentation. The above reconciles EBITDA to the GAAP financial measures for the periods presented.

EBITDA is a non-GAAP financial measure 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. Our credit facility uses EBITDA to measure our compliance with covenants, such as interest coverage and leverage. EBITDA is not, and should not, be used as a substitute for Operating Income as determined in accordance with GAAP and is only used to measure our compliance with our debt covenants. Management does not use EBITDA for any other measurement purpose.

      April 20, 2010 21

First Quarter Acquisition


 

BoomWorks is a full-service marketing communications company specializing in the professional healthcare and pharmaceutical sectors. BoomWorks provides its client base with a full range of strategic and creative services, including strategic planning, medical direction, creative development, sales force support and digital programming.

Located in Montréal, Canada, BoomWorks now operates as Boom Works CDM Montréal and is part of the CDM World Agency group of companies.

      April 20, 2010 22