UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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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):
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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 April 20, 2021, Omnicom Group Inc. (“Omnicom” or the “Company”) published an earnings release reporting its financial results for the three months ended March 31, 2021. A copy of the earnings release is attached as Exhibit 99.1 hereto and is incorporated by reference herein. Following the publication of the earnings release, Omnicom hosted an earnings call in which its financial results were discussed. The investor presentation materials used for the call are attached as Exhibit 99.2 hereto and are incorporated by reference herein.
On April 20, 2021, Omnicom posted the materials attached as Exhibits 99.1 and 99.2 on its website (www.omnicomgroup.com).
Certain statements in the exhibits to this Current Report on Form 8-K constitute 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 condition, 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: international, national or local economic conditions that could adversely affect the Company or its clients, including those caused by the outbreak of coronavirus disease 2019 (“COVID-19”); losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments and a deterioration 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 relating to competitive factors in the advertising, marketing and corporate communications industries; the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment. 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” in Omnicom's most recent Annual Report on Form 10-K and 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.
The foregoing information (including the exhibits 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
Description | |
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.
Omnicom Group Inc. | |||
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By: |
/s/ Andrew L. Castellaneta | ||
Name: |
Andrew L. Castellaneta | ||
Title: |
Senior Vice President, Chief Accounting Officer | ||
Date: April 20, 2021 |
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Exhibit 99.1
Omnicom Group Reports First Quarter 2021 Results
NEW YORK, April 20, 2021 - Omnicom Group Inc. (NYSE: OMC) today announced net income - Omnicom Group Inc. for the first quarter of 2021 of $287.8 million as compared to $258.1 million in the first quarter of 2020. Diluted net income per share for the first quarter of 2021 was $1.33 per share compared to $1.19 in the first quarter of 2020.
Omnicom’s worldwide revenue in the first quarter of 2021 increased 0.6% to $3,426.9 million from $3,406.9 million in the first quarter of 2020. The components of the change in revenue included an increase in revenue from the positive impact of foreign currency translation of 2.8%, a decrease in acquisition revenue, net of disposition revenue of 0.4% and a decrease in revenue from negative organic growth of 1.8%, primarily due to the negative effects on our revenue attributable to the COVID-19 pandemic, when compared to the first quarter of 2020.
Organic growth in the first quarter of 2021 as compared to the first quarter of 2020 in our fundamental disciplines was as follows: Advertising increased 1.2%, CRM Precision Marketing increased 7.2%, CRM Commerce and Brand Consulting decreased 4.2%, CRM Experiential decreased 33.2%, CRM Execution & Support decreased 13.3%, Public Relations decreased 3.5% and Healthcare was flat.
Across all of our regional markets, organic growth in the first quarter of 2021 as compared to the first quarter of 2020 was as follows: the United States decreased 1.0%, Other North America decreased 3.2%, the United Kingdom decreased 6.4%, the Euro Markets & Other Europe decreased 3.2%, Asia Pacific increased 2.5%, Latin America decreased 2.4% and the Middle East & Africa decreased 10.2%.
Operating profit increased $45.2 million, or 10.8%, to $465.4 million compared to $420.2 million during the first quarter of 2020. Our operating margin for the first quarter of 2021 increased to 13.6% versus 12.3% for the first quarter of 2020.
For the first quarter of 2021, our effective income tax rate increased period-over-period to 26.8% from 26.0%.
280 Park Avenue, New York, New York 10017 (212) 415-3672 Fax (212) 415-3000
Omnicom Group Inc.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures in describing our performance. We use EBITA (defined as earnings before interest, taxes and amortization of intangible assets) and EBITA margin (defined as EBITA divided by revenue) 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.
For the first quarter of 2021, EBITA increased $44.3 million, or 10.0%, to $485.3 million from $441.0 million in the first quarter of 2020. Our EBITA margin increased to 14.2% for the first quarter of 2021 versus 12.9% in the first quarter of 2020.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies.
COVID-19 Business Update
The negative effects of the COVID-19 pandemic began to have a significant impact on our businesses late in the first quarter of 2020. In the beginning of 2021, we continued to experience the negative impact of the pandemic on our organic revenue compared to the same period in the prior year. However, the impact from the COVID-19 pandemic on the global economy appears to be moderating in several of our markets, and we expect to achieve positive organic revenue growth beginning in the second quarter of this year and for the full year 2021.
As long as the COVID-19 pandemic remains a public health threat, global economic conditions will continue to be volatile depending on several factors, including new information concerning the severity of the pandemic, government actions to mitigate the effects of the pandemic in the near-term, and the resulting impact on our clients' spending plans. We expect global economic performance and the performance of our businesses to vary by geography and discipline until the impact of the COVID-19 pandemic on the global economy moderates. We
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Omnicom Group Inc.
continuously assess the impact of the COVID-19 pandemic and adjust our response related to changes in our business.
In the second quarter of 2020, we took steps to strengthen our liquidity and financial position that were intended to mitigate any potential impact of the COVID-19 pandemic on our liquidity. Among other things, we issued $600 million of 4.20% Senior Notes due 2030 and entered into a $400 million 364-day revolving credit facility, or 364 Day Credit Facility, and we suspended our share repurchase activity. The 364 Day Credit Facility expired without ever being drawn on April 2, 2021.
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.
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Omnicom Group Inc.
Revenue by Discipline
Effective January 1, 2021, we realigned the classification of certain services primarily within our CRM Consumer Experience discipline. As a result, our CRM discipline is now grouped into four categories: CRM Precision Marketing which includes our precision marketing and digital/direct marketing agencies; CRM Commerce and Brand Consulting that is primarily comprised of Omnicom Commerce Group, including our shopper marketing businesses, and Omnicom Brand Consulting agencies; CRM Experiential, which includes our experiential marketing agencies and events businesses; and CRM Execution & Support, which includes field marketing, merchandising and point of sale, as well as other specialized marketing and custom communications services.
Forward-looking Statements
Certain statements in this press release related to the potential impact of the COVID-19 outbreak constitute forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, 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.
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. You should carefully consider this 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 most recent Annual Report on Form 10-K and 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.
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Omnicom Group Inc.
Conference Call
Omnicom will host a conference call to review the first quarter 2021 financial results on Tuesday, April 20, 2021 at 8:30 a.m. EDT. Participants can listen to the conference call by dialing (877) 336-4440 (domestic) or (409) 207-6984 (international), along with access code 5410296. The call will also be simulcast and archived on our website at: http://investor.omnicomgroup.com/investor-relations/news-events-and-filings.
About Omnicom Group Inc.
Omnicom Group Inc. (NYSE: OMC) (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms provide advertising, strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations and other specialty communications services to over 5,000 clients in more than 70 countries. Follow us on Twitter for the latest news.
Contact
Joanne Trout | joanne.trout@omnicomgroup.com |
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Omnicom Group Inc.
Consolidated Statements of Income
Three Months Ended March 31
(Unaudited)
(Dollars in Millions, Except Per Share Data)
2021 | 2020 | ||||||
Revenue | $ | 3,426.9 | $ | 3,406.9 | |||
Operating Expenses: | |||||||
Salary and service costs | 2,545.0 | 2,533.3 | |||||
Occupancy and other costs | 291.6 | 309.6 | |||||
Costs of services | 2,836.6 | 2,842.9 | |||||
Selling, general and administrative expenses | 71.6 | 86.8 | |||||
Depreciation and amortization | 53.3 | 57.0 | |||||
2,961.5 | 2,986.7 | ||||||
Operating Profit | 465.4 | 420.2 | |||||
Interest Expense | 53.8 | 58.5 | |||||
Interest Income | 6.3 | 12.7 | |||||
Income Before Income Taxes | 417.9 | 374.4 | |||||
Income Tax Expense | 111.9 | 97.4 | |||||
Income (Loss) From Equity Method Investments | — | (5.3) | |||||
Net Income | 306.0 | 271.7 | |||||
Net Income Attributed To Noncontrolling Interests | 18.2 | 13.6 | |||||
Net Income - Omnicom Group Inc. | $ | 287.8 | $ | 258.1 | |||
Net Income Per Share - Omnicom Group Inc. | |||||||
Basic | $ | 1.33 | $ | 1.19 | |||
Diluted | $ | 1.33 | $ | 1.19 | |||
Weighted average shares (in millions) | |||||||
Basic | 215.6 | 216.6 | |||||
Diluted | 216.8 | 217.5 | |||||
Dividends Declared Per Common Share | $ | 0.70 | $ | 0.65 |
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Omnicom Group Inc.
Detail of Operating Expenses
Three Months Ended March 31
(Unaudited)
(Dollars in Millions)
2021 | 2020 | ||||||
Operating Expenses: | |||||||
Salary and service costs | |||||||
Salary and related service costs | $ | 1,649.2 | $ | 1,642.4 | |||
Third-party service costs | 895.8 | 890.9 | |||||
Occupancy and other costs | 291.6 | 309.6 | |||||
Costs of services | 2,836.6 | 2,842.9 | |||||
Selling, general and administrative expenses | 71.6 | 86.8 | |||||
Depreciation and amortization | 53.3 | 57.0 | |||||
Total Operating Expenses | $ | 2,961.5 | $ | 2,986.7 |
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Omnicom Group Inc.
Reconciliation of Non-GAAP Financial Measures - EBITA
Three Months Ended March 31
(Unaudited)
(Dollars in Millions)
2021 | 2020 | ||||||
Net Income - Omnicom Group Inc. | $ | 287.8 | $ | 258.1 | |||
Net Income Attributed To Noncontrolling Interests | 18.2 | 13.6 | |||||
Net Income | 306.0 | 271.7 | |||||
Income (Loss) From Equity Method Investments | — | (5.3) | |||||
Income Tax Expense | 111.9 | 97.4 | |||||
Income Before Income Taxes | 417.9 | 374.4 | |||||
Interest Income | 6.3 | 12.7 | |||||
Interest Expense | 53.8 | 58.5 | |||||
Operating Profit | 465.4 | 420.2 | |||||
Add back: Amortization of intangible assets | 19.9 | 20.8 | |||||
Earnings before interest, taxes and amortization of intangible assets ("EBITA") | $ | 485.3 | $ | 441.0 | |||
Revenue | $ | 3,426.9 | $ | 3,406.9 | |||
EBITA | $ | 485.3 | $ | 441.0 | |||
EBITA Margin % | 14.2 | % | 12.9 | % |
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. 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. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies.
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Exhibit 99.2
First Quarter 2021 Results April 20, 2021 Investor Presentation
2021 vs. 2020 P&L Summary First Quarter 1 April 20, 2021 First Quarter 2021 2020 Revenue $ 3,426.9 $ 3,406.9 Operating Expenses (a) 2,961.5 2,986.7 Operating Profit 465.4 420.2 Net Interest Expense 47.5 45.8 Income Tax Expense 111.9 97.4 Tax Rate % 26.8 % 26.0 % Income (Loss) From Equity Method Investments — (5.3) Net Income Attributed To Noncontrolling Interests 18.2 13.6 Net Income - Omnicom Group Inc. $ 287.8 $ 258.1 Diluted Shares (millions) 216.8 217.5 Earnings per Share - Diluted $ 1.33 $ 1.19 Dividends Declared Per Common Share $ 0.70 $ 0.65 (a) Additional information on our operating expenses can be found on page 2.
Operating Expense Detail First Quarter 202 1 % of Rev 202 0 % of Rev Revenue Operating expenses: Salary and service costs: $ 3,426.9 $ 3,406.9 Salary and related service costs 1,649.2 48.1 % 1,642.4 48.2 % Third - party service costs (a) 895.8 26.1 % 890.9 26.1 % Occupancy and other costs 291.6 8.5 % 309.6 9.1 % Cost of services 2,836.6 2,842.9 Selling, general and administrative expenses 71.6 2.1 % 86.8 2.5 % Depreciation and amortization 53.3 1.6 % 57.0 1.7 % Total operating expenses 2,961.5 86.4 % 2,986.7 87.7 % Operating Profit $ 465.4 $ 420.2 2 April 20, 2021 (a) Third - party service costs are expenses paid to third - party vendors incurred primarily in connection with performance obligations for our services where we have determined that we are acting as principal. These third - party expenses also include incidental costs incurred in the performance of our services including airfare, mileage, hotel and out - of - town expenses, etc.
2021 Total Revenue Change First Quarter $ % ∆ Prior Period Revenue $ 3,406.9 Foreign exchange rate impact (a) 95.7 2.8 % Acquisition revenue, net of disposition revenue (b) (15.1) (0.4)% Organic growth (c) (60.6) (1.8)% Current Period Revenue $ 3,426.9 0.6 % (a) 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. (b) 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 above. (c) Organic growth: calculated by subtracting the foreign exchange rate impact, and the acquisition revenue, net of disposition revenue components from total revenue growth. 3 April 20, 2021
Advertising 58.5% CRM Experiential 2.6% CRM Execution & Support 7 . 2 % PR 9.3% Healthcare 8.4% First Quarter CRM Commerce and Brand Consulting 6.2% CRM Precision Marketing 7.8% 2021 Revenue by Discipline $ Mix % Growth % Or gan ic Growth (a) $ 2,003.7 3.6 % 1.2 % 269.5 16.2 % 7.2 % Advertising CR M Precision Marketing CRM Commerce and 214.5 (2.9)% (4.2)% Brand Consulting CRM Experiential 88.4 (32.7)% (33.2)% CRM Execution & Support 246.6 (9.9)% (13.3)% PR 317.5 (4.9)% (3.5)% Healthcare 286.7 1.7 % — % Total $ 3,426.9 0.6 % (1.8)% Effective January 1, 2021, we realigned the classification of certain services primarily within our CRM Consumer Experience discipline. Please see pages 19 and 20 for Revenue by Discipline information for prior periods. (a) "Organic Growth” reflects the year - over - year increase or decrease in revenue from the prior period, excluding the foreign exchange rate impact and acquisition revenue, net of disposition revenue as defined on page 3. 4 April 20, 2021
UK 10.4% Euro Markets & Other Europe 17.1% Asia Pacific 11.7% First Quarter Latin America 1.8% Middle East & Africa 1.5% Unite d States 54.5% 2021 Revenue by Region $ Mix % Growth % Organic Grow th (a) United States $ 1,868.1 (1.4)% (1.0)% Other North America 104.4 1.3 % (3.2)% UK 356.5 3.3 % (6.4)% Euro Markets & Other Europe 584.5 1.1 % (3.2)% Asia Pacific 400.0 11.3 % 2.5 % Latin America 63.2 (11.5)% (2.4)% Middle East & Africa 50.2 (9.5)% (10.2)% Total $ 3,426.9 0.6 % (1.8)% 5 April 20, 2021 Other North America 3.0% (a) “Organic Growth” reflects the year - over - year increase or decrease in revenue from the prior period, excluding the foreign exchange rate impact and acquisition revenue, net of disposition revenue as defined on page 3.
Ot her 7% Se rvices 2% Oil, Gas & Utilities 1% Not - for - Profit 1% Education 1% Government 3% Pharma & Health 15% Re tail 7% Tech 9% Te lcom 5% T&E 10% Au to 10% Co nsumer Products 8% Fi nancial Services 7% Food & Be verage 14% Revenue by Industry First Quarter – 2021 Ot her 8% 6 April 20, 2021 Se rvices 2% Oil, Gas & Utilities 2% Not - for - Profit 1% Education 1% Government 2% Pharma & Health 14% Re tail 7% Tech 8% Te lcom 6% T&E 9% Au to 11% Co nsumer Products 7% Fi nancial Services 8% Food & Be verage 14% First Quarter – 2020
Cash Flow Performance Three Months Ended March 31 2021 2020 Activities, net Net Income $ 306.0 $ 271.7 Depreciation and Amortization of Intangible Assets 53.3 57.0 Share - Based Compensation 20.8 18.7 Other Items to Reconcile to Net Cash Used in Operating 2.5 14.6 Free Cash Flow (a) $ 382.6 $ 362.0 7 April 20, 2021 Additional information regarding our cash flows can be found in our condensed cash flow statement on page 1 5 . (a) The Free Cash Flow amounts presented above are non - GAAP liquidity measures. See page 21 for the definition of this measure and page 1 8 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 above.
Cash Flow Performance Three Months Ended March 31 2021 2020 Free Cash Flow (a) $ 382.6 $ 362.0 Primary Uses of Cash: Dividends paid to Common Shareholders 140.1 141.7 Dividends paid to Noncontrolling Interest Shareholders 13.6 10.4 Capital Expenditures 12.4 26.4 Acquisition of Businesses and Affiliates, Acquisition of Additional Noncontrolling Interests and Contingent Purchase Price Payments, net of Proceeds from Sale of Investments and other 9.1 9.9 Stock Repurchases, net of Proceeds from Stock Plans (2.7) 198.6 Primary Uses of Cash (a) 172.5 387.0 Net Free Cash Flow (a) $ 210.1 $ (25.0) 8 April 20, 2021 Additional information regarding our cash flows can be found in our condensed cash flow statement on page 1 5 . (a) The Free Cash Flow, Primary Uses of Cash and Net Free Cash Flow amounts presented above are non - GAAP liquidity measures. See page 21 for the definition of these measures and page 1 8 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 Decrease in Cash and Cash Equivalents for the periods presented above.
Current Credit Picture 9 April 20, 2021 Twelve Months Ended March 31 2021 2020 EBITDA (a) $ 1,862.9 $ 2,342.5 Total Debt / EBITDA 3.1 x 2.2 x Net Debt (b) / EBITDA 0.5 x 1.0 x Debt Bank Loans (Due Less Than 1 Year) $ 5.9 $ 10.9 CP & Borrowings Issued Under Revolver — — USD - denominated Senior Notes (c) 4,600.0 4,000.0 EUR - denominated Senior Notes (c) 1,171.8 1,094.0 Other Debt (17.4) (0.6) Total Debt $ 5,760.3 $ 5,104.3 Cash, Cash Equivalents and Short - Term Investments 4,897.3 2,694.1 Net Debt (b) $ 863.0 $ 2,410.2 (a) EBITDA is a non - GAAP performance measure. See page 21 for the definition of this measure and page 1 7 for the reconciliation of non - GAAP financial measures. (b) Net Debt is a non - GAAP liquidity measure. See page 21 for the definition of this measure, which is reconciled in the table above. (c) See page 1 2 for additional information on our Senior Notes.
Historical Returns Return on Invested Capital (ROIC) (a) : Twelve months ended March 31, 2021 19.9 % Twelve months ended March 31, 2020 25.1 % Return on Equity (b) : Twelve months ended March 31, 2021 34.5 % Twelve months ended March 31, 2020 54.9 % (a) Return on Invested Capital is After Tax Reported Operating Profit (a non - GAAP performance measure – see page 21 for the definition of this measure and page 1 8 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). (b) 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. 10 April 20, 2021
Supplemental Financial Information 11 April 20, 2021
Omnicom Debt Maturity Profile 12 April 20, 2021 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 202 2 2026 S en i o r Notes Other borrowings at March 31, 2021 include bank loans of $5.9 million, which are due in less than one year. For purposes of this presentation we have included these borrowings as outstanding through February 14, 2025, the date of expiration of our five - year credit facility . Senior Notes 2024 S en i o r Notes 2027 Euro 2030 2031 Euro S en i o r Notes S en i o r Notes S en i o r Notes Other Borro wi ng s
Net Interest Expense Detail First Quarter 2021 2020 Net Interest expense: Interest expense $ 53.8 $ 58.5 Interest income 6.3 12.7 Net Interest Expense $ 47.5 $ 45.8 13 April 20, 2021
2021 Acquisition Related Expenditures Three Months Ended March 31 Acquisition of Businesses and Affiliates (a) $ — Acquisition of Additional Noncontrolling Interests (b) 2.2 Contingent Purchase Price Payments (c) 6.9 Total Acquisition Expenditures (d) $ 9.1 14 April 20, 2021 (a) Includes acquisitions of a majority interest in agencies resulting in their consolidation, including additional interest in existing affiliate agencies resulting in majority ownership. (b) Includes the acquisition of additional equity interests in already consolidated subsidiary agencies which are recorded to Equity – Noncontrolling Interest. (c) Includes additional consideration paid for acquisitions completed in prior periods. (d) Total Acquisition Expenditures figure is net of cash acquired.
Condensed Cash Flow 15 April 20, 2021 Three Months Ended March 31 2021 2020 Net Income $ 306.0 $ 271.7 Share - Based Compensation 20.8 18.7 Depreciation and Amortization of Intangible Assets 53.3 57.0 Other Items to Reconcile to Net Cash Used in Operating Activities, net 2.5 14.6 Changes in Operating Capital (843.5) (1,349.2) Net Cash Used in Operating Activities (460.9) (987.2) Capital Expenditures (12.4) (26.4) Proceeds from Sale of Investments and other — — Proceeds from Dispositions of Subsidiaries 1.6 0.2 Net Cash Used in Investing Activities (10.8) (24.3) Dividends paid to Common Shareholders (140.1) (141.7) Dividends paid to Noncontrolling Interest Shareholders (13.6) (10.4) Changes in Short - term Debt, net 2.2 1.7 Proceeds from Long - term Borrowings — 594.0 Repayment of Long - term Debt — (600.0) Stock Repurchases, net of Proceeds from Stock Plans 2.7 (198.6) Acquisition of Additional Noncontrolling Interests (2.2) (10.4) Payment of Contingent Purchase Price Obligations (6.9) (1.4) Other Financing Activities, net (17.8) (24.4) Net Cash Used in Financing Activities (175.7) (391.2) Effect of foreign exchange rate changes on cash and cash equivalents (55.8) (210.5) Net Decrease in Cash and Cash Equivalents $ (703.2) $ (1,613.2)
2021 vs. 2020 Non - GAAP Financial Measures – EBITA 16 April 20, 2021 (a) Additional information regarding our operating expenses can be found on page 2. (b) EBITA is a non - GAAP financial performance measure. Please see page 21 for the definition of this measure and page 1 7 for the reconciliation of non - GAAP financial measures, which reconciles the EBITA figures presented above to Net Income - Omnicom Group Inc. for the periods presented above. (c) EBITA Margin is a non - GAAP financial performance measure, which is calculated by dividing EBITA (please see page 21 for the definition of this measure) by revenue for the periods presented. First Quarter 2021 2020 Revenue $ 3,426.9 $ 3,406.9 Operating expenses (a) 2,961.5 2,986.7 Operating Profit 465.4 420.2 Operating Profit Margin % 13.6 % 12.3 % Add back: Amortization of intangible assets 19.9 20.8 EBITA (b) $ 485.3 $ 441.0 EBITA Margin % (c) 14.2 % 12.9 %
Reconciliation of Non - GAAP Financial Measures – EBITA and EBITDA Three Months Ended March 31 Twelve Months Ended March 31 2021 2020 2021 2020 Net Income - Omnicom Group Inc. $ 287.8 $ 258.1 $ 975.1 $ 1,334.0 Net Income Attributed to Noncontrolling Interests 18.2 13.6 80.0 93.9 Net Income 306.0 271.7 1,055.1 1,427.9 Income (Loss) From Equity Method Investments — (5.3) (1.5) (2.8) Income Tax Expense 111.9 97.4 396.2 499.1 Income Before Income Taxes 417.9 374.4 1,452.8 1,929.8 Net Interest Expense 47.5 45.8 191.2 183.8 Operating Profit 465.4 420.2 1,644.0 2,113.6 Amortization of Intangible Assets 19.9 20.8 82.2 83.0 EBITA 485.3 441.0 1,726.2 2,196.6 Depreciation 33.4 36.2 136.7 145.9 EBITDA $ 518.7 $ 477.2 $ 1,862.9 $ 2,342.5 17 April 20, 2021 The abov e table reconciles the GA A P financial measure o f Ne t Income – Omnicom Group Inc. to the non - GAA P financial measures o f E B ITDA an d EB I T A for the period s presented. EBITDA and EBITA, which are defined on page 21, are non - GAAP financial measures within the meaning of applicable SEC rules and regulations. Our credit facility defines EBITDA as earnings before deductin g interes t expense , incom e taxes, depreciatio n an d amortization . Our credit facility use s EBITDA to measure ou r compliance wit h covenants, such a s ou r leverag e ratios, a s presente d o n pag e 9 of this presentation.
Reconciliation of Non - GAAP Financial Measures Three Months Ended March 31 2021 2020 Net Cash Used in Operating Activities $ (460.9) $ (987.2) Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital (843.5) (1,349.2) Free Cash Flow $ 382.6 $ 362.0 Three Months Ended March 31 2021 2020 Net Decrease in Cash and Cash Equivalents $ (703.2) $ (1,613.2) Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital (843.5) (1,349.2) Proceeds from Dispositions of Subsidiaries 1.6 0.2 Changes in Short - term Debt, net 2.2 1.7 Proceeds from Long - term Borrowings — 594.0 Repayment of Long - term Debt — (600.0) Other Financing Activities, net (17.8) (24.4) Effect of foreign exchange rate changes on cash and cash equivalents (55.8) (210.5) Net Free Cash Flow $ 210.1 $ (25.0) Twelve Months Ended March 31 2021 2020 Reported Operating Profit 1,644.0 2,113.6 Effective Tax Rate for the applicable period 27.3 % 25.9 % Income Taxes on Reported Operating Profit 448.8 547.4 After Tax Reported Operating Profit $ 1,195.2 $ 1,566.2 18 April 20, 2021
FY 2020 & 2019 Revenue by Discipline 19 April 20, 2021 2020 Quarterly Consulting Q1 $ Mix Q2 $ Mix Q3 $ Mix Q4 $ Mix Advertising $ 1,933.3 $ 1,530.1 $ 1,827.6 $ 2,220.4 CRM Precision Marketing 232.0 214.0 237.2 261.5 CRM Commerce and Brand 220.9 187.7 194.2 219.0 CRM Experiential 131.3 78.5 88.1 128.9 CRM Execution & Support 273.7 192.8 235.5 259.3 PR 333.7 298.1 325.5 353.5 Healthcare 282.0 299.5 298.4 314.4 Total $ 3,406.9 $ 2,800.7 $ 3,206.5 $ 3,757.0 Effective January 1 , 2021 , we realigned the classification of certain services primarily within our CRM Consumer Experience discipline . As a result, our CRM discipline is now grouped into four categories : CRM Precision Marketing which includes our precision marketing and digital/direct marketing agencies ; CRM Commerce and Brand Consulting that is comprised of Omnicom Commerce Group, including our shopper marketing businesses, and Omnicom Brand Consulting Group ; CRM Experiential, which includes our experiential marketing agencies and events businesses ; and CRM Execution & Support, which includes field marketing, merchandising and point of sale, as well as other specialized marketing and custom communications services .
FY 2020 & 2019 Revenue by Discipline 2020 Full Year 2019 Full Year $ Mix % Growth % Organi c Grow th (a) $ Mix % Growth % Organi c Grow th (a) Advertising $ 7,511.4 (13.3)% (12.3)% $ 8,664.2 1.8 % 4.3 % CRM Precision Marketing 944.6 1.9 % (0.4)% 927.2 15.8 % 12.7 % CRM Commerce and Brand Consulting 821.7 (15.4)% (14.8)% 971.8 (8.1)% (1.8)% CRM Experiential 426.8 (36.3)% (35.4)% 670.0 (10.2)% (6.5)% CRM Execution & Support 961.3 (18.3)% (16.4)% 1,177.2 (29.6)% (2.6)% PR 1,311.0 (5.5)% (4.1)% 1,386.7 (4.2)% (2.2)% Healthcare 1,194.3 3.3 % 3.2 % 1,156.6 9.8 % 10.0 % Total $ 13,171.1 (11.9)% (11.1)% $ 14,953.7 (2.2)% 2.8 % Effective January 1 , 2021 , we realigned the classification of certain services primarily within our CRM Consumer Experience discipline . As a result, our CRM discipline is now grouped into four categories : CRM Precision Marketing which includes our precision marketing and digital/direct marketing agencies ; CRM Commerce and Brand Consulting that is comprised of Omnicom Commerce Group, including our shopper marketing businesses, and Omnicom Brand Consulting Group ; CRM Experiential, which includes our experiential marketing agencies and events businesses ; and CRM Execution & Support, which includes field marketing, merchandising and point of sale, as well as other specialized marketing and custom communications services . (a) “Organic Growth” reflects the year - over - year increase or decrease in revenue from the prior period, excluding the foreign exchange rate impact and acquisition revenue, net of disposition revenue as defined on page 3 . 20 April 20, 2021
Disclosure 21 April 20, 2021 The preceding materials have been prepared for use in the April 20, 2021 conference call on Omnicom’s results of operations for the three months ended March 31, 2021. The call will be archived on the Internet at http:/ / investor.omnicomgroup.com/investor - relations/news - events - and - filings /. Forward - Looking Statements Certain statements in this presentation constitute forward - looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, Omnicom Group Inc. ("Omnicom" or 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 condition, 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: the impact of the COVID - 19 pandemic, 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 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 relating to competitive factors in the advertising, marketing and corporate communications industries; the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment. 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 for the year ended December 31, 2020 and in Item 1A, “Risk Factors” and Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. 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. Non - GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Non - GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies. We provide a reconciliation of non - GAAP measures to the comparable GAAP measures on pages 1 7 and 1 8 . The Non - GAAP measures used in this presentation include the following: Free Cash Flow, defined as net income plus depreciation, amortization, share based compensation expense plus/(less) other items to reconcile to net cash used in 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, 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, defined as operating profit before interest, taxes, depreciation and amortization of intangible assets. We believe EBITDA is a meaningful operating performance measure because the financial covenants in our credit facilities are based on EBITDA. EBITA, defined as operating profit before interest, taxes and amortization of intangible assets and EBITA margin, defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which excludes the non - cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). Accordingly, we believe it is a useful measure for investors to evaluate the performance of our business. Net Debt, 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. After Tax Reported Operating Profit, defined as reported operating profit less income taxes calculated using the effective tax rate for the applicable period. Management uses after tax operating profit as a measure of after tax operating performance as it excludes the after tax effects of financing and investing activities on results of operations. Other Information All dollar amounts are in millions except for per share figures on page 1 . 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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