OMNICOM GROUP INC.
false 0000029989 0000029989 2021-10-19 2021-10-19 0000029989 omc:CommonStockParValue0.15PerShareMember 2021-10-19 2021-10-19 0000029989 omc:Sec0.800SeniorNotesDue2027Member 2021-10-19 2021-10-19 0000029989 omc:Sec1.400SeniorNotesDue2031Member 2021-10-19 2021-10-19

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): October 19, 2021

OMNICOM GROUP INC.

(Exact Name of Registrant as Specified in its Charter)

New York

1-10551

13-1514814

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

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:

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

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 October 19, 2021, Omnicom Group Inc. (“Omnicom” or the “Company”) published an earnings release reporting its financial results for the three and nine months ended September 30, 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 October 19, 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, 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 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 actions. 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

99.1

Earnings release dated October 19, 2021.

99.2

Investor presentation materials dated October 19, 2021.

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.

 

By:

/s/ Andrew L. Castellaneta

Name:

Andrew L. Castellaneta

Title:

Senior Vice President,

Chief Accounting Officer

Date: October 19, 2021


Exhibit 99.1

 

OMNICOM GROUP REPORTS THIRD QUARTER 2021 RESULTS

 

 

Revenue of $3,435.0 million increased 7.1%, with organic growth of 11.5%

Operating profit of $541.6 million increased 8.0%

Operating profit margin of 15.8%

Net income of $355.6 million increased 13.5%

Diluted earnings per share of $1.65 increased 13.8%

 

 

NEW YORK, October 19, 2021 - Omnicom Group Inc. (NYSE: OMC) today announced results for the quarter ended September 30, 2021.

 

“Robust organic revenue growth of 11.5% drove improvement in all of our key financial measures - with a notable jump in CRM Precision Marketing from our digital transformation work," said John Wren, Chairman and Chief Executive Officer of Omnicom Group Inc. “Our powerful and differentiated offering, which is tailored to our clients' needs and is comprised of best-in-class talent, creativity, operating systems and technologies such as Omni, enables us to consistently orchestrate better outcomes for clients and win new business. It is a formula that delivered for us in the third quarter, and will drive our ability to meet our clients' growing demands in an increasingly complex marketing landscape."

 

$ in millions, except per share amounts Three Months Ended September 30,   Nine Months Ended September 30,  
  2021   2020   2021   2020  
Revenue $ 3,435.0      $ 3,206.5      $ 10,433.6      $ 9,414.1     
Operating Profit 1 541.6      501.4      1,575.4      984.1     
Operating Profit Margin 15.8  %   15.6  %   15.1  %   10.5  %  
Net Income 2 355.6      313.3      991.6      547.3     
Net Income per Share - Diluted 2 $ 1.65      $ 1.45      $ 4.58      $ 2.53     
EBITA 3 560.3      521.6      1,635.2      1,046.5     

Notes:

1) 2020 results include a reduction in salary and service costs of $68.7 million and $117.8 million for the three and nine months ended September 30, 2020, respectively, related to reimbursements and tax credits from governmental pandemic relief programs in several countries

2) Net Income and Net Income per Share are for Omnicom Group Inc.

3) See Reconciliation of Non-GAAP Financial Measures

 

Third Quarter 2021 Results

 

Revenues 

Omnicom’s worldwide revenue in the third quarter of 2021 continued to improve from the negative effects of the COVID-19 pandemic and increased 7.1% to $3,435.0 million from $3,206.5 million in the third quarter of 2020. The components of the change in revenue included an increase in revenue from the positive impact of foreign currency translation of 1.6%, a decrease in acquisition revenue, net of disposition revenue, of 5.9% and an increase in revenue from organic growth of 11.5%.

 

280 Park Avenue, New York, NY 10017. Tel (212) 415-3672

 
 

Organic growth in the third quarter of 2021 compared to the third quarter of 2020 increased across all of our fundamental disciplines. The percentage increases were as follows: 8.6% for Advertising, 24.3% for CRM Precision Marketing, 18.0% for CRM Commerce and Brand Consulting, 49.9% for CRM Experiential, 8.3% for CRM Execution & Support, 10.5% for Public Relations and 6.6% for Healthcare.

 

Across all of our regional markets, organic growth in the third quarter of 2021 compared to the third quarter of 2020 was as follows: 7.7% for the United States, 20.2% for Other North America, 11.4% for the United Kingdom, 14.9% for the Euro Markets & Other Europe, 19.6% for Asia Pacific, 15.9% for Latin America and 24.3% for the Middle East & Africa.

 

Expenses

Operating expenses increased $188.3 million, or 7.0%, to $2,893.4 million compared to the third quarter of 2020. Salary and service costs, which tend to fluctuate with changes in revenue, increased $174.7 million, or 7.6%, to $2,461.8 million compared to the third quarter of 2020, reflecting an increase in salary and related service costs of $229.2 million and a decrease in third-party service costs of $54.5 million. The increase in salary and related service costs resulted primarily from the increase in organic revenue, as well as the strengthening of most foreign currencies against the U.S. Dollar, especially the British Pound and Euro. The prior year period reflects a reduction in salary and service costs of $68.7 million related to reimbursements and tax credits from governmental programs in several countries. Third-party service costs, which fluctuate with changes in revenue, decreased during the quarter due to our net disposition activity, primarily related to the disposition of ICON, partially offset by the organic growth in revenue as well as the effects of foreign currency exchange rate changes.

 

Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $12.4 million, or 4.5%, to $285.5 million compared to the third quarter of 2020, due to the strengthening of most foreign currencies against the U.S. Dollar.

 

SG&A expenses increased $4.8 million, or 5.3%, to $95.0 million compared to the third quarter of 2020, due to increases in most categories.

 

Operating Profit

Operating profit increased $40.2 million, or 8.0%, to $541.6 million compared to the third quarter of 2020. Our operating margin for the third quarter of 2021 increased to 15.8% compared to 15.6% for the third quarter of 2020.

 

Interest Expense

Net interest expense decreased $4.8 million, or 9.9%, to $43.7 million compared to the third quarter of 2020. Interest expense on debt in the third quarter of 2021 decreased $3.8 million to $44.8 million primarily as a result of the benefit from the early redemption in May 2021 of all the outstanding $1.250 billion principal amount of 3.625% Senior Notes due 2022, which was partially offset by the issuance of $800 million of 2.60% Senior Notes due 2031.

 

Income Taxes

Our effective tax rate of 24.1% decreased from 26.7% in the third quarter of 2020. In the third quarter of 2021, income tax expense was reduced by approximately $11.7 million primarily from the favorable settlements of uncertain tax positions in certain jurisdictions.

 

Net Income – Omnicom Group Inc.

Net income - Omnicom Group Inc. for the third quarter of 2021 increased $42.3 million or 13.5%, to $355.6 million compared to the third quarter of 2020. Diluted net income per share was $1.65 per share compared to $1.45 per share in the third quarter of 2020.

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EBITA

EBITA increased $38.7 million, or 7.4%, to $560.3 million compared to the third quarter of 2020. Our EBITA margin was unchanged at 16.3% compared to the third quarter of 2020.

 

COVID-19 Business Update

As the impact of the COVID-19 pandemic on the global economy continues to moderate, we experienced an improvement in our business in the third quarter of 2021 as compared to the third quarter of 2020. The increase in revenue primarily reflects increased client spending in all our disciplines and across all our geographic areas compared to the prior year period and the strengthening of most foreign currencies, primarily the British Pound and the Euro, against the U.S. Dollar. The increase in revenue period-over-period was partially offset by a reduction in acquisition revenue, net of disposition revenue reflecting the sale of our wholly owned subsidiary, ICON International, a specialty media business, in the second quarter of 2021.

Global economic conditions may continue to be volatile as long as the COVID-19 pandemic remains a public health threat, which could negatively impact 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 subsides.

 

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.

 

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.

Page 3

 

Conference Call

Omnicom will host a conference call to review the third quarter 2021 financial results on Tuesday, October 19, 2021 at 4:30 p.m. EDT. Participants can listen to the conference call by dialing (844) 291-6362 (domestic) or (234) 720-6995 (international), along with access code 1468163. The call will also be simulcast and archived on our website at: http://investor.omnicomgroup.com/investor-relations/news-events-and-filings.

 

Corporate Responsibility

At Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. We invite you to explore our website (csr.omnicomgroup.com) for highlights of our progress across the four areas on which we focus: Community, People, Environment and Governance.

 

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

Investors: Gregory Lundberg [email protected]
Media: Joanne Trout [email protected]

 

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. 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.

 

Forward-looking Statements

Certain statements in this press release including those related to COVID-19 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, 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.

Page 4

 

Omnicom Group Inc.

Consolidated Statements of Income

Three Months Ended September 30

(Unaudited)

(Dollars in Millions, Except Per Share Data)

 

  2021   2020 (a)  
         
Revenue $ 3,435.0      $ 3,206.5     
Operating Expenses:        
Salary and service costs 2,461.8      2,287.1     
Occupancy and other costs 285.5      273.1     
Costs of services 2,747.3      2,560.2     
Selling, general and administrative expenses 95.0      90.2     
Depreciation and amortization 51.1      54.7     
  2,893.4      2,705.1     
Operating Profit 541.6      501.4     
Interest Expense 50.7      54.4     
Interest Income 7.0      5.9     
Income Before Income Taxes 497.9      452.9     
Income Tax Expense 120.0      120.9     
Income From Equity Method Investments 2.2      2.9     
Net Income 380.1      334.9     
Net Income Attributed To Noncontrolling Interests 24.5      21.6     
Net Income  - Omnicom Group Inc. $ 355.6      $ 313.3     
         
Net Income Per Share - Omnicom Group Inc.        
Basic $ 1.66      $ 1.45     
Diluted $ 1.65      $ 1.45     
         
Weighted average shares (in millions)        
Basic 214.0      215.4     
Diluted 215.4      215.8     
         
Dividends Declared Per Common Share $ 0.70      $ 0.65     

 

(a)Salary and service costs for the three months ended September 30, 2020 includes the reduction of $68.7 million in operating expenses related to reimbursements and tax credits under government programs in several countries where we have operations.

Page 5

 

Omnicom Group Inc.

Consolidated Statements of Income

Nine Months Ended September 30

(Unaudited)

(Dollars in Millions, Except Per Share Data)

  2021 (a)   2020 (b) (c)
       
Revenue $ 10,433.6      $ 9,414.1   
Operating Expenses:      
Salary and service costs 7,609.9      6,851.5   
Occupancy and other costs 871.0      872.6   
Gain on disposition of subsidiary (50.5)     —   
COVID-19 repositioning costs —      277.9   
Costs of services 8,430.4      8,002.0   
Selling, general and administrative expenses 269.9      259.2   
Depreciation and amortization 157.9      168.8   
  8,858.2      8,430.0   
Operating Profit 1,575.4      984.1   
Interest Expense 184.8      166.6   
Interest Income 20.1      25.1   
Income Before Income Taxes 1,410.7      842.6   
Income Tax Expense 355.1      240.2   
Income (Loss) From Equity Method Investments 2.1      (10.1)  
Net Income 1,057.7      592.3   
Net Income Attributed To Noncontrolling Interests 66.1      45.0   
Net Income - Omnicom Group Inc. $ 991.6      $ 547.3   
       
Net Income Per Share - Omnicom Group Inc.      
Basic $ 4.61      $ 2.54   
Diluted $ 4.58      $ 2.53   
       
Weighted average shares (in millions)      
Basic 215.0      215.6   
Diluted 216.4      216.2   
       
Dividends Declared Per Common Share $ 2.10      $ 1.95   
(a)During the second quarter of 2021, we recorded a gain on the disposition of subsidiaries, which increased Operating Profit and Net Income - Omnicom Group Inc. by $50.5 million for the nine months ended September 30, 2021. Additionally, Net Interest Expense during the second quarter of 2021 included a $26.6 million charge related to the early extinguishment of our 2022 Senior Notes, which decreased Net Income - Omnicom Group Inc. by $19.5 million for the nine months ended September 30, 2021. The net impact of these items increased Earnings per Share - Diluted by $0.14 per share for the nine months ended September 30, 2021.
(b)During the second quarter of 2020, we recorded expenses for certain repositioning actions related to the realignment of our businesses in reaction to the COVID-19 pandemic. The impact of these items decreased Operating Profit by $277.9 million, Net Income - Omnicom Group Inc. by $223.1 million and Earnings per Share - Diluted by $1.03 per share for the nine months ended September 30, 2020.
(c)Salary and service costs for the nine months ended September 30, 2020 includes the reduction of $117.8 million in operating expenses related to reimbursements and tax credits under government programs in several countries where we have operations.

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Omnicom Group Inc.

Detail of Operating Expenses

Three Months Ended September 30

(Unaudited)

(Dollars in Millions)

  2021   2020
Operating Expenses:      
Salary and service costs      
Salary and related service costs $ 1,730.3      $ 1,501.1   
Third-party service costs 731.5      786.0   
Occupancy and other costs 285.5      273.1   
Costs of services 2,747.3      2,560.2   
Selling, general and administrative expenses 95.0      90.2   
Depreciation and amortization 51.1      54.7   
Total Operating Expenses $ 2,893.4      $ 2,705.1   

 

 

Omnicom Group Inc.

Detail of Operating Expenses

Nine Months Ended September 30

(Unaudited)

(Dollars in Millions)

  2021   2020
Operating Expenses:      
Salary and service costs      
Salary and related service costs $ 5,101.2      $ 4,568.2   
Third-party service costs 2,508.7      2,283.3   
Occupancy and other costs 871.0      872.6   
Gain on disposition of subsidiary (50.5)     —   
COVID-19 repositioning costs —      277.9   
Costs of services 8,430.4      8,002.0   
Selling, general and administrative expenses 269.9      259.2   
Depreciation and amortization 157.9      168.8   
Total Operating Expenses $ 8,858.2      $ 8,430.0   

 

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Omnicom Group Inc.

Reconciliation of Non-GAAP Financial Measures - EBITA

Three Months Ended September 30

(Unaudited)

(Dollars in Millions)

  2021   2020
       
Net Income  - Omnicom Group Inc. $ 355.6      $ 313.3   
Net Income Attributed To Noncontrolling Interests 24.5      21.6   
Net Income 380.1      334.9   
Income From Equity Method Investments 2.2      2.9   
Income Tax Expense 120.0      120.9   
Income Before Income Taxes 497.9      452.9   
Interest Income 7.0      5.9   
Interest Expense 50.7      54.4   
Operating Profit 541.6      501.4   
Add back: Amortization of intangible assets 18.7      20.2   
Earnings before interest, taxes and amortization of intangible assets ("EBITA") $ 560.3      $ 521.6   
       
Revenue $ 3,435.0      $ 3,206.5   
EBITA $ 560.3      $ 521.6   
EBITA Margin % 16.3  %   16.3  %

 

 

 

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.

Page 8

 

Omnicom Group Inc.

Reconciliation of Non-GAAP Financial Measures - EBITA

Nine Months Ended September 30

(Unaudited)

(Dollars in Millions)

 

  2021   2020
       
Net Income - Omnicom Group Inc. $ 991.6      $ 547.3   
Net Income Attributed To Noncontrolling Interests 66.1      45.0   
Net Income 1,057.7      592.3   
Income (Loss) From Equity Method Investments 2.1      (10.1)  
Income Tax Expense 355.1      240.2   
Income Before Income Taxes 1,410.7      842.6   
Interest Income 20.1      25.1   
Interest Expense 184.8      166.6   
Operating Profit 1,575.4      984.1   
Add back: Amortization of intangible assets 59.8      62.4   
Earnings before interest, taxes and amortization of intangible assets ("EBITA") $ 1,635.2      $ 1,046.5   
       
Revenue $ 10,433.6      $ 9,414.1   
EBITA $ 1,635.2      $ 1,046.5   
EBITA Margin % 15.7  %   11.1  %

 

 

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. 

Page 9

 

 

Omnicom Group Inc.

Revenue by Discipline

Three & Nine Months Ended September 30

(Unaudited)

(Dollars in Millions)

 

  Three Months Ended September 30,   Nine Months Ended September 30,  
  2021   2020   2021   2020  
Advertising $ 1,820.6      $ 1,827.6      $ 5,838.8      $ 5,291.0     
CRM Precision Marketing 309.4      237.1      872.4      683.1     
CRM Commerce and Brand Consulting 231.3      194.2      667.4      602.8     
CRM Experiential 132.7      88.1      345.1      297.9     
CRM Execution & Support 258.8      235.5      756.3      702.0     
Public Relations 359.4      325.6      1,022.8      957.4     
Healthcare 322.8      298.4      930.8      879.9     
Revenue $ 3,435.0      $ 3,206.5      $ 10,433.6      $ 9,414.1     

 

Page 10

 

Exhibit 99.2

 

2021 Third Quarter October 19, 2021

 
 

2 Highlights Robust revenue growth – Revenue growth 7.1% reported, 11.5% organic – Strength across agencies, geographies, and disciplines – Expect continued strength for balance of year Cost controls continue – EBIT up 8.0%, EBIT margin 15.8% – Net income per diluted share up 13.8% to $1.65 Investing in our strategy – Talent & creativity in all disciplines – Precision marketing, performance media, data & analytics, e-commerce, healthcare – Omni platform helping deliver key wins and orchestrating better outcomes for clients Capital allocation – Attractive $0.70 quarterly dividend – Strategic acquisitions to drive organic growth – Share repurchases

 

 

3 Third Quarter Year to Date 2021 2020 2021(b) 2020 (c) Revenue $ 3,435.0 $ 3,206.5 $ 10,433.6 $ 9,414.1 Operating Expenses (a) 2,893.4 2,705.1 8,858.2 8,430.0 Operating Profit 541.6 501.4 1,575.4 984.1 Operating Profit Margin % 15.8 % 15.6 % 15.1 % 10.5 % Net Interest Expense 43.7 48.5 164.7 141.5 Income Tax Expense 120.0 120.9 355.1 240.2 Tax Rate % 24.1 % 26.7 % 25.2 % 28.5 % Income (Loss) From Equity Method Investments 2.2 2.9 2.1 (10.1) Net Income Attributed To Noncontrolling Interests 24.5 21.6 66.1 45.0 Net Income - Omnicom Group Inc. 355.6 313.3 991.6 547.3 Diluted Shares (millions) 215.4 215.8 216.4 216.2 Net Income per Share - Diluted $ 1.65 $ 1.45 $ 4.58 $ 2.53 Dividends Declared Per Common Share $ 0.70 $ 0.65 $ 2.10 $ 1.95 Income Statement Summary (a) Additional information on our operating expenses can be found on page 8. (b) During the second quarter of 2021, we recorded a gain on the disposition of subsidiaries, which increased Operating Profit and Net Income - Omnicom Group Inc. by $50.5 million for the nine months ended September 30, 2021. Additionally, Net Interest Expense during the second quarter of 2021 included a $26.6 million charge related to the early extinguishment of our 2022 Senior Notes, which decreased Net Income - Omnicom Group Inc. by $19.5 million for the nine months ended September 30, 2021. The net impact of these items increased Earnings per Share - Diluted by $0.14 per share for the nine months ended September 30, 2021. (c) During the second quarter of 2020, we recorded expenses for certain repositioning actions related to the realignment of our businesses in reaction to the COVID-19 pandemic. The impact of these items decreased Operating Profit by $277.9 million, Net Income - Omnicom Group Inc. by $223.1 million and Earnings per Share - Diluted by $1.03 per share for the nine months ended September 30, 2020.

 

 

4 Revenue Change Third Quarter Year to Date $ % ? $ % ? Prior Period Revenue $ 3,206.5 $ 9,414.1 Foreign exchange rate impact (a) 51.8 1.6 % 298.3 3.2 % Acquisition revenue, net of disposition revenue (b) (190.5) (5.9) % (267.5) (2.8) % Organic growth (c) 367.2 11.5 % 988.7 10.5 % Current Period Revenue $ 3,435.0 7.1 % $ 10,433.6 10.8 % (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.

 

 

5 Advertising 56.0% CRM Precision Marketing 8.4% CRM Commerce and Brand Consulting 6.4% CRM Experiential 3.3% CRM Execution & Support 7.2% PR 9.8% Healthcare 8.9% Revenue by Discipline $ Mix % Growth % Organic Growth (a) Advertising $ 1,820.6 (0.4) % 8.6 % CRM Precision Marketing 309.4 30.5 % 24.3 % CRM Commerce and Brand Consulting 231.3 19.1 % 18.0 % CRM Experiential 132.7 50.6 % 49.9 % CRM Execution & Support 258.8 9.9 % 8.3 % PR 359.4 10.4 % 10.5 % Healthcare 322.8 8.2 % 6.6 % Total $ 3,435.0 7.1 % 11.5 % $ Mix % Growth % Organic Growth (a) Advertising $ 5,838.8 10.4 % 12.0 % CRM Precision Marketing 872.4 27.7 % 18.7 % CRM Commerce and Brand Consulting 667.4 10.7 % 9.0 % CRM Experiential 345.1 15.8 % 14.1 % CRM Execution & Support 756.3 7.7 % 3.8 % PR 1,022.8 6.8 % 7.1 % Healthcare 930.8 5.8 % 3.8 % Total $ 10,433.6 10.8 % 10.5 % Third Quarter Year to Date (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 4. Advertising 53.0% CRM Precision Marketing 9.0% CRM Commerce and Brand Consulting 6.7% CRM Experiential 3.9% CRM Execution & Support 7.5% PR 10.5% Healthcare 9.4%

 

 

6 $ Mix % Growth % Organic Growth (a) United States $ 5,414.2 3.2 % 8.3 % Other North America 337.5 24.4 % 16.1 % UK 1,119.5 20.4 % 8.3 % Euro Markets & Other Europe 1,890.0 18.4 % 14.0 % Asia Pacific 1,305.7 24.5 % 16.3 % Latin America 206.1 9.7 % 10.4 % Middle East & Africa 160.6 18.7 % 14.9 % Total $ 10,433.6 10.8 % 10.5 % $ Mix % Growth % Organic Growth (a) United States $ 1,705.2 (3.3) % 7.7 % Other North America 116.6 27.0 % 20.2 % UK 383.3 20.0 % 11.4 % Euro Markets & Other Europe 641.0 15.4 % 14.9 % Asia Pacific 458.3 23.9 % 19.6 % Latin America 72.5 17.7 % 15.9 % Middle East & Africa 58.1 28.5 % 24.3 % Total $ 3,435.0 7.1 % 11.5 % Revenue by Region Third Quarter Year to Date UK 11.2% Euro Markets & Other Europe 18.7% Asia Pacific 13.3% Latin America 2.1% Middle East & Africa 1.7% United States 49.6% Other North America 3.4% UK 10.7% Euro Markets & Other Europe 18.1% Asia Pacific 12.5% Latin America 2.0% Middle East & Africa 1.6% United States 51.9% Other North America 3.2% (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 4.

 

 

7 Year to Date 2021 2020 Pharmaceuticals and Health Care 16 % 16 % Food and Beverage 14 % 14 % Auto 10 % 10 % Technology 10 % 9 % Travel and Entertainment 8 % 7 % Consumer Products 8 % 8 % Financial Services 7 % 8 % Retail 7 % 7 % Other 7 % 7 % Telecommunications 5 % 6 % Government 3 % 3 % Services 2 % 2 % Oil,Gas & Utilities 1 % 1 % Not.for.Profit 1 % 1 % Education 1 % 1 % Total 100 % 100 % Revenue by Industry Sector Other 7% Services 2% Oil, Gas & Utilities 1% Not-for- Profit 1% Government 3% Education 1% Pharma & Health 16% Retail 7% Tech 10% Telcom 5%

 
 

8 Operating Expense Detail (a) Salary and service costs for the third quarter and year to date 2020 periods include the reduction of $68.7 million and $117.8 million, respectively, in operating expenses related to reimbursements and tax credits under government programs in several countries where we have operations. (b) COVID-19 repositioning costs for the year to date 2020 period includes expenses for certain repositioning actions related to the realignment of our businesses in reaction to the COVID-19 pandemic. The impact of these items increased operating expenses by $277.9 million for the nine months ended September 30, 2021. (c) 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 other out-of-pocket expenses. Third Quarter Year to Date 2021 % of Rev 2020(a) % of Rev 2021 % of Rev 2020(a)(b) % of Rev Revenue $ 3,435.0 $ 3,206.5 $ 10,433.6 $ 9,414.1 Operating expenses: Salary and related service costs 1,730.3 50.4 % 1,501.1 46.8 % 5,101.2 48.9 % 4,568.2 48.5 % Third-party service costs (c) 731.5 21.3 % 786.0 24.5 % 2,508.7 24.0 % 2,283.3 24.3 % Occupancy and other costs 285.5 8.3 % 273.1 8.5 % 871.0 8.3 % 872.6 9.3 % Gain on disposition of subsidiary — — % — n/a (50.5) (0.5) % — n/a COVID-19 repositioning costs — n/a — — % — n/a 277.9 3.0 % Cost of services 2,747.3 2,560.2 8,430.4 8,002.0 Selling, general and administrative expenses 95.0 2.8 % 90.2 2.8 % 269.9 2.6 % 259.2 2.8 % Depreciation and amortization 51.1 1.5 % 54.7 1.7 % 157.9 1.5 % 168.8 1.8 % Total operating expenses 2,893.4 84.2 % 2,705.1 84.4 % 8,858.2 84.9 % 8,430.0 89.5 % Operating Profit $ 541.6 $ 501.4 $ 1,575.4 $ 984.1

 
 

9 EBITA & Margins Third Quarter Year to Date 2021 2020 2021 2020 Revenue $ 3,435.0 $ 3,206.5 $ 10,433.6 $ 9,414.1 Operating expenses (a) 2,893.4 2,705.1 8,858.2 8,430.0 Operating Profit 541.6 501.4 1,575.4 984.1 Operating Profit Margin % 15.8 % 15.6 % 15.1 % 10.5 % Add back: Amortization of intangible assets 18.7 20.2 59.8 62.4 EBITA (b) $ 560.3 $ 521.6 $ 1,635.2 $ 1,046.5 EBITA Margin % (c) 16.3 % 16.3 % 15.7 % 11.1 % (a) Additional information regarding our operating expenses can be found on page 8. (b) EBITA is a non-GAAP financial performance measure. Please see page 20 for the definition of this measure and page 14 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 20 for the definition of this measure) by revenue for the periods presented.

 
 

10 Cash Flow Performance Nine Months Ended September 30 2021 2020 Free Cash Flow (a) $ 1,249.3 $ 1,135.3 Primary Uses of Cash: Dividends paid to Common Shareholders 443.0 422.7 Dividends paid to Noncontrolling Interest Shareholders 69.8 57.7 Capital Expenditures 42.6 50.0 Acquisition of Businesses and Affiliates, Acquisition of Additional Noncontrolling Interests and Contingent Purchase Price Payments, net of Proceeds from Sale of Investments and other 46.5 104.6 Stock Repurchases, net of Proceeds from Stock Plans 264.7 216.0 Primary Uses of Cash (a) 866.6 851.0 Net Free Cash Flow (a) $ 382.7 $ 284.3 (a) The Free Cash Flow, Primary Uses of Cash and Net Free Cash Flow amounts presented above are non-GAAP liquidity measures. See page 20 for the definition of these measures and page 15 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.

 
 

11 Credit & Liquidity $ Millions Twelve Months Ended September 30 2021 2020 EBITDA (a) $ 2,401.8 $ 1,855.5 Total Debt / EBITDA 2.2 x 3.1 x Net Debt (b) / EBITDA 0.4 x 1.4 x Debt Bank Loans (Due Less Than 1 Year) $ 10.2 $ 23.6 CP & Borrowings Issued Under Revolver — — USD-denominated Senior Notes 4,150.0 4,600.0 EUR-denominated Senior Notes 1,158.0 1,174.4 Other Debt (36.3) (12.9) Total Debt $ 5,281.9 $ 5,785.1 Cash, Cash Equivalents and Short-Term Investments 4,431.2 3,278.3 Net Debt (b) $ 850.7 $ 2,506.8 (a) EBITDA is a non-GAAP performance measure. See page 20 for the definition of this measure and page 14 for the reconciliation of non-GAAP financial measures. (b) Net Debt is a non-GAAP liquidity measure. See page 20 for the definition of this measure, which is reconciled in the table above.

 
 

12 Historical Returns (a) Return on Invested Capital is After Tax Reported Operating Profit (a non-GAAP performance measure – see page 20 for the definition of this measure and page 15 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. Return on Invested Capital (ROIC)(a) Return on Equity(b) Twelve months ended September 30, 2021 26.4 % Twelve months ended September 30, 2021 47.0 % Twelve months ended September 30, 2020 17.7 % Twelve months ended September 30, 2020 37.7 %

 
 

13 Appendix

 
 

14 Non-GAAP Reconciliations 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 20, 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. Our credit facility uses EBITDA to measure our compliance with covenants, such as our leverage ratios, as presented on page 11 of this presentation. Three Months Ended Nine Months Ended Twelve Months Ended September 30 September 30 September 30 2021 2020 2021 2020 2021 2020 Net Income (Loss) - Omnicom Group Inc. $ 355.6 $ 313.3 $ 991.6 $ 547.3 $ 1,389.7 $ 962.3 Net Income Attributed to Noncontrolling Interests 24.5 21.6 66.1 45.0 96.5 79.8 Net Income (Loss) 380.1 334.9 1,057.7 592.3 1,486.2 1,042.1 Income (Loss) From Equity Method Investments 2.2 2.9 2.1 (10.1) 5.4 (9.3) Income Tax Expense 120.0 120.9 355.1 240.2 496.6 399.1 Income Before Income Taxes 497.9 452.9 1,410.7 842.6 1,977.4 1,450.5 Net Interest Expense 43.7 48.5 164.7 141.5 212.7 180.0 Operating Profit 541.6 501.4 1,575.4 984.1 2,190.1 1,630.5 Amortization of Intangible Assets 18.7 20.2 59.8 62.4 80.5 82.2 EBITA 560.3 521.6 1,635.2 1,046.5 2,270.6 1,712.7 Depreciation 32.4 34.5 98.1 106.4 131.2 142.8 EBITDA $ 592.7 $ 556.1 $ 1,733.3 $ 1,152.9 $ 2,401.8 $ 1,855.5

 
 

15 Non-GAAP Reconciliations Nine Months Ended September 30 2021 2020 Net Cash Provided by/(Used in) Operating Activities $ 238.6 $ (661.4) Operating Activities items excluded from Free Cash Flow: Changes in Operating Capital (1,010.7) (1,796.7) Free Cash Flow $ 1,249.3 $ 1,135.3 Nine Months Ended September 30 2021 2020 Net Decrease in Cash and Cash Equivalents $ (1,169.3) $ (1,027.4) Cash Flow items excluded from Net Free Cash Flow: Changes in Operating Capital (1,010.7) (1,796.7) Proceeds from Dispositions of Subsidiaries 114.1 3.2 Changes in Short-term Debt, net 6.7 13.7 Proceeds from Long-term Borrowings 791.7 1,186.6 Repayment of Long-term Debt (1,250.0) (600.0) Other Financing Activities, net (86.2) (49.1) Effect of foreign exchange rate changes on cash and cash equivalents (117.6) (69.4) Net Free Cash Flow $ 382.7 $ 284.3 Twelve Months Ended September 30 2021 2020 Reported Operating Profit 2,190.1 1,630.5 Effective Tax Rate for the applicable period 25.1 % 27.5 % Income Taxes on Reported Operating Profit 549.7 448.4 After Tax Reported Operating Profit $ 1,640.4 $ 1,182.1

 
 

16 Free Cash Flow (a) The Free Cash Flow amounts presented above are non-GAAP liquidity measures. See page 20 for the definition of this measure and page 15 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. Nine Months Ended September 30 2021 2020 Net Income $ 1,057.7 $ 592.3 Depreciation and Amortization of Intangible Assets 157.9 168.8 Share-Based Compensation 57.8 52.5 Gain on disposition of subsidiary (50.5) — COVID-19 Repositioning Costs — 277.9 Other Items to Reconcile to Net Cash Used in Operating Activities, net 26.4 43.8 Free Cash Flow (a) $ 1,249.3 $ 1,135.3

 
 

17 Operating Expense Detail - Constant $ (a) 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. (b) Salary and service costs for the third quarter and year to date 2020 periods include the reduction of $68.7 million and $117.8 million, respectively, in operating expenses related to reimbursements and tax credits under government programs in several countries where we have operations. (c) COVID-19 repositioning costs for the year to date 2020 period includes expenses for certain repositioning actions related to the realignment of our businesses in reaction to the COVID-19 pandemic. The impact of these items increased operating expenses by $277.9 million for the nine months ended September 30, 2020. (d) Third-party service costs are expenses paid to third-party vendors incurred primarily in connection with performance obligations for our services where we have determined that we are acting as principal. These third-party expenses also include incidental costs incurred in the performance of our services including airfare, mileage, hotel and other out-of-pocket expenses. Third Quarter Year to Date 2021 2021 C$(a) 2020(b) 2021 2021 C$(a) 2020(b)(c) Operating expenses: Salary and related service costs $ 1,730.3 $ 1,705.4 $ 1,501.1 $ 5,101.2 $ 4,949.5 $ 4,568.2 Third-party service costs (d) 731.5 719.1 786.0 2,508.7 2,443.9 2,283.3 Occupancy and other costs 285.5 281.0 273.1 871.0 842.9 872.6 Gain on disposition of subsidiary — — — (50.5) (50.5) — COVID-19 repositioning costs — — — — — 277.9 Cost of services 2,747.3 2,705.5 2,560.2 8,430.4 8,185.8 8,002.0 Selling, general and administrative expenses 95.0 94.0 90.2 269.9 263.7 259.2 Depreciation and amortization 51.1 50.6 54.7 157.9 153.9 168.8 Total operating expenses $ 2,893.4 $ 2,850.1 $ 2,705.1 $ 8,858.2 $ 8,603.4 $ 8,430.0

 
 

18 Revenue by Discipline Trend Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Advertising $ 1,973.5 $ 2,148.1 $ 2,078.6 $ 2,464.0 $ 1,933.3 $ 1,530.1 $ 1,827.6 $ 2,220.4 $ 2,003.7 $ 2,014.5 $ 1,820.6 CRM Precision Marketing 212.9 234.9 232.5 246.9 232.0 214.0 237.1 261.5 269.5 293.6 309.4 CRM Commerce and Brand Consulting 235.8 240.5 245.5 250.0 220.9 187.7 194.2 219.0 214.5 221.5 231.3 CRM Experiential 149.3 168.0 154.7 198.0 131.3 78.5 88.1 128.9 88.4 124.0 132.7 CRM Execution & Support 302.2 285.2 286.2 303.6 273.7 192.8 235.5 259.3 246.6 250.9 258.8 PR 335.8 350.5 339.3 361.1 333.7 298.1 325.6 353.5 317.5 345.9 359.4 Healthcare 259.4 292.6 287.0 317.6 282.0 299.5 298.4 314.4 286.7 321.2 322.8 Total $ 3,468.9 $ 3,719.8 $ 3,623.8 $ 4,141.2 $ 3,406.9 $ 2,800.7 $ 3,206.5 $ 3,757.0 $ 3,426.9 $ 3,571.6 $ 3,435.0

 
 

19 OMC Discipline Advertising CRM Precision Marketing CRM Commerce & Brand Consulting CRM Experiential CRM Execution & Support Public Relations Healthcare LTM 3Q21 Revenues ($M) $8,059 $1,134 $886 $474 $1,016 $1,376 $1,245 % of total OMC 57% 8% 6% 3% 7% 10% 9% Omnicom Group Inc. Snapshot Note: For more information regarding companies within each of our disciplines, please visit www.omnicomgroup.com

 
 

20 Disclosures The preceding materials have been prepared for use in the October 19, 2021 conference call on Omnicom’s results of operations for the three and nine months ended September 30, 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, 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 forwardlooking 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 actions. 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 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. 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 14 and 15. 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 exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). Accordingly, we believe they are useful measures 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 3. 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.