Omnicom Group Reports Fourth Quarter and Full Year 2016 Results

February 7, 2017

SHARE THIS

NEW YORK, Feb. 7, 2017 /PRNewswire/ -- Omnicom Group Inc. (NYSE: OMC) today announced that its diluted net income per common share for the fourth quarter of 2016 increased twelve cents, or 8.9%, to $1.47 per share versus $1.35 per share for the fourth quarter of 2015. 

Omnicom's worldwide revenue in the fourth quarter of 2016 increased 2.1% to $4,241.8 million from $4,153.3 million in the fourth quarter of 2015. The components of the change in revenue included an increase in revenue from organic growth of 3.6%, an increase in revenue from acquisitions, net of dispositions of 0.3% and a decrease in revenue from the negative impact of foreign exchange rates of 1.8% when compared to the fourth quarter of 2015. 

Across our regional markets, organic revenue growth in the fourth quarter of 2016 was 0.6% in North America, 8.5% in the United Kingdom, 6.2% in the Euro Markets and Other Europe, 9.5% in Asia Pacific and 29.0% in the Middle East and Africa, while organic revenue declined by 6.2% in Latin America when compared to the same quarter of 2015.

The change in organic revenue in the fourth quarter of 2016 as compared to the fourth quarter of 2015 in our four fundamental disciplines was as follows: advertising increased 4.6%, CRM increased 0.4%, public relations increased 7.7% and specialty communications increased 5.7%.

Operating profit in the fourth quarter of 2016 increased $26.4 million, or 4.6%, to $601.9 million from $575.5 million in the fourth quarter of 2015. Our operating margin for the fourth quarter of 2016 increased to 14.2% versus 13.9% for the fourth quarter of 2015.

For the fourth quarter of 2016, earnings before interest, taxes and amortization of intangibles ("EBITA") increased $27.4 million, or 4.5%, to $631.4 million from $604.0 million in the fourth quarter of 2015. Our EBITA margin (defined as EBITA divided by revenue) increased to 14.9% for the fourth quarter of 2016 versus 14.5% in the fourth quarter of 2015.  

For the fourth quarter of 2016, our income tax rate was 32.5% compared to 32.8% for the same period in 2015.

Net income for the fourth quarter of 2016 increased $18.7 million, or 5.6%, to $350.3 million from $331.6 million in the fourth quarter of 2015. 

Year-to-date

Diluted net income per common share for the twelve months ended December 31, 2016 increased 37 cents, or 8.4%, to $4.78 per share compared to $4.41 per share for the twelve months ended December 31, 2015.    

Worldwide revenue for the twelve months ended December 31, 2016 increased 1.9% to $15,416.9 million from $15,134.4 million in the same period of 2015. The components of the change in revenue included an increase in revenue from organic growth of 3.5%, an increase in revenue from acquisitions, net of dispositions of 0.3% and a decrease in revenue from the negative impact of foreign exchange rates of 1.9% when compared to the same period of 2015.  

Across our regional markets for the twelve months ended December 31, 2016, organic revenue growth was 2.4% in North America, 4.9% in the United Kingdom, 4.0% in the Euro Markets and Other Europe, 6.9% in Asia Pacific and 11.7% in the Middle East and Africa, while organic revenue declined by 0.8% in Latin America when compared to the same period of 2015.

The change in organic revenue for the twelve months ended December 31, 2016 compared to the same period in 2015 in our four fundamental disciplines was as follows: advertising increased 5.9%, public relations increased 2.8% and specialty communications increased 4.6%, while CRM decreased 0.3%.

Operating profit for the twelve months ended December 31, 2016 increased $88.8 million, or 4.6%, to $2,008.9 million compared to $1,920.1 million for the same period in 2015. Our operating margin for the twelve months ended December 31, 2016 increased to 13.0% versus 12.7% for the same period in 2015.

Omnicom's EBITA for the twelve months ended December 31, 2016 increased 4.7%, or $94.7 million, to $2,124.1 million from $2,029.4 million for the same period in 2015. Our EBITA margin for the twelve months ended December 31, 2016 increased to 13.8% versus 13.4% for the same period in 2015.

For the twelve months ended December 31, 2016, our income tax rate was 32.6% compared to 32.8% for the same period in 2015.

Net income for the twelve months ended December 31, 2016 increased $54.7 million, or 5.0%, to $1,148.6 million from $1,093.9 million versus the same period in 2015. 

Non-GAAP Financial Measures

We used certain non-GAAP financial measures in describing our performance above. We use EBITA (defined as earnings before interest, taxes and amortization of intangibles) and EBITA margin (defined as EBITA divided by revenue) as additional operating performance measures, which excludes the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions), because we believe it is a useful measure for investors to evaluate the performance of our businesses. The financial tables at the end of this document reconcile EBITA to the GAAP financial measure of net income for the periods presented. 

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.

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 100 countries.  Follow us on Twitter for the latest news.

For a live webcast or a replay of our fourth quarter earnings conference call, go to http://investor.omnicomgroup.com/investor-relations/news-events-and-filings. 

Omnicom Group Inc.

Consolidated Statements of Income


Three Months Ended December 31

(Unaudited)

(Dollars in Millions, Except Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

2016

 

2015

 

 

 

 

 

Revenue

 

 

$     4,241.8

 

$     4,153.3

Operating Expenses:

 

 

 

 

Salary and service costs

 

3,148.7

 

3,089.0

Occupancy and other costs

 

297.8

 

300.7

    Costs of services

 

3,446.5

 

3,389.7

Selling, general and administrative expenses

 

120.8

 

115.7

Depreciation and amortization

 

72.6

 

72.4

 

 

3,639.9

 

3,577.8

Operating Profit

 

601.9

 

575.5

Add back: Amortization of intangibles

 

29.5

 

28.5

EBITA (a)

 

631.4

 

604.0

Amortization of intangibles

 

29.5

 

28.5

Operating Profit

 

601.9

 

575.5

Net Interest Expense

 

40.2

 

36.8

Income before income taxes

 

561.7

 

538.7

Income tax expense

 

182.7

 

176.7

Income from equity method investments

 

1.4

 

2.2

Net income

 

380.4

 

364.2

Less: Net income allocated to noncontrolling interests

 

30.1

 

32.6

Net income -  Omnicom Group Inc.

 

350.3

 

331.6

Less: Net income allocated to participating securities

 

1.6

 

3.3

Net income available for common shares

 

$        348.7

 

$        328.3

 

 

 

 

 

Net income per common share  -  Omnicom Group Inc.

 

 

 

 

Basic

 

$          1.47

 

$          1.35

Diluted

 

$          1.47

 

$          1.35

 

 

 

 

 

Weighted average shares (in millions)

 

 

 

 

Basic

 

236.5

 

242.6

Diluted

 

237.8

 

243.8

 

 

 

 

 

Dividend declared per common share

 

$          0.55

 

$          0.50

 

 

 

 

 

 

(a) 

EBITA (defined as earnings before interest, taxes and amortization of intangibles) is a non-GAAP financial measure.  We use EBITA as an additional operating performance measure, which excludes the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions), because we believe it is a useful measure for investors to evaluate the performance of our businesses. The above table reconciles EBITA to the GAAP financial measures for the periods presented.  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.

 

Omnicom Group Inc.

Consolidated Statements of Income


Twelve Months Ended December 31

(Unaudited)


(Dollars in Millions, Except Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

2016

 

2015

 

 

 

 

 

Revenue

 

$   15,416.9

 

$   15,134.4

Operating expenses:

 

 

 

 

Salary and service costs

 

11,453.2

 

11,248.7

Occupancy and other costs

 

1,218.0

 

1,242.7

Cost of services

 

12,671.2

 

12,491.4

Selling, general and administrative expenses

 

443.9

 

431.8

Depreciation and amortization

 

292.9

 

291.1

 

 

13,408.0

 

13,214.3

Operating Profit

 

2,008.9

 

1,920.1

Add back: Amortization of intangibles

 

115.2

 

109.3

EBITA (a)

 

2,124.1

 

2,029.4

Amortization of intangibles

 

115.2

 

109.3

Operating Profit

 

2,008.9

 

1,920.1

Net Interest Expense

 

167.1

 

141.5

Income before income taxes

 

1,841.8

 

1,778.6

Income tax expense

 

600.5

 

583.6

Income from equity method investments

 

5.4

 

8.4

Net income

 

1,246.7

 

1,203.4

Less: Net income allocated to noncontrolling interests

 

98.1

 

109.5

Net income -  Omnicom Group Inc.

 

1,148.6

 

1,093.9

Less: Net income allocated to participating securities

 

6.5

 

12.4

Net income available for common shares

 

$     1,142.1

 

$     1,081.5

 

 

 

 

 

Net income per common share  -  Omnicom Group Inc.

 

 

 

 

Basic

 

$          4.80

 

$          4.43

Diluted

 

$          4.78

 

$          4.41

 

 

 

 

 

Weighted average shares (in millions)

 

 

 

 

Basic

 

237.9

 

244.2

Diluted

 

239.2

 

245.2

 

 

 

 

 

Dividend declared per common share

 

$          2.15

 

$          2.00

 

(a)   

EBITA (defined as earnings before interest, taxes and amortization of intangibles) is a non-GAAP financial measure.  We use EBITA as an additional operating performance measure, which excludes the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions), because we believe it is a useful measure for investors to evaluate the performance of our businesses. The above table reconciles EBITA to the GAAP financial measures for the periods presented.  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.

 

Contacts

Investor Relations:                                                      Media:

Shub Mukherjee, 212-415-3011                                 Joanne Trout, 212-415-3669

shub.mukherjee@omnicomgroup.com                        joanne.trout@omnicomgroup.com