April 2017 - Omnicom Group

Omnicom Group Reports First Quarter 2017 Results

Posted on April 18, 2017December 11, 2020 by Revanth Ravish

NEW YORK, April 18, 2017 – Omnicom Group Inc. (NYSE: OMC) today announced that its diluted net income per common share for the first quarter of 2017 increased twelve cents, or 13.3%, to $1.02 per share versus $0.90 per share for the first quarter of 2016.

Omnicom’s worldwide revenue in the first quarter of 2017 increased 2.5% to $3,587.4 million from $3,499.1 million in the first quarter of 2016. The components of the change in revenue included a decrease in revenue from the negative foreign exchange rate impact of 1.2%, a decrease in acquisition revenue, net of disposition revenue of 0.7% and an increase in revenue from organic growth of 4.4% when compared to the first quarter of 2016.

Across our regional markets, organic growth in the first quarter of 2017 as compared to the first quarter of 2016 was 1.1% in North America, 8.1% in the United Kingdom, 8.2% in the Euro Markets and Other Europe, 9.1% in Asia Pacific, 5.4% in Latin America and 37.9% in the Middle East and Africa.

Organic growth in the first quarter of 2017 as compared to the first quarter of 2016 in our four fundamental disciplines was as follows: advertising increased 6.4%, CRM increased 2.1%, public relations increased 1.8% and specialty communications increased 3.3%.

Operating profit in the first quarter of 2017 increased $17.8 million, or 4.5%, to $409.9 million from $392.1 million in the first quarter of 2016. Our operating margin for the first quarter of 2017 increased to 11.4% versus 11.2% for the first quarter of 2016.

For the first quarter of 2017, our income tax rate was 29.2% compared to 32.8% for the same period in 2016. The year over year difference resulted from the adoption of FASB Accounting Standards Update 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) on January 1, 2017. Income tax expense for the first quarter of 2017 included a benefit of $12.4 million arising from a cash tax deduction on restricted stock awards that vested and stock option awards that were exercised in the first three months of 2017 in excess of the book tax deduction on the amortization of these awards over the vesting period. In prior periods only the book tax deduction was reflected in income tax expense. ASU 2016-09 is required to be adopted prospectively, and prior periods have not been restated.

Net income – Omnicom Group Inc. for the first quarter of 2017 increased $23.4 million, or 10.7%, to $241.8 million from $218.4 million in the first quarter of 2016, including the effects of the adoption of ASU 2016-09.

Excluding the $12.4 million benefit from the adoption of ASU 2016-09, Net income – Omnicom Group Inc. would have been $229.4 million and diluted net income per common share for the first quarter of 2017 would have increased seven cents, or 7.8%, to $0.97 per share versus $0.90 per share for the first quarter of 2016.

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 intangibles) 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 arising from acquisitions). Accordingly, we believe they are useful measures for investors to evaluate the performance of our businesses. The financial table at the end of this document reconciles the GAAP financial measure of net income to EBITA for the periods presented.

For the first quarter of 2017, EBITA increased $19.9 million, or 4.7%, to $440.3 million from $420.4 million in the first quarter of 2016. Our EBITA margin increased to 12.3% for the first quarter of 2017 versus 12.0% in the first quarter of 2016.

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.

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 presentation 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.

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 first quarter earnings conference call, go to https://investor.omnicomgroup.com/investor-relations/news-events-and-filings.

Omnicom Group Inc.

Consolidated Statements of Income

Three Months Ended March 31

(Unaudited)

(Dollars in Millions, Except Per Share Data)

	2017		2016

Revenue	$	3,587.4	$	3,499.1
Operating Expenses:
Salary and service costs	2,694.2		2,623.3
Occupancy and other costs	302.0		301.4
Costs of services	2,996.2		2,924.7
Selling, general and administrative expenses	108.6		108.1
Depreciation and amortization	72.7		74.2
	3,177.5		3,107.0
Operating Profit	409.9		392.1
Interest Expense	53.5		50.3
Interest Income	13.9		10.2
Income Before Income Taxes	370.3		352.0
Income Tax Expense ^(a)	108.0		115.5
Income From Equity Method Investments	0.1		(0.2		)
Net Income	262.4		236.3
Net Income Attributed To Noncontrolling Interests	20.6		17.9
Net Income – Omnicom Group Inc.	241.8		218.4
Less: Net income allocated to participating securities	0.5		1.5
Net income available for common shares	$	241.3	$	216.9

Net income per common share – Omnicom Group Inc.
Basic	$	1.03	$	0.90
Diluted	$	1.02	$	0.90

Weighted average shares (in millions)
Basic	234.6		240.0
Diluted	236.5		241.1

Dividend declared per common share	$	0.55	$	0.50

(a) On January 1, 2017, we adopted FASB ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09), which requires all additional tax benefits or deficiencies related to share-based compensation to be recognized in the results of operations on the restricted stock vesting date or on the exercise date for stock options. ASU 2016-09 is required to be adopted on a prospective basis and retroactive restatement is not permitted. As a result, income tax expense for the three months ended March 31, 2017 reflects a reduction of $12.4 million arising from a larger cash tax deduction as compared to the book tax deduction resulting from the vesting of restricted stock and stock options that were exercised in the first three months of 2017. The larger tax deduction is primarily due to the increase in the intrinsic value of these awards that resulted from an increase in the price of our common stock since the grant date of the awards.

Omnicom Group Inc.

Reconciliation of Non-GAAP Financial Measures

Three Months Ended March 31

(Unaudited)

(Dollars in Millions)

	2017			2016

Net Income – Omnicom Group Inc.	$	241.8		$	218.4
Net Income Attributed To Noncontrolling Interests	20.6			17.9
Net Income	262.4			236.3
Income From Equity Method Investments	0.1			(0.2		)
Income Tax Expense	108.0			115.5
Income Before Income Taxes	370.3			352.0
Interest Income	13.9			10.2
Interest Expense	53.5			50.3
Operating Profit	409.9			392.1
Add back: Amortization of intangible assets	30.4			28.3
Earnings before interest, taxes and amortization of intangible assets (“EBITA”)	$	440.3		$	420.4

Revenue	$	3,587.4		$	3,499.1
EBITA	$	440.3		$	420.4
EBITA Margin – %	12.3		%	12.0		%

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 intangibles) 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 arising from acquisitions). Accordingly, we believe they are useful measures for investors to evaluate the performance of our businesses. 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 Schedules First Quarter 2017 Earnings Release and Conference Call

Posted on April 11, 2017December 11, 2020 by Revanth Ravish

BBDO Tops WARC 100 Rankings as Most Effective Agency Network in the World for Fourth Year in a Row

Posted on April 4, 2017December 11, 2020 by Revanth Ravish

BBDO TOPS WARC 100 RANKINGS AS MOST EFFECTIVE AGENCY NETWORK IN THE WORLD FOR FOURTH YEAR IN A ROW

NEW YORK, APRIL 4, 2017 – For the fourth year in a row, BBDO has been ranked the most effective agency network in the world in the WARC 100. The annual WARC 100 tracks the rankings of campaigns based on their performance in more than 80 effectiveness and strategy competitions over the past year. Its intent is to reflect the business impact of a campaign.

Seventeen of the top 100 most effective campaigns of the year were created by 11 BBDO agencies for 16 brands, with BBDO India’s “#ShareTheLoad” campaign for Ariel topping the list at #1. Other awarded work included campaigns for Bonds, DB Export, the Economist, Guinness, New Zealand Transport Agency, Pedigree, Sainsbury’s and Snickers, to name a few.

Four BBDO agencies were ranked among the top-ten individual shops in the world, including AMV BBDO in the UK (#2), BBDO Mumbai in India (#3), Colenso BBDO in New Zealand (#9) and BBDO New York in the USA (#10). Six other BBDO agencies finished among the top 50. In addition, Proximity London was the number one ranked digital specialist.

Said Andrew Robertson, President and CEO, BBDO Worldwide, “BBDO is all about ‘The Work. The Work. The Work.’ Great work that works great. The best work results come from smart thinking that drives brilliant creativity. That’s why this ranking matters to us. This year, we had the top-ranked campaign in the world, four of the top-ten individually ranked agencies, and were the number-one network in the world – for the fourth consecutive year – all of which demonstrates the strength and depth of the network.”

Winning the WARC 100 completes a global triple crown for BBDO. Earlier this year, BBDO topped The Gunn Report for the 11^th year in a row as the world’s most creative agency network. In addition, BBDO was ranked number one in The Directory Big Won as the world’s most awarded agency network across all marketing communication disciplines.

David Tiltman, Head of Content at WARC, commented, “The WARC 100 represents the best work in marketing – breakthrough campaigns that have a business impact. To have topped these rankings four years in a row is a significant achievement. In a fast-changing industry, BBDO is consistently delivering results for its clients.”

Further details regarding the WARC 100 rankings can be found at the WARC 100 website: https://www.warc.com/warc100.100

ABOUT WARC AND THE WARC 100

Warc.com is an online service offering advertising best practices, evidence and insights from the world’s leading brands. WARC helps clients grow their businesses by using proven approaches to maximize advertising effectiveness.

The WARC 100 is a ranking of advertising and marketing campaigns that have worked. WARC tracks advertising competitions around the world – all of which require entrants to show the business impact of a campaign, rather than solely recognizing the campaign’s creativity. This year, WARC tracked more than 2,000 winners in more than 80 different effectiveness and strategy competitions to compile the rankings.

Founded in 1985, WARC is privately owned and has offices in the UK, U.S. and Singapore.

ABOUT BBDO

BBDO’s mantra is “The Work. The Work. The Work.” Every day, BBDO people in 289 offices in 81 countries work day by day, job by job and client by client to create and deliver the world’s most compelling commercial content. For 11 years in a row, BBDO has been the most creative agency network in the world in The Gunn Report. In addition, BBDO has been ranked the most awarded agency network across all marketing communications in The Directory Big Won for 12 of the 13 years that this report has been published. BBDO has also been named Network of the Year at Cannes five times and has been chosen Agency of the Year multiple times by the leading industry trade publications.

BBDO is part of Omnicom Group Inc. (NYSE-OMC) (www.omnicomgroup.com), a leading global marketing and corporate communications company.