Omnicom Acquires Digital Commerce Powerhouse Flywheel Posted on October 30, 2023October 30, 2023 by Katie Beaule Expands Omnicom’s reach in fast-growing e-commerce & retail media segments NEW YORK, Oct. 30, 2023 — Omnicom (NYSE: OMC) today announced it has agreed to acquire Flywheel Digital, the digital commerce business of Ascential (LSE: ASCL.L), for a net cash purchase price of approximately $835 million. Flywheel’s services enable top brands to sell more goods more efficiently across hundreds of digital marketplaces, such as Amazon, Walmart, and Alibaba. Since 2014, Flywheel has been at the forefront of digital commerce, developing a suite of best-in-class solutions specifically designed to accelerate sales for the world’s leading brands. With a workforce of more than 2,000 professionals, Flywheel provides services in retail commerce operations, media execution, and market intelligence to over 4500 brands. These services are reinforced by their advanced technology platform, Flywheel Commerce Cloud, which delivers near real-time insights to improve decision-making and boost sales. John Wren, Chairman and CEO of Omnicom said, “E-commerce sales worldwide are set to increase by 50%, reaching about $7 trillion dollars by 2025. The acquisition of Flywheel significantly broadens our reach and influence in the rapidly expanding digital commerce and retail media sectors, two of the fastest-growing parts of the industry. Together, we will seamlessly integrate our offerings across retail and brand media, digital and in-store commerce, and CRM, ultimately delivering superior results for our clients.” For the past eight years, Flywheel has assembled leading-edge digital commerce solutions and integrated them into a proprietary platform with a single user interface. Today, the Flywheel Commerce Cloud platform manages tens of billions in product sales and billions of advertising spend annually across digital marketplaces. Flywheel Commerce Cloud’s product and transaction data will be connected to Omni’s audience and behavioral data to provide unmatched insights and analytics. Flywheel will operate as a Practice Area within Omnicom and will be led by Duncan Painter who currently serves as CEO of Ascential. Painter stated, “By connecting Flywheel Commerce Cloud’s product and transaction data with Omni’s audience and behavioral data, we are poised to offer an end-to-end set of services that outpaces the competition. We aim to empower our clients to automate, optimize, and measure their digital commerce and media spend within an increasingly complex marketplace.” The acquisition is expected to close in the first quarter of 2024 and is subject to Ascential shareholder approval, regulatory approvals, and customary closing conditions. Moelis & Company LLC acted as financial advisor and Latham & Watkins LLP acted as legal advisor to Omnicom. Omnicom has provided further detail on the acquisition in a presentation available and archived on its investor relations website. About OmnicomOmnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing, and other specialty communications services to over 5,000 clients in more than 70 countries. About FlywheelFlywheel operates a leading cloud-based digital commerce platform across the world’s major digital marketplaces. It enables our clients to access near real-time performance measurement and improve sales, share, and profit. Through its expertise, scale, global reach, and highly sophisticated AI and data-powered solutions, Flywheel provides differentiated value for both the world’s largest consumer product companies and fast-growing brands. These solutions can be tailored from pure self-service software to outsourced management of digital commerce marketplace operations and everything in between. With operations across the Americas, Europe, APAC, and China, Flywheel offers clients access to massive, global markets and has solutions for more than 400 digital marketplaces. To discover more about Flywheel’s revolution in retail media technology visit the new www.flywheeldigital.com or view the Flywheel brand launch video.
Omnicom Reports Third Quarter 2023 Results Posted on October 17, 2023October 18, 2023 by Amanda Granath Revenue of $3,578.1 million, with organic growth of 3.3% Operating income of $560.8 million Operating income margin of 15.7% Diluted earnings per share of $1.86 NEW YORK, Oct. 17, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) today announced results for the quarter ended September 30, 2023. “We are pleased with our strong organic revenue growth of 3.3%, with notable performances in our Advertising & Media, Precision Marketing, and Healthcare disciplines. Our year-to-date organic growth of 4.0% remains in line with our full-year expectations, which reflects the resiliency of our business even in periods of economic uncertainty,” said John Wren, Chairman and Chief Executive Officer of Omnicom. “Omnicom continued to post strong profitability and earnings growth in the quarter, and our recent business wins validate the benefits of our client strategy in this rapidly evolving marketplace. We are very well positioned for a recovery in business conditions, with a strong balance sheet and leading creativity in all of our service disciplines.” Third Quarter 2023 Results Three Months Ended September 30, $ in millions, except per share amounts 2023 2022 Revenue $ 3,578.1 $ 3,443.4 Operating Income 560.8 546.0 Operating Income Margin 15.7 % 15.9 % Net Income 1 371.9 364.5 Net Income per Share – Diluted 1 $ 1.86 $ 1.77 EBITA2 581.1 566.1 EBITA Margin2 16.2 % 16.4 % Notes: 1) Net Income and Net Income per Share for Omnicom Group Inc.; 2) See non-GAAP reconciliations starting on page 8 . RevenuesReported revenue in the third quarter of 2023 increased $134.7 million, or 3.9%, to $3,578.1 million. Worldwide revenue growth in the third quarter of 2023 compared to the third quarter of 2022 was led by an increase in organic growth of $113.1 million, or 3.3%. The impact of foreign currency translation increased revenue by $59.1 million, or 1.7%. Acquisition revenue, net of disposition revenue, reduced revenue by $37.5 million, or 1.1%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines. Organic growth by discipline in the third quarter of 2023 compared to the third quarter of 2022 was as follows: 6.1% for Advertising & Media, 4.3% for Precision Marketing, 3.8% for Healthcare, and 9.2% for Experiential. Organic decline by discipline was as follows: 5.5% for Public Relations, 3.6% for Execution & Support, and 1.7% for Commerce & Branding. Organic growth by region in the third quarter of 2023 compared to the third quarter of 2022 was as follows: 2.7% for the United States, 5.7% for Euro Markets & Other Europe, 4.4% for the United Kingdom, 19.2% for Latin America, and 2.5% for Asia Pacific. Organic decline by region was as follows: 10.8% for the Middle East & Africa, and 1.7% for Other North America. ExpensesOperating expenses increased $119.9 million, or 4.1%, to $3,017.3 million in the third quarter of 2023 compared to the third quarter of 2022. Salary and service costs, which tend to fluctuate with changes in revenue, are comprised of salary and related costs, third-party service costs, and third-party incidental costs. Salary and service costs include employee compensation and benefits costs and freelance labor. Salary and service costs increased $110.4 million, or 4.5%, to $2,586.5 million. Salary and related costs increased $7.6 million, or 0.4%, to $1,756.7 million, primarily due to an increase in headcount as a result of organic growth and acquisitions. Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost and which we are required to include in revenue. Third-party service costs increased $90.6 million, or 15.4%, to $678.8 million as a result of organic growth, and third-party incidental costs increased $12.2 million, or 8.8%, to $151.0 million. Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $7.6 million, or 2.7%, to $288.6 million, due to increases in other occupancy expenses, partially offset by lower rent. SG&A expenses increased $3.4 million, or 3.9%, to $89.8 million, primarily due to higher professional fees related to acquisitions. Operating IncomeOperating income increased $14.8 million, or 2.7%, to $560.8 million in the third quarter of 2023 compared to the third quarter of 2022. The related operating income margin was 15.7% compared to 15.9% for the third quarter of 2022. Interest Expense, netNet interest expense in the third quarter of 2023 increased $9.2 million to $38.3 million compared to the third quarter of 2022. Interest expense increased $1.5 million to $53.5 million, and interest income decreased $7.7 million to $15.2 million primarily due to lower cash and short term investment balances. Income TaxesOur effective tax rate of 26% in the third quarter of 2023 was flat with the rate in the third quarter of 2022. Net Income – Omnicom Group Inc. and Diluted Net Income per ShareNet income – Omnicom Group Inc. for the third quarter of 2023 increased $7.4 million, or 2.0%, to $371.9 million compared to the third quarter of 2022. Diluted shares outstanding for the third quarter of 2023 decreased 3.1% to 199.9 million from 206.3 million in the third quarter of 2022 as a result of net share repurchases. Diluted net income per share of $1.86 increased $0.09, or 5.1%, from $1.77 per share. EBITAEBITA increased $15.0 million, or 2.6%, to $581.1 million in the third quarter of 2023 compared to the third quarter of 2022. The related EBITA margin was 16.2% compared to 16.4% for the third quarter of 2022. Risks and UncertaintiesCurrent global economic challenges, including the war in Ukraine, high and sustained inflation, rising interest rates, supply chain disruptions, credit market deterioration, and other macroeconomic factors, could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. We closely monitor economic conditions, client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness, and other developments. Definitions – Components of Revenue ChangeWe 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. Conference CallOmnicom will host a conference call to review its financial results on Tuesday, October 17, 2023 at 4:30 p.m. Eastern Time. Participants can listen to the conference call by calling 844-291-5494 (domestic) or 409-207-6995 (international), along with access code 4961768. The call will also be simulcast and archived on our investor relations website. Corporate ResponsibilityAt Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. Please explore our website (omnicomgroup.com/corporate-responsibility) for highlights of our progress across the areas on which we focus: Empower People, Protect Our Planet, Lead Responsibly. About OmnicomOmnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries. Non-GAAP Financial MeasuresWe 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. EBITA is defined as operating income before interest, taxes, and amortization of intangible assets, and EBITA margin is 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). We also use Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITA, Adjusted EBITA Margin, Adjusted Income Tax Expense, Adjusted Net Income – Omnicom Group Inc. and Adjusted Net Income per diluted share – Omnicom Group Inc. as additional operating performance measures. We believe these measures are useful in evaluating the impact of certain items on operating performance and allow for comparability between reporting periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies. Forward-Looking StatementsCertain statements in this press release 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 position, 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: adverse economic conditions, including those caused by the war in Ukraine, the lingering effects of the COVID-19 pandemic, high and persistent inflation in countries that comprise our major markets, rising interest rates, and supply chain issues affecting the distribution of our clients’ products; 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 or a disruption 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 related 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;effectively managing the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and partnerships in our business; and risks related to our environmental, social and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. 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, 2022. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In millions, except per share amounts) Three Months Ended September 30, 2023 2022 Revenue $ 3,578.1 $ 3,443.4 Operating Expenses: Salary and service costs 2,586.5 2,476.1 Occupancy and other costs 288.6 281.0 Cost of services 2,875.1 2,757.1 Selling, general and administrative expenses 89.8 86.4 Depreciation and amortization 52.4 53.9 Total operating expenses 3,017.3 2,897.4 Operating Income 560.8 546.0 Interest Expense 53.5 52.0 Interest Income 15.2 22.9 Income Before Income Taxes and Income From Equity Method Investments 522.5 516.9 Income Tax Expense 136.1 134.7 Income From Equity Method Investments 1.9 1.1 Net Income 388.3 383.3 Net Income Attributed To Noncontrolling Interests 16.4 18.8 Net Income – Omnicom Group Inc. $ 371.9 $ 364.5 Net Income Per Share – Omnicom Group Inc.: Basic $ 1.88 $ 1.78 Diluted $ 1.86 $ 1.77 Revenue $ 3,578.1 $ 3,443.4 Operating Margin % 15.7 % 15.9 % EBITA $ 581.1 $ 566.1 EBITA Margin % 16.2 % 16.4 % Dividends Declared Per Common Share $ 0.70 $ 0.70 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In millions, except per share amounts) Nine Months Ended September 30, 2023 2022 Revenue $ 10,631.3 $ 10,420.9 Operating Expenses: Salary and service costs 7,747.2 7,533.9 Occupancy and other costs 877.9 874.2 Real estate and other repositioning costs1,2 191.5 — Charges arising from the effects of the war in Ukraine2 — 113.4 Gain on disposition of subsidiary1 (78.8) — Cost of services 8,737.8 8,521.5 Selling, general and administrative expenses 278.1 294.0 Depreciation and amortization 157.4 164.8 Total operating expenses 9,173.3 8,980.3 Operating Income 1,458.0 1,440.6 Interest Expense 165.9 154.2 Interest Income 80.9 42.2 Income Before Income Taxes and Income From Equity Method Investments 1,373.0 1,328.6 Income Tax Expense1,2 360.7 383.3 Income From Equity Method Investments 3.1 2.6 Net Income 1,2 1,015.4 947.9 Net Income Attributed To Noncontrolling Interests 49.7 61.2 Net Income – Omnicom Group Inc. 1,2 $ 965.7 $ 886.7 Net Income Per Share – Omnicom Group Inc.: Basic $ 4.84 $ 4.30 Diluted1,2 $ 4.78 $ 4.27 Revenue $ 10,631.3 $ 10,420.9 Operating Margin % 13.7 % 13.8 % EBITA $ 1,516.9 $ 1,500.9 EBITA Margin % 14.3 % 14.4 % Dividends Declared Per Common Share $ 2.10 $ 2.10 (1) For the nine months ended September 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain on disposition of certain of our research businesses in the Execution & Support discipline. The net aggregate impact to Operating Income for the nine months ended September 30, 2023 was a reduction of $112.7 million ($89.6 million after tax). The net aggregate effect of these items in the nine months ended September 30, 2023 to diluted net income per share – Omnicom Group Inc. was a decrease of $0.44. (2) For the nine months ended September 30, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022 as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income – Omnicom Group Inc. by $118.2 million and diluted net income per share – Omnicom Group Inc. by $0.57. OMNICOM GROUP INC. AND SUBSIDIARIES DETAIL OF OPERATING EXPENSES (Unaudited) (In millions) Three Months Ended September 30, 2023 2022 Revenue $ 3,578.1 $ 3,443.4 Operating Expenses: Salary and service costs: Salary and related costs 1,756.7 1,749.1 Third-party service costs1 678.8 588.2 Third-party incidental costs2 151.0 138.8 Total salary and service costs 2,586.5 2,476.1 Occupancy and other costs 288.6 281.0 Cost of services 2,875.1 2,757.1 Selling, general and administrative expenses 89.8 86.4 Depreciation and amortization 52.4 53.9 Total operating expenses 3,017.3 2,897.4 Operating Income $ 560.8 $ 546.0 Nine Months Ended September 30, 2023 2022 Revenue $ 10,631.3 $ 10,420.9 Operating Expenses: Salary and service costs: Salary and related costs 5,306.7 5,344.5 Third-party service costs1 2,033.9 1,799.0 Third-party incidental costs2 406.6 390.4 Total salary and service costs 7,747.2 7,533.9 Occupancy and other costs 877.9 874.2 Real estate and other repositioning costs 191.5 — Charges arising from the effects of the war in Ukraine — 113.4 Gain on disposition of subsidiary (78.8) — Cost of services 8,737.8 8,521.5 Selling, general and administrative expenses 278.1 294.0 Depreciation and amortization 157.4 164.8 Total operating expenses 9,173.3 8,980.3 Operating Income $ 1,458.0 $ 1,440.6 (1) Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. (2) Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs which we bill back to the client directly at our cost and which we are required to include in revenue. OMNICOM GROUP INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In millions) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net Income – Omnicom Group Inc. $ 371.9 $ 364.5 $ 965.7 $ 886.7 Net Income Attributed To Noncontrolling Interests 16.4 18.8 49.7 61.2 Net Income 388.3 383.3 1,015.4 947.9 Income From Equity Method Investments 1.9 1.1 3.1 2.6 Income Tax Expense 136.1 134.7 360.7 383.3 Income Before Income Taxes and Income From Equity Method Investments 522.5 516.9 1,373.0 1,328.6 Interest Expense 53.5 52.0 165.9 154.2 Interest Income 15.2 22.9 80.9 42.2 Operating Income 560.8 546.0 1,458.0 1,440.6 Add back: Amortization of intangible assets 20.3 20.1 58.9 60.3 Earnings before interest, taxes and amortization of intangible assets (“EBITA”) $ 581.1 $ 566.1 $ 1,516.9 $ 1,500.9 Real estate and other repositioning costs — — 191.5 — Charges arising from the effects of the war in Ukraine — — — 113.4 Gain on disposition of subsidiary — — (78.8) — EBITA – Adjusted $ 581.1 $ 566.1 $ 1,629.6 $ 1,614.3 Revenue $ 3,578.1 $ 3,443.4 $ 10,631.3 $ 10,420.9 EBITA $ 581.1 $ 566.1 $ 1,516.9 $ 1,500.9 EBITA Margin % 16.2 % 16.4 % 14.3 % 14.4 % EBITA – Adjusted $ 581.1 $ 566.1 $ 1,629.6 $ 1,614.3 EBITA Margin % – Adjusted 16.2 % 16.4 % 15.3 % 15.5 % 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. The above table also presents non-GAAP adjustments to EBITA to present EBITA- Adjusted 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. OMNICOM GROUP INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In millions) Three Months Ended September 30, Reported 2023 Non- GAAP Adj. Non- GAAP 2023 Adj. Reported 2022 Non- GAAP Adj. Non- GAAP 2022 Adj. Revenue $3,578.1 $ — $ 3,578.1 $ 3,443.4 $ — $ 3,443.4 Operating Expenses 3,017.3 — 3,017.3 2,897.4 — 2,897.4 Operating Income 560.8 — 560.8 546.0 — 546.0 Operating Income Margin % 15.7 % 15.7 % 15.9 % 15.9 % Add back: Amortization of intangible assets 20.3 — 20.3 20.1 — 20.1 EBITA1 $ 581.1 $ — $ 581.1 $ 566.1 $ — $ 566.1 EBITA Margin %1 16.2 % 16.2 % 16.4 % 16.4 % Nine Months Ended September 30, Reported 2023 Non- GAAP Adj. (2) Non- GAAP 2023 Adj. Reported 2022 Non- GAAP Adj. (2) Non- GAAP 2022 Adj. Revenue $10,631.3 $ — $ 10,631.3 $ 10,420.9 $ — $ 10,420.9 Operating Expenses2 9,173.3 (112.7) 9,060.6 8,980.3 (113.4) 8,866.9 Operating Income 1,458.0 112.7 1,570.7 1,440.6 113.4 1,554.0 Operating Income Margin % 13.7 % 14.8 % 13.8 % 14.9 % Add back: Amortization of intangible assets 58.9 — 58.9 60.3 — 60.3 EBITA1 $ 1,516.9 $ 112.7 $ 1,629.6 $ 1,500.9 $ 113.4 $ 1,614.3 EBITA Margin %1 14.3 % 15.3 % 14.4 % 15.5 % (1) See Non-GAAP reconciliation on page 8. (2) For the nine months ended September 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain on disposition of certain of our research businesses in the Execution & Support discipline. There was no impact to Operating Income for the three months ended September 30, 2023 from this disposition. The net aggregate impact to Operating Income for the nine months ended September 30, 2023 was a reduction of $112.7 million ($89.6 million after tax). The net aggregate effect of these items in the nine months ended September 30, 2023 to diluted net income per share – Omnicom Group Inc. was a decrease of $0.44.For the nine months ended September 30, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022 as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income – Omnicom Group Inc. by $118.2 million and diluted net income per share – Omnicom Group Inc. by $0.57. OMNICOM GROUP INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In millions, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating Income – Reported $ 560.8 $ 546.0 $ 1,458.0 $ 1,440.6 Real estate and other repositioning costs — — 191.5 — Charges arising from the effects of the war in Ukraine — — — 113.4 Gain on disposition of subsidiary — — (78.8) — Non-GAAP Operating Income – Adjusted $ 560.8 $ 546.0 $ 1,570.7 $ 1,554.0 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income Tax Expense – Reported $ 136.1 $ 134.7 $ 360.7 $ 383.3 Income tax expense related to: Real estate and other repositioning costs — — 46.0 — Charges arising from the effects of the war in Ukraine — — — (4.8) Gain on disposition of subsidiary — — (22.9) — Non-GAAP Income Tax Expense- Adjusted $ 136.1 $ 134.7 $ 383.8 $ 378.5 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net Income Net Income per Share- Diluted Net Income Net Income per Share- Diluted Net Income Net Income per Share- Diluted Net Income Net Income per Share- Diluted Net Income – Omnicom Group Inc. – Reported $ 371.9 $ 1.86 $ 364.5 $ 1.77 $ 965.7 $ 4.78 $ 886.7 $ 4.27 Real estate and other repositioning costs — — — — 145.5 0.72 — — Charges arising from the effects of the war in Ukraine — — — — — — 118.2 0.57 Gain on disposition of subsidiary — — — — (55.9) (0.28) — — Non-GAAP Net Income – Omnicom Group Inc. – Adjusted 1 $ 371.9 $ 1.86 $ 364.5 $ 1.77 $ 1,055.3 $ 5.22 $ 1,004.9 $ 4.84 (1) Diluted Shares for the three months ended September 30, 2023 and 2022 in millions were 199.9 and 206.3, respectively. Diluted Shares for the nine months ended September 30, 2023 and 2022 in millions were 202.0 and 207.6, respectively. The above tables reconcile GAAP financial measures of Operating Income, Income Tax Expense, and Net Income-Omnicom Group Inc., to adjusted non-GAAP financial measures of Non-GAAP Operating Income – Adjusted, Non-GAAP Income Tax Expense – Adjusted, and Non-GAAP Net Income-Omnicom Group Inc.-Adjusted for the periods presented. Management believes excluding the charges arising from the effects of the war in Ukraine, partially offset by a gain on the disposition of a subsidiary, and repositioning costs provides investors with a better picture of the performance of the business during the periods presented. SOURCE Omnicom Group Inc.
Omnicom names DDB’s Aditya Kanthy CEO of newly formed Omnicom Advertising Services in India Posted on October 17, 2023October 17, 2023 by Amanda Granath CEO of DDB Mudra Group to oversee creative agency group MUMBAI, India, Oct. 17, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) Chairman and CEO John Wren today named Aditya Kanthy as CEO of the newly formed Omnicom Advertising Services group in India. Kanthy will oversee Omnicom’s creative agencies in the region, focusing on talent, cross agency collaboration, and innovation to drive growth in one of the company’s fastest growing markets. The respective creative agencies within the group – DDB, BBDO and TBWA – will maintain their current branding in the Indian market. Omnicom Advertising Services will bring together the power of Omnicom to provide exceptional integrated solutions to meet the needs of clients in India.The group will capitalize on the top talent housed within its leading networks and work in partnership with other Omnicom agencies, such as Omnicom Media Group, to further strengthen Omnicom’s comprehensive offering in India. Omnicom recently announced the creation of large global capability centers with four campuses out of Bangalore, Hyderabad, Chennai and Gurgaon. “This year India will become the most populous nation on the planet. It is an important growth engine for Omnicom. By centralizing the leadership of three creative powerhouses under Aditya, we will continue to build on our agencies’ strong foundations to deliver a wider breadth of capability and scale for our clients,” says John Wren, Chairman and CEO, Omnicom. “Aditya brings deep experience to the newly created Omnicom Advertising Services, and our India operations is primed to thrive under his leadership.” Kanthy, currently CEO of DDB Mudra Group, began his career in Mudra in 2003 as a strategic planner, taking on various responsibilities over the years including Chief Strategy Officer, a role in which he helped shape India’s most successful independent advertising agency into an Omnicom-owned integrated marketing communications group. As the new leader of Omnicom Advertising Services India, he will further strengthen Omnicom’s presence and ensure all of our capabilities are extended to our top clients. Speaking about this development, Aditya Kanthy said, “Omnicom is the most creative global network in the world. Our agencies represent the enduring power of creativity to build brands and businesses. I look forward to bringing the might of the Omnicom network to clients in India and continue to attract the best creative talent in one of the most exciting markets in the world.” ABOUT OMNICOMOmnicom (NYSE – OMC) 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. SOURCE Omnicom Group Inc.
Omnicom takes Advertising Week 2023 Posted on October 13, 2023October 13, 2023 by Amanda Granath Advertising Week New York gathers professionals across the advertising, marketing, technology and media industries to connect in-person and digitally around the globe. With over 600 speakers and more than 400 sessions, #AWNewYork23 will drive thoughtful dialogue around the latest innovations and big issues shaping our industry. Beginning on Monday, October 16, Omnicom will lead conversations at Advertising Week with featured speakers from across its agencies and networks. Join us as we explore the transformative force of generative AI, the power of narrative in media planning and much more. View the full schedule here. Highlights for the week include: Monday, October 16th 11:20AM | “Building Trust and Relevance with Conscientious Consumers” with Chrissie Hanson, CEO, OMD USA 4:50PM | “Why Advertising Must Save TV” with Kelly Metz, Managing Director, Advanced TV Activation, OMG Tuesday, October 17th 3:20PM | “Generative AI and the Changing Advertising Landscape” with Vincent Yates, Chief Data Scientist, Credera 4:30PM | “The Body Clock & The Media: From Menstruation to Menopause and Everything in Between” with Kathleen Saxton, Chief Marketing Officer, Omnicom Wednesday, October 18th 10:40AM | “The Power of Media to Transform Culture: Gun Violence in America” with David Lubars, Chief Creative Officer, BBDO Worldwide 11:20AM | “Changemakers Conversation: Gen Z and Their CMO Parents” with Margaret Molloy, Global Chief Marketing Officer, Siegel+Gale Thursday, October 19th 10:40AM | “CTV: Rise of the Performance Storyteller” with Georgina Thomson, Head of Investment, Beauty Co Lab, Omnicom 4:10PM | “Remember the Humane: Defining Community and Online Spaces in the AI Revolution” with Alex Hesz, Chief Strategy Officer, Omnicom
Omnicom Schedules Third Quarter 2023 Earnings Release and Conference Call Posted on October 10, 2023October 10, 2023 by Amanda Granath NEW YORK, Oct. 10, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) will publish its third quarter 2023 results on Tuesday, October 17, 2023 after the New York Stock Exchange close of trading. The company will also host a conference call to review such financial results on Tuesday, October 17, 2023, starting at 4:30 p.m. Eastern Time. Participants may listen to the conference call by dialing 844-291-5494 (domestic) or 409-207-6995 (international), along with access code 4961768. The conference call will be simulcast and archived on our website at investor.omnicomgroup.com. About OmnicomOmnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries. SOURCE Omnicom Group Inc.
Omnicom elevates Alex Lubar to Global CEO of DDB Worldwide Posted on October 4, 2023October 4, 2023 by Amanda Granath Glen Lomas becomes Global President and Chief Operating Officer NEW YORK, Oct. 4, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) Chairman and CEO John Wren today announced the elevation of Alex Lubar as Global CEO of DDB Worldwide. Lubar succeeds current Global CEO Marty O’Halloran who will continue as Chairman. In addition, Glen Lomas currently CEO, DDB EMEA, based in London, becomes Global President and Chief Operating Officer in partnership with Alex. “We are pleased to announce these changes as DDB has reclaimed its title of being one of the top creative agencies in the world, including 2023 Cannes Network of the Year,” said John Wren, Chairman and CEO, Omnicom. “Marty’s dedication to DDB has made him an integral part of the network’s culture and operations, and we thank him for his strong leadership during the past four years as CEO. With extensive global leadership credentials within the industry, we are confident that Alex, supported by Glen, will continue to elevate the network and build upon its legacy of creative excellence.” Lubar was appointed President and Chief Operating Officer of DDB Worldwide last October 2022, following ten years at McCann. He held several regional leadership roles during the course of his time there including President, McCann North America, head of McCann’s Asia Pacific region, and CEO of McCann London. Said Lubar about his new role, “Since its inception, DDB has unlocked the power of human emotion to make millions of different people change how they behave, feel, and transact with brands and businesses around the world. We believe that creativity, in all its modern forms, has the power to profoundly transform our clients’ businesses. I am honored to have the opportunity to lead Bill Bernbach’s legacy into the future with such a talented global staff and leadership team who all share the same vision.” Lomas has unparalleled international client experience at DDB having been CEO of Europe, Middle East, and Africa, DDB’s largest region and with the network since 1995. Based in London, he is responsible for the EMEA region and has built successful client teams across geographies while creating an environment where creativity and effectiveness flourish across the network. Said Lomas about his appointment: “It has always been a privilege to work at DDB and it is a great honor to take on this role. DDB has always been where brilliant, unpretentious people turn up each day to apply their creativity to solving problems. The problems and solutions change, but that culture doesn’t. I love what this network is capable of when it comes together, as demonstrated this year at Cannes, and Alex and I are here to ensure that spirit continues and the network keeps evolving to attract the most ambitious talent and clients.” O’Halloran has been a leader within the DDB network for close to four decades and took over the role of Global CEO in 2020. Under his leadership, DDB won 2023 Network of the Year at Cannes, Network of the Year for the past 3 years at D&AD, and Network of the Year at Effie US and Latina. “It has been my honor to lead DDB over the past 4 years,” said O’Halloran. “The talent across our regions is incredible and together we’ve been able to produce work that has achieved transformative results for our clients and has been awarded as some of the best creativity in the world. As part of this orchestrated succession plan, there is no doubt in my mind Alex will continue to lead the DDB network to new heights. I look forward to working in a Chairman’s capacity with Alex and Glen as they partner in leading the way forward with their global leadership team.” ABOUT DDB WORLDWIDE DDB Worldwide (www.ddb.com) is one of the world’s largest and most influential advertising and marketing networks which includes DDB branded agencies, along with adam&eveDDB (London, Berlin, New York), DM9 and Africa (both in Brazil), alma (Miami), Mango, Track and Rodgers Townsend. DDB has been awarded numerous accolades from the industry’s leading awards shows including 2023 Global Network of the Year by the Cannes Lions International Festival of Creativity, D&AD Agency Network of the Year for three consecutive years 2023, 2022, 2021, and Effie’s US Agency of the Year in 2022 and 2023. WARC has listed DDB as one of the Top 3 Global Networks for 12 of the last 15 years. The network’s clients include MARS, McDonald’s, Molson Coors, Volkswagen, Reynolds Consumer Products, Peloton, JetBlue, Adidas, Lucozade, CALM, PlayStation, Marmite, Waitrose & Partners, and the U.S. Army, among others. Founded in 1949, DDB is part of the Omnicom Group (NYSE: OMC) and consists of approximately 10,000 employees across over 140 offices in over 60 countries, with its headquarters in New York, NY. ABOUT OMNICOMOmnicom (NYSE – OMC) 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. SOURCE Omnicom Group Inc.