2023 Fourth Quarter:
Revenue of $4,060.9
million, with organic growth of 4.4%
Operating income of $646.7 million; $661.2
million non-GAAP adjusted
Operating income margin of 15.9%; 16.3%
non-GAAP adjusted
Diluted earnings per share of $2.13; $2.20
non-GAAP adjusted
2023 Full Year:
Revenue of $14,692.2
million, with organic growth of 4.1%
Operating income of $2,104.7 million; $2,231.9
million non-GAAP adjusted
Operating income margin of 14.3%; 15.2%
non-GAAP adjusted
Diluted earnings per share of $6.91; $7.41
non-GAAP adjusted
NEW
YORK, Feb. 6, 2024 /PRNewswire/ -- Omnicom
(NYSE: OMC) today announced results for the quarter and full year
ended December 31, 2023.
"Omnicom finished 2023 with 4.4% organic revenue growth in the
fourth quarter and 4.1% for the year. Looking out to full
year 2024, we are set up well with solid fundamentals, tremendous
opportunities in digital commerce and retail media from our
Flywheel acquisition, and momentum in new business wins," said
John Wren, Chairman and Chief
Executive Officer of Omnicom. "Our accelerated investments in
analytics and AI will enhance our ability to drive the best
outcomes for our clients, while shareholders remain supported by
our profitable operations and balanced deployment of capital
through dividends, acquisitions, and share repurchases."
Fourth Quarter 2023 Results
|
Three Months Ended
December 31,
|
$ in millions,
except per share amounts
|
2023
|
|
Non-GAAP
Adj.3
|
|
Non-GAAP
2023 Adj.
|
|
|
2022
|
Revenue
|
$ 4,060.9
|
|
$
—
|
|
$ 4,060.9
|
|
|
$
3,868.2
|
Operating
Income
|
646.7
|
|
14.5
|
|
661.2
|
|
|
642.7
|
Operating Income
Margin
|
15.9 %
|
|
|
|
16.3 %
|
|
|
16.6 %
|
Net Income
1
|
425.7
|
|
13.0
|
|
438.7
|
|
|
429.8
|
Net Income per Share -
Diluted 1
|
$ 2.13
|
|
|
|
$ 2.20
|
|
|
$
2.09
|
EBITA2
|
668.1
|
|
14.5
|
|
682.6
|
|
|
662.7
|
EBITA
Margin2
|
16.5 %
|
|
|
|
16.8 %
|
|
|
17.1 %
|
Notes: 1) Net Income
and Net Income per Share for Omnicom Group Inc. 2) See non-GAAP
reconciliations starting on page 11. 3)
Included in the fourth quarter of 2023 within selling, general and
administrative expenses are acquisition transaction costs of
$14.5
million ($13.0 million after tax) primarily related to the purchase
of Flywheel Digital, which closed on January 2,
2024.
|
Revenues
Reported revenue in the fourth quarter of
2023 increased $192.7 million, or
5.0%, to $4,060.9 million.
Worldwide revenue growth in the fourth quarter of 2023 compared
to the fourth quarter of 2022 was led by an increase in organic
growth of $171.3 million, or
4.4%. The impact of foreign currency translation
increased revenue by $47.0
million, or 1.2%. Acquisition revenue, net of
disposition revenue, reduced revenue by $25.6 million, or 0.7%, 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 fourth quarter of 2023
compared to the fourth quarter of 2022 was as follows: 9.3% for
Advertising & Media, 3.6% for Healthcare, and 1.0% for Commerce
& Branding, partially offset by declines of 8.0% for
Experiential, 2.9% for Public Relations, 1.1% for Precision
Marketing, and 0.4% for Execution & Support.
Organic growth by region in the fourth quarter of 2023 compared
to the fourth quarter of 2022 was as follows: 14.1% for Euro
Markets & Other Europe, 10.9% for Asia Pacific, 5.8% for the United Kingdom, 13.7% for Latin America, and 0.6% for the United States, partially offset by
declines of 17.3% for the Middle
East & Africa, and 1.3%
for Other North America.
Expenses
Operating expenses increased $188.7 million, or 5.9%, to $3,414.2 million in the fourth quarter of 2023
compared to the fourth quarter of 2022.
Salary and service costs increased $162.0
million, or 5.8%, to $2,954.0
million. These costs tend to fluctuate with changes in
revenue and are comprised of salary and related costs, which
include employee compensation and benefits costs and freelance
labor, third-party service costs, and third-party incidental costs.
Salary and related costs increased $52.7
million, or 2.8%, to $1,906.1
million, primarily due to an increase in headcount as a
result of organic growth and acquisitions, partially offset by our
disposition activity earlier in the year. 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 $97.5
million, or 12.4%, to $884.0
million, and third-party incidental costs increased
$11.8 million, or 7.8%, to
$163.9 million, both as a result of
organic growth and our acquisitions. Third-party service costs were
less impacted by our disposition activity.
Occupancy and other costs, which are less directly linked to
changes in revenue than salary and service costs, decreased
$3.5 million, or 1.2%, to
$290.9 million, due to a decrease in
rent expense, partially offset by an increase in other occupancy
expenses.
SG&A expenses increased $31.1
million, or 36.8%, to $115.6
million, primarily due to an increase in professional fees
and $14.5 million of acquisition
transaction costs related primarily to our Flywheel Digital
acquisition, which closed on January 2,
2024.
Operating Income
Operating income increased
$4.0 million, or 0.6%, to
$646.7 million in the fourth quarter
of 2023 compared to the fourth quarter of 2022. The related
operating income margin was 15.9% compared to 16.6% for the fourth
quarter of 2022. In the fourth quarter of 2023, non-GAAP
adjusted operating income of $661.2
million increased 2.9%, and the non-GAAP adjusted operating
income margin was 16.3%.
Interest Expense, net
Net interest expense in the
fourth quarter of 2023 increased $0.9
million to $26.8 million
compared to the fourth quarter of 2022. Interest income decreased
$2.7 million to $25.8 million, primarily due to lower average
cash and short-term investment balances compared to the fourth
quarter of 2022.
Income Taxes
Our effective tax rate of 26.5% in the
fourth quarter of 2023 was flat with the rate in the fourth quarter
of 2022.
Net Income – Omnicom Group Inc. and Diluted Net Income per
Share
Net income - Omnicom Group Inc. for the fourth quarter
of 2023 decreased $4.1 million, or
1.0%, to $425.7 million compared to
the fourth quarter of 2022. Diluted shares outstanding for the
fourth quarter of 2023 decreased 2.8% to 199.5 million from 205.2
million in the fourth quarter of 2022 as a result of net share
repurchases. Diluted net income per share of $2.13 increased $0.04, or 1.9%, from $2.09 per share. In the fourth quarter of
2023, non-GAAP adjusted diluted earnings per share of $2.20 increased 5.3%.
EBITA
EBITA increased $5.4
million, or 0.8%, to $668.1
million in the fourth quarter of 2023 compared to the fourth
quarter of 2022. The related EBITA margin was 16.5% compared to
17.1% for the fourth quarter of 2022. In the fourth quarter of
2023, non-GAAP adjusted EBITA of $682.6
million increased 3.0%, and the non-GAAP adjusted EBITA
margin was 16.8%.
Full Year 2023 Results
|
Twelve Months Ended
December 31,
|
$ in millions,
except per share amounts
|
2023
|
|
Non-GAAP
Adj.3
|
|
Non-GAAP
2023 Adj.
|
|
|
2022
|
|
|
Non-GAAP
Adj.3
|
|
Non-GAAP
2022 Adj.
|
Revenue
|
$
14,692.2
|
|
$
—
|
|
$
14,692.2
|
|
|
$
14,289.1
|
|
|
$
—
|
|
$
14,289.1
|
Operating
Income
|
2,104.7
|
|
127.2
|
|
2,231.9
|
|
|
2,083.3
|
|
|
113.4
|
|
2,196.7
|
Operating Income
Margin
|
14.3 %
|
|
|
|
15.2 %
|
|
|
14.6 %
|
|
|
|
|
15.4 %
|
Net Income
1
|
1,391.4
|
|
102.6
|
|
1,494.0
|
|
|
1,316.5
|
|
|
118.2
|
|
1,434.7
|
Net Income per Share -
Diluted 1
|
$
6.91
|
|
|
|
$
7.41
|
|
|
$
6.36
|
|
|
|
|
$
6.93
|
EBITA2
|
2,185.0
|
|
127.2
|
|
2,312.2
|
|
|
2,163.6
|
|
|
113.4
|
|
2,277.0
|
EBITA
Margin2
|
14.9 %
|
|
|
|
15.7 %
|
|
|
15.1 %
|
|
|
|
|
15.9 %
|
Notes: 1) Net Income
and Net Income per Share for Omnicom Group Inc. 2) See non-GAAP
reconciliations starting on page 11. 3) For the year
ended December 31, 2023, operating expenses included real estate
operating lease impairment charges, severance, and other exit costs
of $191.5 million ($145.5 million after tax) 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 of
$78.8 million ($55.9 million after tax) on disposition of certain
of our research businesses in the Execution & Support
discipline. Included in the fourth quarter of 2023 within
selling, general and administrative expenses are acquisition
transaction costs of $14.5 million ($13.0 million after tax)
primarily related to the purchase of Flywheel Digital in January
2024. The net aggregate impact to Operating Income for the year
ended December 31, 2023 was a reduction of $127.2 million ($102.6
million after tax). The net aggregate effect of these items for the
year ended December 31, 2023 to diluted net income per share -
Omnicom Group Inc. was a decrease of $0.50. For the year ended
December 31, 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.
|
Revenues
Reported revenue in 2023 increased
$403.1 million, or 2.8%, to
$14,692.2 million.
Worldwide revenue growth in 2023 compared to 2022 was led by an
increase in organic growth of $584.5
million, or 4.1%. The impact of foreign currency
translation reduced revenue by $28.3
million, or 0.2%. Acquisition revenue, net of
disposition revenue, reduced revenue by $153.1 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 2023 compared to 2022 was as
follows: 6.5% for Advertising & Media, 3.8% for Healthcare,
3.1% for Precision Marketing, 3.0% for Experiential, and 1.2% for
Commerce & Branding, partially offset by declines of 1.0% for
Execution & Support and 0.8% for Public Relations.
Organic growth by region in 2023 compared to 2022 was as
follows: 2.6% for the United
States, 7.2% for Euro Markets & Other Europe, 6.0% for
Asia Pacific, 4.7% for the
United Kingdom, 13.0% for
Latin America, and 3.0% for Other
North America, partially offset by a decline of 5.8% for
Middle East & Africa.
Expenses
Operating expenses increased $381.7 million, or 3.1%, to $12,587.5 million in 2023 compared to 2022.
Included in operating expenses for 2023 is the net impact of the
gain on disposition of certain of our research businesses in our
Execution & Support discipline of $78.8
million and repositioning costs related to real estate and
other exit charges and severance costs of $191.5 million.
Salary and service costs increased $375.3
million, or 3.6%, to $10,701.2
million. These costs tend to fluctuate with changes in
revenue and are comprised of salary and related costs, which
include employee compensation and benefits costs and freelance
labor, third-party service costs, and third-party incidental costs.
Salary and related costs increased $14.9
million, or 0.2%, to $7,212.8
million, primarily due to an increase in headcount as a
result of organic growth and acquisitions, partially offset by our
disposition activity earlier in the year. 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 $332.4
million, or 12.9%, to $2,917.9
million, and third-party incidental costs increased
$28.0 million, or 5.2%, to
$570.5 million, both as a result of
organic growth and our acquisitions for the year. Third-party
service costs were less impacted by our disposition activity.
Occupancy and other costs, which are less directly linked to
changes in revenue than salary and service costs, were flat due to
increases in other occupancy expenses, offset by lower rent.
SG&A expenses increased $15.2
million, or 4.0%, to $393.7
million, primarily due to an increase in professional fees,
including $14.5 million of
acquisition transaction costs primarily related to our Flywheel
acquisition, which closed on January 2,
2024.
Operating Income
Operating income increased
$21.4 million, or 1.0%, to
$2,104.7 in 2023 compared to 2022.
The related operating income margin was 14.3% compared to 14.6% for
2022. In 2023, non-GAAP adjusted operating income of $2,231.9 million increased 1.6%, and the non-GAAP
adjusted operating income margin was 15.2%.
Interest Expense, net
Net interest expense in 2023
decreased $26.1 million to
$111.8 million compared to
2022. Interest income increased $36.0
million to $106.7 million,
primarily due to higher interest rates on cash balances and
short-term investment balances compared to 2022.
Income Taxes
Our effective tax rate of 26.3% in 2023
decreased from 28.1% in 2022. The higher effective tax rate for
2022 was primarily due to the result of the non-deductibility of
$113.4 million in charges recorded in
the first quarter of 2022 arising from the effects of the war in
Ukraine, as well as an additional
increase in income tax expense of $4.8
million related to the disposition of our businesses in
Russia.
Net Income – Omnicom Group Inc. and Diluted Net Income per
Share
Net income - Omnicom Group Inc. in 2023 increased
$74.9 million, or 5.7%, to
$1,391.4 compared to 2022. Diluted
shares outstanding for 2023 decreased 2.7% to 201.4 million from
207.0 million in 2022 as a result of net share repurchases. Diluted
net income per share increased $0.55,
or 8.6%, to $6.91 per share. In
2023, non-GAAP adjusted diluted earnings per share of $7.41 increased 6.9%.
EBITA
EBITA increased $21.4
million, or 1.0%, to $2,185.0
million in 2023 compared to 2022. The related EBITA margin
was 14.9% compared to 15.1% for 2022. In 2023, non-GAAP
adjusted EBITA of $2,312.2 million
increased 1.5%, and the non-GAAP adjusted EBITA margin was
15.7%.
Risks and Uncertainties
Current global economic
challenges, including geopolitical events, international
hostilities, acts of terrorism, public health crises, high
inflation in countries that comprise our major markets, high
interest rates, and labor and supply chain issues could cause
economic uncertainty and volatility. The impact of these issues on
our business will vary by geographic market and discipline. We
monitor economic conditions closely, as well as 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 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.
Conference Call
Omnicom will host a conference call to
review its financial results on Tuesday, February 6, 2024 at
4:30 p.m. Eastern Time. Participants
can listen to the conference call by calling 844-291-6362
(domestic) or 234-720-6995 (international), along with access code
1468163. The call will also be simulcast and archived on our
investor relations website.
Corporate Responsibility
At 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 Omnicom
Omnicom (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 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. 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 Statements
Certain statements in this
document contain 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 geopolitical events,
international hostilities, acts of terrorism, public health crises,
high and sustained inflation in countries that comprise our major
markets, high interest rates, and labor 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 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; unanticipated changes to, or the ability
to hire and retain key personnel; currency exchange rate
fluctuations; reliance on information technology systems and risks
related to cybersecurity incidents; effective management of the
risks, challenges and efficiencies presented by utilizing
Artificial Intelligence (AI) technologies and related partnerships
in our business; changes in legislation or governmental regulations
affecting the Company or its clients; risks associated with
assumptions the Company makes in connection with acquisitions, its
critical accounting estimates and legal proceedings; the Company's
international operations, which are subject to the risks of
currency repatriation restrictions, social or political conditions,
and an evolving regulatory environment in high-growth markets and
developing countries; 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 and in 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.
OMNICOM GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In millions, except
per share amounts)
|
|
|
Three Months Ended
December
31,
|
|
2023
|
|
2022
|
Revenue
|
$
4,060.9
|
|
$
3,868.2
|
Operating
Expenses:
|
|
|
|
Salary and service
costs
|
2,954.0
|
|
2,792.0
|
Occupancy and other
costs
|
290.9
|
|
294.4
|
Cost of
services
|
3,244.9
|
|
3,086.4
|
Selling, general and
administrative expenses1
|
115.6
|
|
84.5
|
Depreciation and
amortization
|
53.7
|
|
54.6
|
Total operating
expenses
|
3,414.2
|
|
3,225.5
|
Operating
Income
|
646.7
|
|
642.7
|
Interest
Expense
|
52.6
|
|
54.4
|
Interest
Income
|
25.8
|
|
28.5
|
Income Before Income
Taxes and Income From Equity Method Investments
|
619.9
|
|
616.8
|
Income Tax
Expense
|
164.2
|
|
163.5
|
Income From Equity
Method Investments
|
2.1
|
|
2.6
|
Net
Income
|
457.8
|
|
455.9
|
Net Income Attributed
To Noncontrolling Interests
|
32.1
|
|
26.1
|
Net Income - Omnicom
Group Inc.
|
$
425.7
|
|
$
429.8
|
Net Income Per Share -
Omnicom Group Inc.:
|
|
|
|
Basic
|
$
2.15
|
|
$
2.11
|
Diluted
|
$
2.13
|
|
$
2.09
|
|
|
|
|
Revenue
|
$
4,060.9
|
|
$
3,868.2
|
Operating Margin
%
|
15.9 %
|
|
16.6 %
|
EBITA
|
$
668.1
|
|
$
662.7
|
EBITA Margin
%
|
16.5 %
|
|
17.1 %
|
|
|
|
|
Dividends Declared Per
Common Share
|
$
0.70
|
|
$
0.70
|
|
|
1)
|
Included in the fourth
quarter of 2023 within selling, general and administrative expenses
are acquisition transaction costs of $14.5 million ($13.0
million after tax), primarily related to the purchase of Flywheel
Digital in January 2024.
|
OMNICOM GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In millions, except
per share amounts)
|
|
|
Full
Year
|
|
2023
|
|
2022
|
Revenue
|
$
14,692.2
|
|
$
14,289.1
|
Operating
Expenses:
|
|
|
|
Salary and service
costs
|
10,701.2
|
|
10,325.9
|
Occupancy and other
costs
|
1,168.8
|
|
1,168.6
|
Real estate and other
repositioning costs1
|
191.5
|
|
—
|
Charges arising from
the effects of the war in Ukraine2
|
—
|
|
113.4
|
Gain on disposition of
subsidiary1
|
(78.8)
|
|
—
|
Cost of
services
|
11,982.7
|
|
11,607.9
|
Selling, general and
administrative expenses1
|
393.7
|
|
378.5
|
Depreciation and
amortization
|
211.1
|
|
219.4
|
Total operating
expenses1,2
|
12,587.5
|
|
12,205.8
|
Operating
Income
|
2,104.7
|
|
2,083.3
|
Interest
Expense
|
218.5
|
|
208.6
|
Interest
Income
|
106.7
|
|
70.7
|
Income Before Income
Taxes and Income From Equity Method Investments
|
1,992.9
|
|
1,945.4
|
Income Tax
Expense1,2
|
524.9
|
|
546.8
|
Income From Equity
Method Investments
|
5.2
|
|
5.2
|
Net
Income1,2
|
1,473.2
|
|
1,403.8
|
Net Income Attributed
To Noncontrolling Interests
|
81.8
|
|
87.3
|
Net Income - Omnicom
Group Inc.1,2
|
$
1,391.4
|
|
$
1,316.5
|
Net Income Per Share -
Omnicom Group Inc.:
|
|
|
|
Basic
|
$
6.98
|
|
$
6.40
|
Diluted1,2
|
$
6.91
|
|
$
6.36
|
|
|
|
|
Revenue
|
$
14,692.2
|
|
$
14,289.1
|
Operating Margin
%
|
14.3 %
|
|
14.6 %
|
EBITA
|
$
2,185.0
|
|
$
2,163.6
|
EBITA Margin
%
|
14.9 %
|
|
15.1 %
|
|
|
|
|
Dividends Declared Per
Common Share
|
$
2.80
|
|
$
2.80
|
|
|
1)
|
For the year ended
December 31, 2023, operating expenses included real estate
operating lease impairment charges, severance, and other exit costs
of $191.5 million ($145.5 million after tax) 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 of
$78.8 million ($55.9 million after tax) on
disposition of certain of our research businesses in the Execution
& Support discipline. Included in the year ended December
31, 2023 within selling, general and administrative expenses are
acquisition transaction costs of $14.5 million ($13.0 million
after tax) primarily related to the purchase of Flywheel
Digital in January 2024. The net aggregate impact to Operating
Income for the year ended December 31, 2023 was a reduction of
$127.2 million ($102.6 million after tax). The net aggregate effect
of these items for the year ended December 31, 2023 to diluted
net income per share - Omnicom Group Inc. was a decrease of
$0.50.
|
|
|
2)
|
For the year ended
December 31, 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
December
31,
|
|
2023
|
|
2022
|
Revenue
|
$
4,060.9
|
|
$
3,868.2
|
Operating
Expenses:
|
|
|
|
Salary and service
costs:
|
|
|
|
Salary and related
costs
|
1,906.1
|
|
1,853.4
|
Third-party service
costs1
|
884.0
|
|
786.5
|
Third-party incidental
costs2
|
163.9
|
|
152.1
|
Total salary and
service costs
|
2,954.0
|
|
2,792.0
|
Occupancy and other
costs
|
290.9
|
|
294.4
|
Cost of services
|
3,244.9
|
|
3,086.4
|
Selling, general and
administrative expenses3
|
115.6
|
|
84.5
|
Depreciation and
amortization
|
53.7
|
|
54.6
|
Total operating
expenses
|
3,414.2
|
|
3,225.5
|
Operating
Income
|
$
646.7
|
|
$
642.7
|
|
|
Full
Year
|
|
2023
|
|
2022
|
Revenue
|
$
14,692.2
|
|
$
14,289.1
|
Operating
Expenses:
|
|
|
|
Salary and service
costs:
|
|
|
|
Salary and related
costs
|
7,212.8
|
|
7,197.9
|
Third-party service
costs1
|
2,917.9
|
|
2,585.5
|
Third-party incidental
costs2
|
570.5
|
|
542.5
|
Total salary and
service costs
|
10,701.2
|
|
10,325.9
|
Occupancy and other
costs
|
1,168.8
|
|
1,168.6
|
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)
|
|
—
|
Cost of services
|
11,982.7
|
|
11,607.9
|
Selling, general and
administrative expenses3
|
393.7
|
|
378.5
|
Depreciation and
amortization
|
211.1
|
|
219.4
|
Total operating
expenses
|
12,587.5
|
|
12,205.8
|
Operating
Income
|
$
2,104.7
|
|
$
2,083.3
|
|
|
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.
|
3)
|
Included in the three
and twelve months ended December 31, 2023 within selling, general
and administrative expenses are acquisition transaction costs
of $14.5 million ($13.0 million after tax), primarily related to
the purchase of Flywheel Digital in January 2024.
|
OMNICOM GROUP INC.
AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In
millions)
|
|
|
Three Months Ended
December
31,
|
|
Full
Year
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net Income -
Omnicom Group Inc.
|
$
425.7
|
|
$
429.8
|
|
$
1,391.4
|
|
$
1,316.5
|
Net Income Attributed
To Noncontrolling Interests
|
32.1
|
|
26.1
|
|
81.8
|
|
87.3
|
Net
Income
|
457.8
|
|
455.9
|
|
1,473.2
|
|
1,403.8
|
Income From Equity
Method Investments
|
2.1
|
|
2.6
|
|
5.2
|
|
5.2
|
Income Tax
Expense
|
164.2
|
|
163.5
|
|
524.9
|
|
546.8
|
Income Before Income
Taxes and Income From Equity Method Investments
|
619.9
|
|
616.8
|
|
1,992.9
|
|
1,945.4
|
Interest
Expense
|
52.6
|
|
54.4
|
|
218.5
|
|
208.6
|
Interest
Income
|
25.8
|
|
28.5
|
|
106.7
|
|
70.7
|
Operating
Income
|
646.7
|
|
642.7
|
|
2,104.7
|
|
2,083.3
|
Add back: Amortization
of intangible assets
|
21.4
|
|
20.0
|
|
80.3
|
|
80.3
|
Earnings before
interest, taxes and amortization of intangible assets
("EBITA")
|
$
668.1
|
|
$
662.7
|
|
$
2,185.0
|
|
$
2,163.6
|
|
|
|
|
|
|
|
|
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)
|
|
—
|
Acquisition
transaction costs
|
14.5
|
|
—
|
|
14.5
|
|
—
|
EBITA -
Adjusted
|
$
682.6
|
|
$
662.7
|
|
$
2,312.2
|
|
$
2,277.0
|
|
|
|
|
|
|
|
|
Revenue
|
$
4,060.9
|
|
$
3,868.2
|
|
$
14,692.2
|
|
$
14,289.1
|
EBITA
|
$
668.1
|
|
$
662.7
|
|
$
2,185.0
|
|
$
2,163.6
|
EBITA Margin
%
|
16.5 %
|
|
17.1 %
|
|
14.9 %
|
|
15.1 %
|
EBITA -
Adjusted
|
$
682.6
|
|
$
662.7
|
|
$
2,312.2
|
|
$
2,277.0
|
EBITA Margin % -
Adjusted
|
16.8 %
|
|
17.1 %
|
|
15.7 %
|
|
15.9 %
|
|
The above table
reconciles the U.S. GAAP financial measure of Net Income - Omnicom
Group Inc. to EBITA (defined as earnings before interest, taxes and
amortization of intangible assets) and EBITA Margin (defined as
EBITA divided by revenue) for the periods presented. 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
December 31,
|
|
Reported
2023
|
|
Non-GAAP
Adj.
|
|
Non-GAAP
2023 Adj.
|
|
|
Reported
2022
|
|
Non-GAAP
Adj.
|
|
Non-GAAP
2022 Adj.
|
Revenue
|
$ 4,060.9
|
|
$
—
|
|
$ 4,060.9
|
|
|
$ 3,868.2
|
|
$
—
|
|
$ 3,868.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses2
|
3,414.2
|
|
(14.5)
|
|
3,399.7
|
|
|
3,225.5
|
|
—
|
|
3,225.5
|
Operating
Income
|
646.7
|
|
14.5
|
|
661.2
|
|
|
642.7
|
|
—
|
|
642.7
|
Operating Income Margin
%
|
15.9 %
|
|
|
|
16.3 %
|
|
|
16.6 %
|
|
|
|
16.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back: Amortization
of intangible assets
|
21.4
|
|
—
|
|
21.4
|
|
|
20.0
|
|
—
|
|
20.0
|
EBITA1
|
$
668.1
|
|
$
14.5
|
|
$
682.6
|
|
|
$
662.7
|
|
$
—
|
|
$
662.7
|
EBITA Margin
%1
|
16.5 %
|
|
|
|
16.8 %
|
|
|
17.1 %
|
|
|
|
17.1 %
|
|
|
Full
Year
|
|
Reported
2023
|
|
Non-GAAP
Adj. (2)
|
|
Non-GAAP
2023 Adj.
|
|
|
Reported
2022
|
|
Non-GAAP
Adj. (2)
|
|
Non-GAAP
2022 Adj.
|
Revenue
|
$14,692.2
|
|
$
—
|
|
$
14,692.2
|
|
|
$
14,289.1
|
|
$
—
|
|
$
14,289.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses2
|
12,587.5
|
|
(127.2)
|
|
12,460.3
|
|
|
12,205.8
|
|
(113.4)
|
|
12,092.4
|
Operating
Income
|
2,104.7
|
|
127.2
|
|
2,231.9
|
|
|
2,083.3
|
|
113.4
|
|
2,196.7
|
Operating Income Margin
%
|
14.3 %
|
|
|
|
15.2 %
|
|
|
14.6 %
|
|
|
|
15.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back: Amortization
of intangible assets
|
80.3
|
|
—
|
|
80.3
|
|
|
80.3
|
|
—
|
|
80.3
|
EBITA1
|
$ 2,185.0
|
|
$
127.2
|
|
$ 2,312.2
|
|
|
$ 2,163.6
|
|
$
113.4
|
|
$ 2,277.0
|
EBITA Margin
%1
|
14.9 %
|
|
|
|
15.7 %
|
|
|
15.1 %
|
|
|
|
15.9 %
|
|
|
1)
|
See Non-GAAP
reconciliation on page 11.
|
2)
|
For the full year ended
December 31, 2023, operating expenses included real estate
operating lease impairment charges, severance, and other exit costs
of $191.5 million ($145.5 million after tax) 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 of
$78.8 million ($55.9 million after tax) on
disposition of certain of our research businesses in the Execution
& Support discipline. Included in the three and twelve months
ended December 31, 2023 within selling, general and administrative
expenses are acquisition transaction costs of $14.5 million
($13.0 million after tax) primarily related to the purchase
of Flywheel Digital in January 2024. The net aggregate impact to
Operating Income for the full year ended December 31, 2023 was
a reduction of $127.2 million ($102.6 million after tax). The net
aggregate effect of these items in the full year ended
December 31, 2023 to diluted net income per share - Omnicom
Group Inc. was a decrease of $0.50.
|
|
|
|
For the full year ended
December 31, 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
December 31,
|
|
Full
Year
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating Income -
Reported
|
$
646.7
|
|
$
642.7
|
|
$
2,104.7
|
|
$
2,083.3
|
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)
|
|
—
|
Acquisition
transaction costs
|
14.5
|
|
—
|
|
14.5
|
|
—
|
Non-GAAP Operating
Income - Adjusted
|
$
661.2
|
|
$
642.7
|
|
$
2,231.9
|
|
$
2,196.7
|
|
|
Three Months Ended
December 31,
|
|
Full
Year
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Income Tax Expense -
Reported
|
$
164.2
|
|
$
163.5
|
|
$
524.9
|
|
$
546.8
|
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)
|
|
—
|
Acquisition
transaction costs
|
1.5
|
|
—
|
|
1.5
|
|
—
|
Non-GAAP Income Tax
Expense- Adjusted
|
$
165.7
|
|
$
163.5
|
|
$
549.5
|
|
$
542.0
|
|
Three Months Ended
December 31,
|
|
|
Full
Year
|
|
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
|
$
425.7
|
$
2.13
|
|
$
429.8
|
$
2.09
|
|
|
$
1,391.4
|
$
6.91
|
|
$
1,316.5
|
$
6.36
|
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)
|
|
—
|
—
|
Acquisition
transaction costs
|
13.0
|
0.07
|
|
—
|
—
|
|
|
13.0
|
0.06
|
|
—
|
—
|
Non-GAAP Net Income
- Omnicom Group Inc. - Adjusted1
|
$
438.7
|
$
2.20
|
|
$
429.8
|
$
2.09
|
|
|
$
1,494.0
|
$
7.41
|
|
$
1,434.7
|
$
6.93
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1)
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Diluted Shares for the
three months ended December 31, 2023 and 2022 in millions were
199.5 and 205.2, respectively. Diluted Shares for the full year
ended December 31, 2023 and 2022 in millions were 201.4 and 207.0,
respectively.
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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 real estate and other
repositioning costs and acquisition transaction costs, partially
offset by a gain on the disposition of certain of our research
businesses in 2023 and excluding the charge arising from the
effects of the war in Ukraine in 2022, provides investors with a
better picture of the performance of the business during the
periods presented.
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View original
content:https://www.prnewswire.com/news-releases/omnicom-reports-fourth-quarter-and-full-year-2023-results-302055244.html
SOURCE Omnicom Group Inc.