Exhibit 99.2 |
OmnicomGroup |
FULL YEAR 2004 RESULTS Investor Presentation |
February 22, 2005 |
The following materials have been prepared for use in the February 22, 2005 conference call on Omnicom’s results of operations for the year December 31, 2004. The call will be archived on the Internet at http://www.omnicomgroup.com/financialwebcasts. |
Forward-Looking Statements |
Certain of the statements in this document constitute forward-looking statements. These statements relate to future events or future financial performance and involve known and unknown risks and other factors that may cause our actual or our industry’s results, levels of activity or achievement to be materially different from those expressed or implied by any forward-looking statements. These risks and uncertainties include, but are not limited to, our future financial condition and results of operations, changes in general economic conditions, competitive factors, changes in client communication requirements, the hiring and retention of human resources and our international operations, which are subject to the risks of currency fluctuations and exchange controls. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of those terms or other comparable terminology. These statements are present expectations. Actual events or results may differ materially. |
Other Information |
All dollar amounts are in millions except for EPS. The following financial information contained in this document has not been audited, although some of it has been derived from Omnicom’s historical financial statements, including its audited financial statements. In addition, industry, operational and other non-financial data contained in this document has been derived from sources we believe to be reliable, but we have not independently verified such information, and we do not, nor does any other person, assume responsibility for the accuracy or completeness of that information. |
The inclusion of information in this presentation does not mean that such information is material or that disclosure of such information is required. |
OmnicomGroup | 1 |
2004 vs. 2003 P&L Summary |
Fourth Quarter (a) | Full Year (a) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | % change | 2004 | 2003 | % change | ||||||||
Revenue | $ 2,789.0 | $ 2,506.0 | 11.3% | $ 9,747.2 | $ 8,621.4 | 13.1% | |||||||
Operating Income | 394.9 | 353.1 | 11.8% | 1,215.4 | 1,091.9 | 11.3% | |||||||
% Margin | 14.2% | 14.1% | 12.5% | 12.7% | |||||||||
Net Interest Expense | 10.0 | 10.0 | 36.6 | 42.8 | |||||||||
Profit Before Tax | 384.9 | 343.1 | 12.2% | 1,178.8 | 1,049.1 | 12.4% | |||||||
% Margin | 13.8% | 13.7% | 12.1% | 12.2% | |||||||||
Taxes | 129.4 | 113.2 | 396.3 | 353.0 | |||||||||
% Tax Rate | 33.6% | 33.0% | 33.6% | 33.6% | |||||||||
Profit After Tax | 255.5 | 229.9 | 11.1% | 782.5 | 696.1 | 12.4% | |||||||
Equity in Affiliates | 6.6 | 6.8 | 17.1 | 15.1 | |||||||||
Minority Interest | (25.6) | (26.0) | (76.1) | (80.2) | |||||||||
Net Income | $ 236.5 | $ 210.7 | 12.2% | $ 723.5 | $ 631.0 | 14.7% | |||||||
(a) | In connection with our adoption on January 1, 2004 of SFAS 123 — “Accounting for Stock-Based Compensation” as amended by SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment for FASB Statement No. 123,” utilizing the retroactive restatement method, stock-based compensation costs have been expensed in the current period and the results for the quarter ended December 31, 2003 and Full Year 2003 have been restated as if we had used the fair value method to account for employee stock- based compensation beginning January 1, 2003. |
OmnicomGroup | 2 |
2004 vs. 2003 Earnings Per Share |
Fourth Quarter (a) | Full Year(a) | ||||||
---|---|---|---|---|---|---|---|
2004 | 2003 | 2004 | 2003 | ||||
Earnings per Share: | |||||||
Basic | $ 1.28 | $ 1.12 | $ 3.90 | $ 3.37 | |||
Diluted | 1.28 | 1.12 | 3.88 | 3.37 | |||
Weighted Average Shares (millions): | |||||||
Basic | 184.1 | 187.8 | 185.7 | 187.3 | |||
Diluted | 185.2 | 188.9 | 186.6 | 187.6 | |||
Dividend Declared Per Share | $0.225 | $0.200 | $0.900 | $0.800 |
(a) | In connection with our adoption on January 1, 2004 of SFAS 123 — “Accounting for Stock-Based Compensation” as amended by SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment for FASB Statement No. 123,” utilizing the retroactive restatement method, stock-based compensation costs have been expensed in the current period and the results for the quarter ended December 30, 2003 and Full Year 2003 have been restated as if we had used the fair value method to account for employee stock-based compensation beginning January 1, 2003. |
OmnicomGroup | 3 |
2004 Total Revenue Growth |
Fourth Quarter | Full Year | ||||
$ | % | $ | % | ||
Prior Period Revenue | $2,506.0 | $8,621.4 | |||
Foreign Exchange (FX) Impact(a) | 103.5 | 4.1% | 390.6 | 4.5% | |
Acquisition Revenue(b) | 19.2 | 0.8% | 163.9 | 1.9% | |
Organic Revenue(c) | 160.3 | 6.4% | 571.3 | 6.7% | |
Current Period Revenue | $2,789.0 | 11.3% | $9,747.2 | 13.1% | |
(a) | To calculate the FX impact, we first convert the current period’s local currency revenue using the average exchange rates from the equivalent prior period to arrive at constant currency revenue. The FX impact equals the difference between the current period revenue in U.S. dollars and the current period revenue in constant currency. |
(b) | Acquisition revenue is the aggregate of the applicable prior period revenue of the acquired businesses. Netted against this number is the revenue of any business included in the prior period reported revenue that was disposed of subsequent to the prior period. |
(c) | Organic revenue is calculated by subtracting both the acquisition revenue and the FX impact from total revenue growth. |
OmnicomGroup | 4 |
2004 Revenue By Discipline |
$ Mix | % Growth(a) | ||||
---|---|---|---|---|---|
Advertising | 1,202.6 | 9.3 | % | ||
CRM | 981.0 | 10.5 | % | ||
PR | 280.3 | 15.7 | % | ||
Specialty | 325.1 | 17.8 | % |
$ Mix | % Growth(a) | ||||
---|---|---|---|---|---|
Advertising | 4,207.5 | 11.4 | % | ||
CRM | 3,366.1 | 14.0 | % | ||
PR | 1,040.5 | 12.0 | % | ||
Specialty | 1,133.1 | 17.6 | % |
(a) | “Growth” is the year-over-year growth from the prior period. Certain reclassifications have been made to the December 31, 2003 presentation to conform the numbers to the December 31, 2004 balances presented. |
5 |
OmnicomGroup | 5 |
2004 Revenue By Geography |
$ Mix | $ Growth | ||||
---|---|---|---|---|---|
United States | $1,441.8 | $113.9 | |||
Organic | 95.2 | ||||
Acquisition | 18.7 | ||||
International | $1,347.2 | $169.1 | |||
Organic | 65.1 | ||||
Acquisition | 0.5 | ||||
FX | 103.5 | ||||
$ Mix | % Growth | ||||
United States | $1,441.8 | 8.6 | % | ||
Euro Denominated | 627.4 | 15.3 | % | ||
United Kingdom | 307.6 | 12.0 | % | ||
Other | 412.2 | 14.8 | % | ||
$ Mix | $ Growth | ||||
---|---|---|---|---|---|
United States | $5,223.4 | $502.5 | |||
Organic | 370.6 | ||||
Acquisition | 131.9 | ||||
International | $4,523.8 | $623.3 | |||
Organic | 200.7 | ||||
Acquisition | 32.0 | ||||
FX | 390.6 | ||||
$ Mix | % Growth | ||||
United States | $5,223.4 | 10.6 | % | ||
Euro Denominated | 2,058.2 | 15.0 | % | ||
United Kingdom | 1,085.0 | 15.2 | % | ||
Other | 1,380.6 | 18.1 | % | ||
OmnicomGroup | 6 |
Cash Flow - GAAP Presentation (condensed) |
Full Year | |||||||
2004 | 2003 | 2002 | |||||
Net Income | $ 723.5 | $ 631.0 | $ 570.5 | ||||
Stock-Based Compensation Expense | 143.4 | 148.8 | 187.8 | ||||
Depreciation and Amortization | 172.1 | 160.9 | 150.3 | ||||
Cash-Tax Differences | 108.7 | 23.2 | (35.1 | ) | |||
Other non-cash items to reconcile to net income | 79.1 | 93.9 | 93.5 | ||||
Other changes in Working Capital | 60.8 | (3.6 | ) | 33.6 | |||
Net Cash Provided by Operations | 1,287.6 | 1,054.2 | 1,000.6 | ||||
Capital Expenditures | (159.7 | ) | (141.1 | ) | (117.2 | ) | |
Acquisitions and Long-term Investments | (340.5 | ) | (410.0 | ) | (586.3 | ) | |
Other Short-term Investing activities, net | (258.7 | ) | (262.9 | ) | 20.4 | ||
Net Cash Used by Investing Activities | (758.9 | ) | (814.0 | ) | (683.1 | ) | |
Dividends | (163.1 | ) | (149.3 | ) | (148.4 | ) | |
Stock Repurchases | (446.5 | ) | (25.9 | ) | (371.7 | ) | |
Other Financing Activities | (40.4 | ) | 529.8 | 400.3 | |||
Net Cash (Used in) Provided by Financing Activities | (650.0 | ) | 354.6 | (119.8 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | 43.4 | (18.3 | ) | (2.9 | ) | ||
Net (Decrease) Increase in Cash and Cash Equivalents | (77.9 | ) | 576.5 | 194.8 | |||
OmnicomGroup | 7 |
After-Tax Free Cash Flow (a) |
Full Year | |||||||
2004 | 2003 | 2002 | |||||
Net Income | $ 723.5 | $ 631.0 | $ 570.5 | ||||
Stock-Based Compensation Expense | 143.4 | 148.8 | 187.8 | ||||
Depreciation and Amortization | 172.1 | 160.9 | 150.3 | ||||
Cash-Tax Differences | 108.7 | 23.2 | (35.1 | ) | |||
After-Tax Free Cash Flow | 1,147.7 | 963.9 | 873.5 | ||||
Primary Cash Uses: | |||||||
Capital Expenditures | 159.7 | 141.1 | 117.2 | ||||
Dividends | 163.1 | 149.3 | 148.4 | ||||
Acquisitions and Long-term Investments | 340.5 | 410.0 | 586.3 | ||||
Stock Repurchases, (net of proceeds)(b) | 371.7 | (27.2 | ) | 320.9 |
(a) | The After-Tax Free Cash Flow numbers presented above are a non-GAAP measure. They exclude changes in working capital and certain other investing and financing activities. This presentation reflects the metrics used by management to assess our generation of cash. We believe that this presentation is more meaningful for understanding our after-tax free cash flow and our primary uses of that cash flow. This presentation was derived from our GAAP condensed statement of cash flow on the previous page of this presentation. | |
(b) | Stock repurchases of $446.5 million in 2004, $25.9 million in 2003 and $371.7 million in 2002 are net of proceeds from stock option exercises and stock sold in our employee stock purchase plan of $74.8 million, $53.1 million and $50.8 million for the years ended 2004, 2003 and 2002, respectively. |
OmnicomGroup | 8 |
Current Credit Picture |
Full Year | |||||
2004 | 2003 | ||||
Operating Income (EBIT) (a) | $ 1,215 | $ 1,092 | |||
Net Interest Expense (a) | $ 36.6 | $ 42.8 | |||
EBIT / Net Interest | 33.2 | x | 25.5 | x | |
Net Debt / EBIT | 0.7 | 0 | 0.9 | 6 | |
Debt: | |||||
Bank Loans (Due Less Than 1 Year) | $ 18 | $ 42 | |||
5.20% Euro Notes Due 6/24/05 (b) | 207 | 192 | |||
Convertible Notes Due 2/7/31 | 847 | 847 | |||
Convertible Notes Due 7/31/32 | 892 | 892 | |||
Convertible Notes Due 6/15/33 | 600 | 600 | |||
Loan Notes and Sundry (various through 2010) | 22 | 18 | |||
Total Debt | $ 2,586 | $ 2,591 | |||
Cash and Short Term Investments | 1,740 | 1,547 | |||
Net Debt | $ 846 | $ 1,044 | |||
(a) | “Operating Income (EBIT)” and “Net Interest Expense” calculations shown are for the years ended as specified. Although our bank agreements reference EBITDA, we have used EBIT for this presentation because EBITDA is a non-GAAP measure. 2003 figures are restated to reflect the adoption of SFAS 123 — “Accounting for Stock-Based Compensation.” |
(b) | The change in the outstanding balance results from changes in the Euro to US dollar currency exchange rate. The Euro balance outstanding as of December 31, 2004 and 2003 was €152.4. |
OmnicomGroup | 9 |
Current Liquidity Picture |
Total Amount | As of December 31, 2004 | ||||||
Outstanding | Available | ||||||
Committed Facilities | |||||||
364 Day Revolver due 5/23/05(a) | $ 500 | $ — | $ 500 | ||||
5 Year Revolver due 5/24/09 | 1,500 | — | 1,500 | ||||
Other Committed Credit Facilities | 18 | 18 | — | ||||
Total Committed Facilities | 2,018 | 18 | 2,000 | ||||
Uncommitted Facilities (b) | 384 | — | — | (b) | |||
Total Credit Facilities | $2,402 | $ 18 | 2,000 | ||||
Cash & Short Term Investments | 1,740 | ||||||
Total Liquidity Available | $3,740 | ||||||
(a) | The $500 million 364 Day Credit facility includes a one-year term out at maturity at our option. | ||
(b) | Uncommitted facilities in the US, U.K. and Canada. These amounts are excluded for purposes of this analysis. |
OmnicomGroup | 10 |
Return on Equity(a) |
(a) | “Return on Equity” is constant dollar based Net Income for the given period divided by the shareholders’ equity at the end of the prior period which has also been adjusted to a constant dollar basis. | ||
In connection with our adoption on January 1, 2004 of SFAS 123 — “Accounting for Stock-Based Compensation” as amended by SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment for FASB Statement No. 123,” utilizing the retroactive restatement method, stock-based compensation costs have been expensed in the current period and the results for the years ended December 31, 2002 and 2003 have been restated as if we had used the fair value method to account for employee stock-based compensation beginning January 1, 2002. |
OmnicomGroup | 11 |
Acquisitions Summary |
Acquisition Related Expenditures |
Full Year 2004 | |||
---|---|---|---|
New Subsidiary Acquisitions(a) | $ 32 | ||
Affiliates to Subsidiaries(b) | 1 | ||
Affiliates(c) | 2 | ||
Existing Subsidiaries(d) | 151 | ||
Earn-outs(e) | 192 | ||
Total Acquisition Expenditures | $378 | ||
Note: See appendix for subsidiary acquisition profiles. |
(a) | Includes acquisitions of a majority interest in new agencies resulting in their consolidation. |
(b) | Includes acquisitions of additional equity interests in existing affiliate agencies resulting in their majority ownership and consolidation. |
(c) | Includes acquisitions of less than a majority interest in agencies in which Omnicom did not have a prior equity interest and the acquisition of additional interests in existing affiliated agencies that did not result in majority ownership. |
(d) | Includes the acquisition of additional equity interests in already consolidated subsidiary agencies. |
(e) | Includes additional consideration paid for acquisitions completed in prior periods. |
OmnicomGroup | 13 |
Potential Earn-out Obligations |
The following is an estimate of future earn-out related obligations as of December 31, 2004, assuming that the underlying acquired agencies continue to perform at their current levels:(a) |
2005 | 2006 | 2007 | 2008 | Thereafter | Total | ||||||
$225 | $82 | $81 | $47 | $23 | $458 | ||||||
(a) | The ultimate payments will vary as they are dependent on future events and changes in FX rates. |
OmnicomGroup | 14 |
Potential Obligations |
In conjunction with certain transactions Omnicom has agreed to acquire (at the sellers’ option) additional equity interests. The following is an estimate of these potential future obligations (as of December 31, 2004), assuming these underlying acquired agencies continue to perform at their current levels:(a) |
Currently Exercisable | Not Currently Exercisable | Total | |||||
---|---|---|---|---|---|---|---|
Subsidiary Agencies | $139 | $ 99 | $238 | ||||
Affiliated Agencies | 24 | 12 | 36 | ||||
Total | $163 | $111 | $274 | ||||
(a) | The ultimate payments will vary as they are dependent on future events and changes in FX rates. |
OmnicomGroup | 15 |
Fourth Quarter Acquisition |
Cooper & Hayes | ||||||
Cooper & Hayes is a full-service agency. The acquisition of Cooper & Hayes will enhance DDB’s foothold in the Southeast and its expertise in the cruise, vacation and tourism industries. |
OmnicomGroup | 16 |
Fourth Quarter Acquisition |
Hornall Anderson Design Works | ||||||
Hornall Anderson Design Works is an integrated, full service brand design firm. The firm’s competency focuses on strategic based design. Services include: brand strategy, brand design, corporate identity, packaging, literature systems, branded environments and interactive media. |
OmnicomGroup | 17 |
Fourth Quarter Acquisition |
U5 | ||||||
U5 is a small full service agency which currently services one of our existing client’s in the automotive industry. U5 supports this client in Europe, the Middle East and Asia. Interone Worldwide acquired U5 to strengthen and expand its existing client relationship. Interone and U5 have considerable opportunities for expanding the range of services offered to this shared client within other agencies in the BBDO network group in Germany and the BBDO worldwide network. |
OmnicomGroup | 18 |