OMNICOM GROUP., INC. NEW YORK, July 22, 2014 /PRNewswire/ -- Omnicom Group Inc. (NYSE: OMC) today announced that its worldwide revenue in the second quarter of 2014 increased 6.4% to $3,870.9 million from $3,637.0 million in the second quarter of 2013. Domestic revenue for the second quarter of 2014 increased 7.8% to $2,053.3 million compared to $1,904.0 million in the second quarter of 2013. International revenue increased 4.9% to $1,817.6 million compared to $1,733.0 million in the second quarter of 2013.
For the quarter ended June 30, 2014, organic growth increased revenue 5.8% versus the second quarter of 2013 and the impact of foreign exchange rates increased revenue 0.7% compared to the same quarter of 2013. Acquisitions, net of dispositions reduced revenue 0.1%.
Across our regional markets, organic revenue in the second quarter increased 7.9% in North America, 2.1% in Europe, 5.1% in Asia Pacific, 7.8% in Latin America and 2.0% in Africa/Middle East.
The change in organic revenue in the second quarter of 2014 compared to the second quarter of 2013 in our four fundamental disciplines was as follows: advertising increased 10.5%, CRM increased 1.1%, public relations increased 4.1% and specialty communications increased 0.2%.
On May 8, 2014, Omnicom and Publicis Groupe S.A. ("Publicis") entered into a termination agreement under which Omnicom and Publicis mutually agreed to terminate their proposed merger.
Second quarter results include $1.8 million of pre-tax charges in connection with the proposed merger with Publicis, which are primarily comprised of professional fees. In addition, the effective tax rate for the second quarter reflects the recognition of an income tax benefit of $11.2 million related to previously incurred expenses for the proposed merger with Publicis. On May 8, 2014, the proposed merger with Publicis was terminated. Prior to the termination of the merger, the majority of the merger costs were capitalized for income tax purposes and the related tax benefits were not recorded. Because the merger was terminated, the merger costs were no longer required to be capitalized for income tax purposes. The net impact of these items on net income available to common shareholders in the second quarter was $9.2 million. The impact on diluted earnings per common share was $0.03 per common share.
In the second quarter of 2014, Omnicom's earnings before interest, taxes and amortization of intangibles ("EBITA"), a non-GAAP financial measure, increased $25.9 million, or 4.7%, to $574.2 million from $548.3 million in the second quarter of 2013. Our EBITA margin decreased to 14.8% for the second quarter of 2014 compared to 15.1% for the second quarter of 2013.
Operating income in the second quarter of 2014 increased $25.4 million, or 4.9%, to $548.4 million from $523.0 million in the second quarter of 2013 and the operating margin in the second quarter of 2014 decreased to 14.2% versus 14.4% in the second quarter of 2013.
Omnicom's net income for the second quarter of 2014 increased $35.7 million, or 12.3%, to $325.2 million from $289.5 million in the second quarter of 2013. Diluted net income per common share in the second quarter was $1.23 per share versus $1.09 per share during the second quarter of 2013.
Year-to-date
Worldwide revenue for the six months ended June 30, 2014 increased 4.8% to $7,373.0 million from $7,035.9 million in the same period in 2013. Domestic revenue for the six months ended June 30, 2014 increased 6.0% to $3,917.3 million from $3,695.6 million in the same period in 2013. International revenue for the six months ended June 30, 2014 increased 3.5% to $3,455.7 million from $3,340.3 million in the same period in 2013.
For the six months ended June 30, 2014, organic growth increased revenue 5.1% and the impact of foreign exchange rates increased revenue 0.1%. Acquisitions, net of dispositions reduced revenue 0.4%.
Across our regional markets for the six months ended June 30, 2014, organic revenue increased 6.4% in North America, 2.2% in Europe, 5.4% in Asia Pacific, 7.6% in Latin America and 4.2% in Africa/Middle East when compared to the same period in 2013.
The change in organic revenue in the six months of 2014 compared to the same period in 2013 in our four fundamental disciplines was as follows: advertising increased 7.8%, CRM increased 2.7%, public relations increased 2.7% and specialty communications increased 2.5%.
Year-to-date 2014 results include $8.8 million of pre-tax charges in connection with the proposed merger with Publicis, which are primarily comprised of professional fees. In addition, the effective tax rate for the six months ended June 30, 2014 reflects the recognition of an income tax benefit of $11.4 million related to previously incurred expenses for the proposed merger with Publicis. On May 8, 2014, the proposed merger with Publicis was terminated. Prior to the termination of the merger, the majority of the merger costs were capitalized for income tax purposes and the related tax benefits were not recorded. Because the merger was terminated, the merger costs were no longer required to be capitalized for income tax purposes. The net impact of these items on net income available to common shareholders in the six months ended June 30, 2014 was $2.6 million. The impact on diluted earnings per common share was $0.01 per common share.
Omnicom's EBITA for the six months ended June 30, 2014 increased 3.8%, or $35.9 million, to $981.3 million from $945.4 million for the same period in 2013. EBITA margins decreased to 13.3% for the six months of 2014 versus 13.4% during the same period of 2013.
Operating income for the six months ended June 30, 2014 increased $36.3 million, or 4.1%, to $931.1 million compared to $894.8 million for the same period in 2013. Our operating margin for the six months of 2014 decreased to 12.6% from 12.7% versus the six months of 2013.
Net income for the six months ended June 30, 2014 increased $36.0 million, to $530.7 million from $494.7 million for the same period in 2013.
Omnicom's diluted net income per common share for the six months ended June 30, 2014 increased fifteen cents, or 8.1%, to $2.00 per share, compared to $1.85 per share for the six months of 2013.
Omnicom Group Inc. (NYSE: OMC) (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom's branded networks and numerous specialty firms provide advertising, strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations and other specialty communications services to over 5,000 clients in more than 100 countries.
For a live webcast and/or a replay of our second quarter earnings conference call, go to www.omnicomgroup.com/InvestorRelations.
Omnicom Group Inc.
Three Months Ended June 30
(Unaudited)
(Dollars in Millions, Except Per Share Data)
2014 2013
Reported Reported
-------- --------
Revenue $3,870.9 $3,637.0
Operating Expenses, excluding amortization of intangibles 3,296.7 3,088.7
------- -------
EBITA (a) (b) 574.2 548.3
Less: Amortization of Intangibles 25.8 25.3
---- ----
Operating Income 548.4 523.0
Net Interest Expense 33.7 40.7
---- ----
Income before income taxes 514.7 482.3
Income tax expense(a) 160.3 163.6
Income from equity method investments 4.0 2.9
--- ---
Net income 358.4 321.6
Less: Net income allocated to noncontrolling interests 33.2 32.1
---- ----
Net income - Omnicom Group Inc. 325.2 289.5
Less: Net income allocated to participating securities 6.3 7.8
--- ---
Net income available for common shares(a) $318.9 $281.7
====== ======
Net income per common share - Omnicom Group Inc.
Basic $1.24 $1.09
Diluted(a) $1.23 $1.09
Weighted average shares (in millions)
Basic 256.2 257.7
Diluted 258.2 259.2
Dividend declared per common share $0.50 $0.40
(a) Second quarter 2014 amounts
include $1.8 million of pre-tax
expenses incurred in connection
with Omnicom's proposed merger
with Publicis, which are
primarily comprised of
professional fees. In addition,
income tax expense for the
second quarter of 2014 includes
the recognition of an income tax
benefit of $11.2 million related
to previously incurred expenses
for the proposed merger with
Publicis. On May 8, 2014, the
proposed merger with Publicis
was terminated. Prior to the
termination of the merger, the
majority of the merger costs
were capitalized for income tax
purposes and the related tax
benefits were not recorded.
Because the merger was
terminated, for income tax
purposes, the merger costs were
no longer required to be
capitalized and as a result, we
recorded a tax benefit related
to the expenses that were
previously incurred. The net
impact of these items on net
income available to common
shareholders was $9.2 million.
The impact on diluted earnings
per common share was $0.03 per
common share during the period
presented.
(b) EBITA (defined as Earnings before
interest, taxes and amortization
of intangibles) is a non-GAAP
measure. We use EBITA as an
additional operating performance
measure, which excludes the non-
cash amortization expense of
acquired intangible assets. We
believe that EBITA is a useful
measure to evaluate the
performance of our businesses.
Non-GAAP financial measures
should not be considered in
isolation from, or as a
substitute for, financial
information presented in
compliance with U.S. GAAP. Non-
GAAP financial measures reported
by us may not be comparable to
similarly titled amounts
reported by other companies.
Omnicom Group Inc.
Six Months Ended June 30
(Unaudited)
(Dollars in Millions, Except Per Share Data)
2014 2013
Reported Reported
-------- --------
Revenue $7,373.0 $7,035.9
Operating Expenses, excluding amortization
of intangibles 6,391.7 6,090.5
------- -------
EBITA (a) (b) 981.3 945.4
Less: Amortization of Intangibles 50.2 50.6
---- ----
Operating Income 931.1 894.8
Net Interest Expense 72.7 81.7
---- ----
Income before income taxes 858.4 813.1
Income tax expense 276.5 272.7
Income from equity method investments 4.6 6.1
--- ---
Net income 586.5 546.5
Less: Net income allocated to
noncontrolling interests 55.8 51.8
---- ----
Net income - Omnicom Group Inc. 530.7 494.7
Less: Net income allocated to
participating securities 10.4 13.4
---- ----
Net income available for common shares $520.3 $481.3
====== ======
Net income per common share - Omnicom
Group Inc.
Basic $2.02 $1.86
Diluted $2.00 $1.85
Weighted average shares (in millions)
Basic 257.7 259.4
Diluted 259.8 260.7
Dividend declared per common share $0.90 $0.80
(a) Year-to-date 2014 amounts
include $8.8 million of pre-tax
expenses incurred in connection
with Omnicom's proposed merger
with Publicis, which are
primarily comprised of
professional fees. In addition,
income tax expense for the first
six months of 2014 includes the
recognition of an income tax
benefit of $11.4 million related
to previously incurred expenses
for the proposed merger with
Publicis. On May 8, 2014, the
proposed merger with Publicis
was terminated. Prior to the
termination of the merger, the
majority of the merger costs
were capitalized for income tax
purposes and the related tax
benefits were not recorded.
Because the merger was
terminated, for income tax
purposes, the merger costs were
no longer required to be
capitalized and as a result, we
recorded a tax benefit related
to the expenses that were
previously incurred. The net
impact of these items on net
income available to common
shareholders was $2.6 million.
The impact on diluted earnings
per common share was $0.01 per
common share during the period
presented.
(b) EBITA (defined as Earnings before
interest, taxes and amortization
of intangibles) is a non-GAAP
measure. We use EBITA as an
additional operating performance
measure, which excludes the non-
cash amortization expense of
acquired intangible assets. We
believe that EBITA is a useful
measure to evaluate the
performance of our businesses.
Non-GAAP financial measures
should not be considered in
isolation from, or as a
substitute for, financial
information presented in
compliance with U.S. GAAP. Non-
GAAP financial measures reported
by us may not be comparable to
similarly titled amounts
reported by other companies.
SOURCE Omnicom Group Inc.
