omc-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-10551

OMNICOM GROUP INC.

(Exact name of registrant as specified in its charter)


New York			13-1514814
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

280 Park Avenue, New York, NY			10017
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (212) 415-3600

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.15 Par Value	OMC	New York Stock Exchange
0.800% Senior Notes due 2027	OMC/27	New York Stock Exchange
1.400% Senior Notes due 2031	OMC/31	New York Stock Exchange
3.700% Senior Notes due 2032	OMC/32	New York Stock Exchange
2.250% Senior Notes due 2033	OMC/33	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of April 10, 2024, there were 195,833,671 shares of Omnicom Group Inc. Common Stock outstanding.

OMNICOM GROUP INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Consolidated Balance Sheets - March 31, 2024 and December 31, 2023	1
	Consolidated Statements of Income - Three Months Ended March 31, 2024 and 2023	2
	Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2024 and 2023	3
	Consolidated Statements of Equity - Three Months Ended March 31, 2024 and 2023	4


	Consolidated Statements of Cash Flows - Three Months Ended March 31, 2024 and 2023	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Forward-Looking Statements	14
	Executive Summary	14
	Consolidated Results of Operations	17
	Non-GAAP Financial Measures	23
	Liquidity and Capital Resources	24
	Critical Accounting Estimates	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		28

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)


	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents	$	3,172.8	$	4,432.0

Accounts receivable, net of allowance for doubtful accounts of $23.0 and $17.2	7,905.8		8,659.8
Work in process	1,711.6		1,342.5
Other current assets	1,076.1		949.9
Total Current Assets	13,866.3		15,384.2
Property and Equipment at cost, less accumulated depreciation of $1,162.5 and $1,150.4	860.2		874.9
Operating Lease Right-Of-Use Assets	1,021.1		1,046.4
Equity Method Investments	64.8		66.4
Goodwill	10,693.8		10,082.3
Intangible Assets, net of accumulated amortization of $857.5 and $863.6	533.0		366.9
Other Assets	236.4		223.5
TOTAL ASSETS	$	27,275.6	$	28,044.6

LIABILITIES AND EQUITY:
Current Liabilities:
Accounts payable	$	10,337.7	$	11,634.0
Customer advances	1,238.2		1,356.2
Current portion of debt	750.3		750.5
Short-term debt	11.2		10.9
Taxes payable	381.0		351.6
Other current liabilities	2,235.4		2,142.8
Total Current Liabilities	14,953.8		16,246.0
Long-Term Liabilities	916.2		887.7
Long-Term Liability - Operating Leases	827.2		853.0
Long-Term Debt	5,501.0		4,889.1
Deferred Tax Liabilities	514.8		529.1
Commitments and Contingent Liabilities (Note 12)
Temporary Equity - Redeemable Noncontrolling Interests	428.4		414.6
Equity:
Shareholders’ Equity:
Preferred stock	—		—
Common stock	44.6		44.6
Additional paid-in capital	512.0		492.0
Retained earnings	10,751.3		10,571.5
Accumulated other comprehensive income (loss)	(1,415.9)		(1,337.6)
Treasury stock, at cost	(6,322.5)		(6,154.2)
Total Shareholders’ Equity	3,569.5		3,616.3
Noncontrolling interests	564.7		608.8
Total Equity	4,134.2		4,225.1
TOTAL LIABILITIES AND EQUITY	$	27,275.6	$	28,044.6

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended March 31,
	2024		2023
REVENUE	$	3,630.5	$	3,443.3
OPERATING EXPENSES:
Salary and service costs	2,692.6		2,542.9
Occupancy and other costs	314.1		291.6
Real estate repositioning costs	—		119.2



Cost of services	3,006.7		2,953.7
Selling, general and administrative expenses	85.3		89.2
Depreciation and amortization	59.6		53.9
Total Operating Expenses	3,151.6		3,096.8
OPERATING INCOME	478.9		346.5
Interest Expense	53.8		54.9
Interest Income	27.0		35.6
INCOME BEFORE INCOME TAXES AND INCOME FROM EQUITY METHOD INVESTMENTS	452.1		327.2
Income Tax Expense	116.0		83.4
Income From Equity Method Investments	0.9		0.1
NET INCOME	337.0		243.9
Net Income Attributed To Noncontrolling Interests	18.4		16.4
NET INCOME - OMNICOM GROUP INC.	$	318.6	$	227.5
Net Income Per Share - Omnicom Group Inc.:
Basic	$	1.61	$	1.13
Diluted	$	1.59	$	1.11

Weighted Average Shares:
Basic	197.9		202.2
Diluted	200.1		204.5

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)


	Three Months Ended March 31,
	2024		2023
NET INCOME	$	337.0	$	243.9
OTHER COMPREHENSIVE INCOME (LOSS):
Cash flow hedge:

Amortization of loss included in interest expense	1.4		1.4
Income tax effect	(0.4)		(0.4)
Cash flow hedge, net of tax	1.0		1.0
Defined benefit pension plans and postemployment arrangements:

Amortization of prior service cost	1.2		1.1
Amortization of actuarial losses	0.3		0.2
Income tax effect	(1.7)		(0.9)
Defined benefit pension plans and postemployment arrangements, net of tax	(0.2)		0.4
Foreign currency translation adjustment	(86.3)		51.8

Other Comprehensive Income (Loss)	(85.5)		53.2
TOTAL COMPREHENSIVE INCOME	251.5		297.1
Comprehensive Income Attributed To Noncontrolling Interests	11.2		16.2
COMPREHENSIVE INCOME - OMNICOM GROUP INC.	$	240.3	$	280.9

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended March 31,
	2024		2023
Common Stock, shares	297.2		297.2
Common Stock, par value	$	44.6	$	44.6
ADDITIONAL PAID-IN CAPITAL:
Beginning Balance	492.0		571.1
Net change in noncontrolling interests	24.6		(38.5)
Change in temporary equity	(16.4)		21.3
Share-based compensation	22.1		20.7
Stock issued, share-based compensation	(10.3)		6.1
Ending Balance	512.0		580.7
RETAINED EARNINGS:
Beginning Balance	10,571.5		9,739.3

Net income	318.6		227.5
Common stock dividends declared	(138.8)		(141.3)
Ending Balance	10,751.3		9,825.5
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Beginning Balance	(1,337.6)		(1,437.9)

Other comprehensive income (loss)	(78.3)		53.4
Ending Balance	(1,415.9)		(1,384.5)
TREASURY STOCK:
Beginning Balance	(6,154.2)		(5,665.0)
Stock issued, share-based compensation	13.6		20.4
Common stock repurchased	(181.9)		(305.1)
Ending Balance	(6,322.5)		(5,949.7)
SHAREHOLDERS' EQUITY	3,569.5		3,116.6
NONCONTROLLING INTERESTS:
Beginning Balance	608.8		524.3
Net income	18.4		16.4
Other comprehensive income (loss)	(7.2)		(0.2)
Dividends to noncontrolling interests	(13.3)		(12.5)
Net change in noncontrolling interests	(42.0)		(13.4)

Ending Balance	564.7		514.6

TOTAL EQUITY	$	4,134.2	$	3,631.2

Dividends Declared Per Common Share	$	0.70	$	0.70

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Three Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	337.0	$	243.9
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of right-of-use assets	33.8		34.6
Amortization of intangible assets	25.8		19.3
Amortization of net deferred loss on interest rate swaps	1.4		1.4
Share-based compensation	22.1		20.7
Real estate repositioning costs	—		119.2


Other, net	(5.0)		(10.2)
Use of operating capital	(1,033.6)		(951.0)
Net Cash Used In Operating Activities	(618.5)		(522.1)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(23.1)		(23.1)
Acquisition of businesses and interests in affiliates, net of cash acquired	(801.5)		—

Other, net	(13.7)		(14.5)
Net Cash Used In Investing Activities	(838.3)		(37.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings	645.9		—

Change in short-term debt	0.3		1.0
Dividends paid to common shareholders	(138.8)		(142.3)
Repurchases of common stock	(180.1)		(305.1)
Proceeds from stock plans	2.1		26.3
Acquisition of additional noncontrolling interests	(10.4)		(29.2)
Dividends paid to noncontrolling interest shareholders	(13.3)		(12.5)
Payment of contingent purchase price obligations	(0.5)		(9.2)
Other, net	(21.8)		(8.0)
Net Cash Provided By (Used In) Financing Activities	283.4		(479.0)
Effect of foreign exchange rate changes on cash and cash equivalents	(85.8)		18.4

Net Decrease in Cash and Cash Equivalents	(1,259.2)		(1,020.3)
Cash and Cash Equivalents at the Beginning of Period	4,432.0		4,281.8
Cash and Cash Equivalents at the End of Period	$	3,172.8	$	3,261.5

The accompanying notes to the consolidated financial statements are an integral part of these statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in tables in millions, except per share amounts)

1. Presentation of Financial Statements

The terms “Omnicom,” “the Company,” “we,” “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying unaudited consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures have been condensed or omitted.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, in all material respects, of the information contained herein. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, or 2023 10-K. Results for the interim periods are not necessarily indicative of results that may be expected for the year.

Risks and Uncertainties

Global economic challenges, including 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 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.

2. Revenue

Nature of our services

We provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives. Our networks, practice areas and agencies provide a comprehensive range of services in the following fundamental disciplines: Advertising & Media, Precision Marketing, Public Relations, Healthcare, Branding & Retail Commerce, Experiential, and Execution & Support. Advertising & Media includes creative services across digital and traditional media, strategic media planning and buying, performance media and data analytics services. Precision Marketing includes digital and direct marketing, digital transformation consulting, e-commerce operations, media execution, market intelligence and data and analytics. Public Relations services include corporate communications, crisis management, public affairs and media and media relations services. Healthcare includes corporate communications and advertising and media services to global healthcare and pharmaceutical companies. Branding & Retail Commerce services include brand and product consulting, strategy and research and retail marketing. Experiential marketing services include live and digital events and experience design and execution. Execution & Support includes field marketing, sales support, digital and physical merchandising, point-of-sale and product placement, as well as other specialized marketing and custom communications services. At the core of all our services is the ability to create or develop a client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums.

Economic factors affecting our revenue

Global economic conditions have a direct impact on our revenue. Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue.

Revenue by discipline:


	Three Months Ended March 31,
	2024		2023
Advertising & Media	$	1,906.8	$	1,776.5
Precision Marketing	438.2		360.0
Public Relations	390.3		375.5
Healthcare	323.6		318.4
Branding & Retail Commerce	200.2		209.6
Experiential	159.9		147.8
Execution & Support	211.5		255.5
Revenue	$	3,630.5	$	3,443.3

Revenue by geographic market:


	Three Months Ended March 31,
	2024		2023
Americas:
North America	$	2,040.9	$	1,926.8
Latin America	96.5		74.0
EMEA:
Europe	1,005.8		951.9
Middle East and Africa	79.6		84.9
Asia-Pacific	407.7		405.7
Revenue	$	3,630.5	$	3,443.3

The Americas is comprised of North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA is comprised of Europe, the Middle East and Africa. Asia-Pacific includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States for the three months ended March 31, 2024, and 2023 was $1,925.9 million and $1,812.2 million, respectively.

Contract balances

Contract balances include work in process and customer advances, which primarily consist of advance billings to customers in accordance with the terms of the client contracts, primarily for the reimbursement of third-party costs.


	March 31, 2024		December 31, 2023		March 31, 2023
Work in process:

Media and production costs	$	788.8	$	664.4	$	710.9
Unbilled fees and costs and contract assets	922.8		678.1		798.0
Work in process	$	1,711.6	$	1,342.5	$	1,508.9
Customer advances	$	1,238.2	$	1,356.2	$	1,279.6

There were no impairment losses to work in process recorded in the three months ended March 31, 2024 and 2023.

3. Net Income per Share

Basic and diluted net income per share:


	Three Months Ended March 31,
	2024		2023
Net Income - Omnicom Group Inc.	$	318.6	$	227.5


Weighted Average Shares (millions):
Basic	197.9		202.2
Dilutive stock options and restricted shares	2.2		2.3
Diluted	200.1		204.5


Net Income per Share - Omnicom Group Inc.:
Basic	$1.61		$1.13
Diluted	$1.59		$1.11

4. Business Combinations

On January 2, 2024, we acquired Flywheel Digital, the digital commerce business of Ascential plc, for a net cash purchase price of approximately $845 million. The financial statements of Flywheel Digital are included in our consolidated financial statements as of and for the period ended March 31, 2024. The acquisition of Flywheel Digital did not have a material effect on our financial position or results of operations in the three months ended March 31, 2024 and is not expected to do so for the remainder of the year. The principal tangible assets and liabilities acquired were net working capital, and the intangible assets acquired were primarily comprised of customer relationships, intellectual property, trade name and goodwill. The allocation of the purchase price to the underlying assets is undergoing a formal valuation process that is not yet complete. As a result, as of March 31, 2024, we estimated amortizable intangible assets to be $182.6 million. We will likely revise this estimate, however, we do not expect any changes to be material to our financial position and results of operations.

5. Goodwill and Intangible Assets

Change in goodwill:


	Three Months Ended March 31,
	2024		2023
January 1	$	10,082.3	$	9,734.3
Acquisitions	688.3		—


Dispositions	(5.9)		(1.4)
Foreign currency translation	(70.9)		59.7
March 31	$	10,693.8	$	9,792.6

The increase in goodwill during the three months ended March 31, 2024 is primarily attributable to the acquisition of Flywheel Digital. There were no goodwill impairment losses recorded in the three months ended March 31, 2024 and 2023, and there are no accumulated goodwill impairment losses.

Intangible assets:


	March 31, 2024						December 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value



Acquired intangible assets and internally developed strategic platform assets	$	1,084.3	$	(585.6)	$	498.7	$	902.6	$	(572.9)	$	329.7
Other purchased and internally developed software

SEC Form 10-Q filed by Omnicom Group Inc.