What changed in this filing

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Item 1. Financial Statements

2024-07-17 compared with 2024-04-17 · 86 added, 61 removed, 405 unchanged (27% of the section changed)

4 unchanged sentences

(In millions)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current Assets:

43 unchanged sentences

(In millions, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 2024 2023

REVENUE $ 3,853.8 $ 3,609.9 $ 7,484.3 $ 7,053.2

2 unchanged sentences

Occupancy and other costs 314.2 297.7 628.3 589.3

Real estate repositioning costs — 119.2

Real estate and other repositioning costs 57.8 72.3 57.8 191.5

Gain on disposition of subsidiary — ( 78.8 ) — ( 78.8 )

Cost of services 3,172.1 2,909.0 6,178.8 5,862.7

23 unchanged sentences

(In millions)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 2024 2023

NET INCOME $ 348.2 $ 383.2 $ 685.2 $ 627.1

20 unchanged sentences

(In millions, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 2024 2023

COMMON STOCK - Shares 297.2 297.2 297.2 297.2

36 unchanged sentences

(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Amortization of intangible assets 52.1 38.6

Amortization of net deferred loss on interest rate swaps 1.4 1.4

Share-based compensation 44.7 41.1

Real estate repositioning costs — 119.2

Real estate and other repositioning costs 57.8 191.5

Gain on disposition of subsidiary — ( 78.8 )

Other, net ( 6.4 ) ( 5.7 )

5 unchanged sentences

Other, net ( 13.7 ) 178.7

Net Cash Used In Investing Activities ( 838.3 ) ( 37.6 )

Net Cash (Used In) Provided By Investing Activities ( 866.3 ) 132.6

CASH FLOWS FROM FINANCING ACTIVITIES:

47 unchanged sentences

Revenue by discipline:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Advertising & Media $ 2,046.8 $ 1,911.5 $ 3,953.6 $ 3,688.0

7 unchanged sentences

Revenue by geographic market:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

North America $ 2,148.4 $ 1,978.8 $ 4,189.3 $ 3,905.6

7 unchanged sentences

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.

Revenue in the United States for the three months ended June 30, 2024, and 2023 was $ 2,033.4 million and $ 1,850.6 million, respectively, and revenue in the United States for the six months ended June 30, 2024, and 2023 was $ 3,959.3 million and $ 3,662.8 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

June 30, 2024 December 31, 2023 June 30, 2023

Work in process:

3 unchanged sentences

Customer advances $ 1,262.1 $ 1,356.2 $ 1,159.7

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

There were no work in process impairment charges recorded in the six months ended June 30, 2024 and 2023.

Net Income per Share

Basic and diluted net income per share:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Income - Omnicom Group Inc.

9 unchanged sentences

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 financial statements of Flywheel Digital are included in our consolidated financial statements as of and for the period ended June 30, 2024.

The acquisition of Flywheel Digital did not have a material effect on our financial position or results of operations in the three and six months ended June 30, 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.

We expect goodwill attributed to the U.S.

operations of Flywheel Digital to be tax deductible.

The allocation of the purchase price to the underlying assets is undergoing a formal valuation process and is substantially complete.

As a result, as of June 30, 2024, we estimated amortizable intangible assets to be $ 182.6 million.

We do not expect any changes arising from the completion of the purchase price allocation to be material to our financial position or results of operations.

Goodwill and Intangible Assets

Change in goodwill:

Three Months Ended March 31,

Six Months Ended June 30,

January 1 $ 10,082.3 $ 9,734.3

Acquisitions 657.5 3.2

Noncontrolling interests in acquired businesses 10.7 —

Contingent purchase price obligations of acquired businesses — 3.3

Dispositions ( 5.9 ) ( 118.6 )

1 unchanged sentence

$ 10,646.5 $ 9,703.4

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.

The increase in goodwill during the six months ended June 30, 2024 is primarily attributable to the acquisition of Flywheel Digital.

There were no goodwill impairment losses recorded in the six months ended June 30, 2024 and 2023, and there are no accumulated goodwill impairment losses.

Intangible assets:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Value Accumulated

7 unchanged sentences

Amortization of intangible assets:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Acquired intangible assets and internally developed strategic platform assets $ 21.5 $ 14.7 $ 43.0 $ 29.5

1 unchanged sentence

Amortization Expense $ 26.3 $ 19.3 $ 52.1 $ 38.6

We completed our annual goodwill impairment test as of May 1, 2024.

The market assumptions used in our assessment reflected the current economic environment (see Note 1- Risks and Uncertainties ).

Based on the results of our impairment test, we concluded that at May 1, 2024 our goodwill was not impaired.

Credit Facilities

We have a $ 2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, terminating on June 2, 2028 .

On January 3, 2024, we entered into a $ 600 million Delayed Draw Term Loan Agreement, or Term Loan Facility, terminating on December 31, 2026.

Our $ 2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility terminates on June 2, 2028 .

The $ 600 million Delayed Draw Term Loan Agreement, or Term Loan Facility automatically terminated on July 15, 2024 .

We have the ability to issue up to $ 2 billion of U.S.

Dollar denominated commercial paper and issue up to the equivalent of $ 500 million in British Pounds or Euro under a Euro commercial paper program.

During the three months ended March 31, 2024, there were no drawings under the Credit Facility or the Term Loan Facility, and no commercial paper issuances.

In addition, certain of our international subsidiaries have uncommitted credit lines, aggregating $ 507.0 million, that are guaranteed by Omnicom.

During the three months ended June 30, 2024, there were no drawings under the Credit Facility or the Term Loan Facility, and no commercial paper issuances.

In addition, certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom, aggregating $ 503.5 million.

All of these facilities provide additional liquidity sources for operating capital and general corporate purposes.

The Credit Facility and Term Loan Facility each contain a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period.

At March 31, 2024, we were in compliance with this covenant as our Leverage Ratio was 2.5 times.

The Credit Facility and Term Loan Facility do not limit our ability to declare or pay dividends or repurchase our common stock.

The Credit Facility has and Term Loan Facility had a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period.

At June 30, 2024, we were in compliance with this covenant as our Leverage Ratio was 2.6 times.

The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

Short-term debt of $ 11.2 million and $ 10.9 million at March 31, 2024 and December 31, 2023, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries.

Short-term debt of $ 15.1 million and $ 10.9 million at June 30, 2024 and December 31, 2023, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries.

Due to the short-term nature of this debt, carrying value approximates fair value.

1 unchanged sentence

Long-term debt:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

3.65 % Senior Notes due 2024

15 unchanged sentences

Long-Term Debt $ 5,489.4 $ 4,889.1

On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued € 600 million 3.70 % Senior Notes due 2032.

On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued € 600 million 3.70 % Senior Notes due 2032, or 2032 Notes.

The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $ 643.1 million.

Omnicom has fully and unconditionally guaranteed the obligations of OFH.

Our 2.45 % Senior Notes due 2030, 4.20 % Senior Notes due 2030 and 2.60 % Senior Notes due 2031 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

5 unchanged sentences

Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully, and unconditionally guaranteed the obligations of OFH with respect to the € 500 million 0.80 % Senior Notes due 2027 and the € 500 million 1.40 % Senior Notes due 2031, and Omnicom has fully and unconditionally guaranteed the obligations of OFH with respect to the € 600 million 3.70 % Senior Notes due 2032, collectively the Euro Notes.

OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, Australia, and other countries in the Asia-Pacific region.

18 unchanged sentences

Americas EMEA Asia-Pacific

March 31, 2024

June 30, 2024

Revenue - Three months ended

$ 2,254.8 $ 1,167.5 $ 431.5

Revenue - Six months ended

$ 4,392.2 $ 2,252.9 $ 839.2

Long-lived assets and goodwill $ 8,038.9 $ 3,773.3 $ 709.7

March 31, 2023

June 30, 2023

Revenue - Three months ended

$ 2,063.4 $ 1,108.2 $ 438.3

Revenue - Six months ended

$ 4,064.2 $ 2,145.0 $ 844.0

Long-lived assets and goodwill $ 7,521.9 $ 3,431.1 $ 706.5

Our effective tax rate for the three months ended March 31, 2024 increased period-over-period to 25.7 % from 25.5 %.

The effective tax rate for three months ended March 31, 2024 includes the favorable impact from the resolution of certain non-U.S.

Our effective tax rate for the six months ended June 30, 2024 decreased period-over-period to 26.0 % from 26.4 %.

The effective tax rate for six months ended June 30, 2024 includes the favorable impact from the resolution of certain non-U.S.

tax positions of $ 7.5 million.

The effective tax rate for the three months ended March 31, 2023 includes the favorable impact from the resolution of certain tax positions of approximately $ 10.0 million of previously unrecognized tax benefits, partially offset by approximately $ 6.0 million related to a lower tax benefit in certain jurisdictions for the real estate repositioning costs in the quarter, and an increase in the U.K.

statutory tax rate.

The Inflation Reduction Act of 2022, or IRA, levies a 1% excise tax on net stock repurchases after December 31, 2022.

The excise tax is recorded as a cost of acquiring treasury stock and is not material.

Additionally, the IRA imposes a 15% corporate alternative minimum tax, or CAMT, for tax years beginning after December 31, 2022.

The CAMT does not have a material impact on our results of operations or financial position.

The effective tax rate for the six months ended June 30, 2023 includes an increase of approximately $ 10.7 million in income tax expense related to a lower tax benefit in certain jurisdictions for the real estate and other repositioning costs in the period and an increase in the U.K.

statutory tax rate, partially offset by approximately $ 10.0 million of favorable impacts from the resolution of certain non-U.S.

tax positions.

Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development, or OECD.

3 unchanged sentences

We are continuing to monitor the pending implementation of Pillar Two by individual countries and the potential effects of Pillar Two on our business.

We do not expect the provisions effective in 2024 to have a materially adverse impact on our results of operations, financial position or cash flows.

At March 31, 2024, our unrecognized tax benefits were $ 168.7 million.

The provisions effective in 2024 do not have a materially adverse impact on our results of operations, financial position, or cash flows.

At June 30, 2024, our unrecognized tax benefits were $ 176.7 million.

Of this amount, approximately $ 170.3 million would affect our effective tax rate upon resolution of the uncertain tax positions.

3 unchanged sentences

Postemployment Arrangements

Three Months Ended March 31,

Six Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

5 unchanged sentences

Total net periodic benefit expense $ 4.2 $ 6.9 $ 6.8 $ 6.4

We contributed $ 0.1 million to our defined benefit pension plans in each of the three months ended March 31, 2024 and 2023.

Real Estate Repositioning Costs

In the six months ended June 30, 2024 and 2023, we contributed $ 0.1 million and $ 0.3 million to our defined benefit pension plans, respectively.

Real Estate and Other Repositioning Costs

In connection with our strategic initiatives, for the three and six months ended June 30, 2024, operating expenses included $ 57.8 million ($ 42.9 million after-tax) in the second quarter of 2024 primarily reflecting severance actions related to ongoing efficiency initiatives including strategic agency consolidation in our smaller international markets and the launch of our centralized production strategy.

There were no significant real estate repositioning charges during the three and six months ended June 30, 2024.

In connection with the transition to a flexible working environment, a hybrid model which allows for partial remote work, we took certain actions in the first quarter of 2023 to reduce and reposition our office lease portfolio.

As a result, for the three months ended March 31, 2023, operating expenses included $ 119.2 million ($ 91.0 million after tax), primarily related to non-cash impairment charges for the operating lease right-of-use, or ROU, assets.

In the second quarter of 2023, as a result of our continuing efforts to increase efficiencies and relevant skill sets to meet client demands, we incurred severance charges and other exit costs associated with rebalancing our workforce and consolidating operations in certain markets.

As a result, for the three and six months ended June 30, 2023, operating expenses included $ 72.3 million ($ 54.5 million after-tax) primarily related to severance actions in the second quarter of 2023 and $ 191.5 million ($ 145.5 million after-tax), respectively, related to non-cash impairment charges for the operating lease right-of-use, or ROU, assets, severance charges, and other exit costs.

Substantially all of the operating lease payments related to the ROU assets will be paid out over two years.

There were no real estate repositioning charges during the three months ended March 31, 2024.

Disposition of Subsidiaries

In April 2023, we disposed of certain research businesses included in our Execution & Support discipline.

As a result, for the three and six months ended June 30, 2023, we recorded a pretax gain of $ 78.8 million.

The disposition did not have a material impact on our ongoing results of operations or financial position.

Supplemental Cash Flow Data

Change in operating capital:

Three Months Ended March 31,

Six Months Ended June 30,

(Increase) decrease in accounts receivable $ 340.2 $ 584.6

5 unchanged sentences

Supplemental financial information:

Three Months Ended March 31,

Income taxes paid $ 306.4 $ 289.1

10 unchanged sentences

Currency Translation Total

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

January 1 $ ( 8.1 ) $ ( 42.7 ) $ ( 1,286.8 ) $ ( 1,337.6 )

3 unchanged sentences

$ ( 6.2 ) $ ( 42.1 ) $ ( 1,397.2 ) $ ( 1,445.5 )

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

January 1 $ ( 12.1 ) $ ( 41.3 ) $ ( 1,384.5 ) $ ( 1,437.9 )

10 unchanged sentences

Financial assets and liabilities measured at fair value on a recurring basis:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

7 unchanged sentences

Changes in contingent purchase price obligations:

Three Months Ended March 31,

Six Months Ended June 30,

January 1 $ 229.5 $ 115.0

5 unchanged sentences

Carrying amount and fair value of our financial assets and liabilities:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Value Carrying

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements