OMNICOM GROUP INC

Previous wording

Given our size and breadth, we manage our business by monitoring several financial indicators. The key performance indicators we focus on are revenue growth, operating income, and EBITA (defined as operating income before amortization of acquired intangible assets and internally developed strategic platform assets) and EBITA margin (defined as EBITA divided by revenue). We analyze revenue growth by reviewing the components and mix of the growth, including growth by principal regional market, practice area and marketing discipline, the impact from foreign currency exchange rate changes, growth from acquisitions, net of dispositions, and growth from our largest clients. Variability in operating expenses is analyzed in the following categories: cost of services, selling, general and administrative expenses, or SG&A, and depreciation and amortization.

Current wording

Given our size and breadth, we manage our business by monitoring several financial indicators. The key performance indicators we focus on are revenue growth, operating income, and EBITA (defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets) and EBITA margin (defined as EBITA divided by revenue). We analyze revenue growth by reviewing the components and mix of the growth, including growth by principal regional market, practice area and marketing discipline, the impact from foreign currency exchange rate changes, growth from acquisitions, net of dispositions, and growth from our largest clients. Variability in operating expenses is analyzed in the following categories: cost of services, selling, general and administrative expenses, or SG&A, and depreciation and amortization.

Previous wording

Worldwide revenue for the three months ended March 31, 2024, increased $187.2 million, or 5.4%, to $3,630.5 million, compared to $3,443.3 million in the prior year quarter. Worldwide organic revenue growth (defined below) increased revenue $136.9 million, or 4.0%, primarily reflecting increased client spending in our Advertising & Media, Precision Marketing, Experiential, and Healthcare disciplines and most geographic markets compared to the prior year period. Changes in foreign exchange rates period-over-period reduced revenue $2.7 million, or 0.1%. Acquisition revenue, net of disposition revenue, increased revenue $53.0 million, or 1.5%, primarily related to the purchase of Flywheel Digital in January 2024 (see Note 4 to the unaudited consolidated financial statements) and acquisition activity in the second half of 2023, partially offset by dispositions in the Execution & Support discipline in the first half of 2023.

Current wording

Worldwide revenue for the six months ended June 30, 2024 increased $431.1 million, or 6.1%, to $7,484.3 million, compared to $7,053.2 million in the prior year quarter. Worldwide organic revenue growth increased revenue $325.2 million, or 4.6%, primarily reflecting increased client spending in our Advertising & Media, Precision Marketing, Experiential, and Healthcare disciplines and in all of our major geographic markets compared to the prior year period. Changes in foreign exchange rates period-over-period reduced revenue $40.1 million, or 0.6%. Acquisition revenue, net of disposition revenue, increased revenue $146.0 million, or 2.1%, primarily related to the purchase of Flywheel Digital in January 2024 (see Note 4 to the unaudited consolidated financial statements) and acquisition activity in the second half of 2023, partially offset by dispositions in the Execution & Support discipline in the first half of 2023.

Previous wording

A summary of our consolidated results of operations period-over-period is:

Current wording

A summary of our consolidated results of operations period-over-period:

Previous wording

Beginning with the three months ended March 31, 2024, EBITA is defined as operating income before amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year period to be consistent with the revised definition, which reduced EBITA from previously reported amounts. We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods.

Current wording

Beginning with the three months ended March 31, 2024, EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year period to be consistent with the revised definition, which reduced EBITA from previously reported amounts. We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods, the after-tax impact of which on diluted net income per share- Omnicom Group Inc. for the three and six months ended June 30, 2024 was $0.08 and $0.16, respectively, and for the three and six months ended June 30, 2023 was $0.05 and $0.11, respectively.

Previous wording

As a leading global advertising, marketing and corporate communications company, we operate in all major markets and have a large and diverse client base. For the twelve months ended March 31, 2024, our largest client accounted for 3.0% of our revenue, and our 100 largest clients, which represent many of the world’s major marketers, accounted for approximately 53.8% of our revenue. Our clients operate in virtually every sector of the global economy with no one industry representing more than 16% of our revenue for the three months ended March 31, 2024. Although our revenue is generally balanced between the United States and international markets, and we have a large and diverse client base, we are not immune to general economic downturns.

Current wording

As a leading global advertising, marketing and corporate communications company, we operate in all major markets and have a large and diverse client base. For the twelve months ended June 30, 2024, our largest client accounted for 2.9% of our revenue, and our 100 largest clients, which represent many of the world’s major marketers, accounted for approximately 53.6% of our revenue. Our clients operate in virtually every sector of the global economy with no one industry representing more than 17% of our revenue for the six months ended June 30, 2024. Although our revenue is generally balanced between the United States and international markets, and we have a large and diverse client base, we are not immune to general economic downturns.

Previous wording

The period-over-period change in results of operations were:

Current wording

The period-over-period change in results of operations:

Previous wording

Beginning with the three months ended March 31, 2024, EBITA is defined as operating income before amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year period to be consistent with the revised definition, which reduced EBITA from previously reported amounts. We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods.

Current wording

Beginning with the three months ended March 31, 2024, EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year period to be consistent with the revised definition, which reduced EBITA from previously reported amounts. We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods, the after-tax impact of which on diluted net income per share- Omnicom Group Inc. for the three and six months ended June 30, 2024 was $0.08 and $0.16, respectively, and for the three and six months ended June 30, 2023 was $0.05 and $0.11, respectively.

Previous wording

The components of period-over-period revenue change in the United States (“Domestic”) and the remainder of the world (“International”) were:

Current wording

The components of period-over-period revenue change in the United States (“Domestic”) and the remainder of the world (“International”):

Previous wording

•Foreign exchange rate impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case $3,633.2 million for the Total column). The foreign exchange impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue ($3,630.5 million less $3,633.2 million for the Total column).

Current wording

•Foreign exchange rate impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case $3,891.2 million and $7,524.4 million for the Total column for the three and six months ended June 30, 2024, respectively). The foreign exchange impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue ($3,853.8 million less $3,891.2 million and $7,484.3 million less $7,524.4 million for the Total column for the three and six months ended June 30, 2024, respectively).

Previous wording

•The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($3,443.3 million for the Total column).

Current wording

•The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($3,609.9 million and $7,053.2 million for the Total column for the three and six months ended June 30, 2024, respectively).

Previous wording

Changes in the value of foreign currencies against the U.S. Dollar affect our results of operations and financial position. For the most part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact on operating margin is minimized. Assuming exchange rates at April 12, 2024 remain unchanged, we expect the impact of changes in foreign exchange rates will reduce revenue in the second quarter by 1.0% and be flat for the year. Based on our acquisition and disposition activity to date, we expect that the net impact will increase revenue by 2.5% for the second quarter and 2.0% for the full year.

Current wording

Changes in the value of foreign currencies against the U.S. Dollar affect our results of operations and financial position. For the most part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact on operating margin is minimized. Assuming exchange rates at July 15, 2024 remain unchanged, we expect the impact of changes in foreign exchange rates will reduce revenue in both the third quarter and for the full year by 0.5%. Based on our acquisition and disposition activity to date, we expect that the net impact will increase revenue by 1.5% for both the third quarter and for the full year.

Previous wording

The period-over-period change in revenue and organic growth by discipline was:

Current wording

The period-over-period change in revenue and organic growth by discipline:

Previous wording

The period-over-period change in worldwide revenue for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, in our fundamental disciplines was: Advertising & Media increased $130.3 million, Precision Marketing increased $78.2 million, Public Relations increased $14.8 million, Healthcare increased $5.2 million, Branding & Retail Commerce decreased $9.4 million, Experiential increased $12.1 million, and Execution & Support decreased $44.0 million. Worldwide organic revenue growth increased revenue $136.9 million, or 4.0%, primarily reflecting increased client spending in Advertising & Media, led by our Media, Precision Marketing, Experiential, and Healthcare disciplines compared to the prior year period. Changes in foreign exchange rates period-over-period reduced revenue $2.7 million, or 0.1%. The decrease in revenue from foreign exchange translation was primarily related to the weakening of several currencies against the U.S. Dollar, substantially offset by the strengthening of the British Pound and Euro against the U.S. Dollar. Acquisition revenue, net of disposition revenue, increased revenue $53.0 million, or 1.5%, primarily related to the purchase of Flywheel Digital in January 2024, which is included in our Precision Marketing discipline, and acquisition activity in the second half of 2023.

Current wording

The period-over-period change in worldwide revenue for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, in our fundamental disciplines was: Advertising & Media increased $265.6 million, Precision Marketing increased $148.0 million, Public Relations increased $39.4 million, Healthcare increased $9.0 million, Branding & Retail Commerce decreased $20.6 million, Experiential increased $33.8 million, and Execution & Support decreased $44.1 million. Worldwide organic revenue growth increased revenue $325.2 million, or 4.6%, primarily reflecting increased client spending in Advertising & Media, led by our Media, as well as Experiential, Precision Marketing and Healthcare disciplines compared to the prior year period. Changes in foreign exchange rates period-over-period reduced revenue $40.1 million, or 0.6%. The decrease in revenue from foreign exchange translation was primarily related to the weakening of some currencies, including the Japanese Yen and Australian Dollar, against the U.S. Dollar, partially offset by the strengthening of the British Pound against the U.S. Dollar. Acquisition revenue, net of disposition revenue, increased revenue $146.0 million, or 2.1%, primarily related to the purchase of Flywheel Digital in January 2024, which is included in our Precision Marketing discipline, and acquisition activity in the later second half of 2023.

Previous wording

In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors. Under our client-centric approach, we seek to broaden our relationships with all of our clients. Our largest client represented 3.0% and 2.7% of revenue for the twelve months ended March 31, 2024 and 2023, respectively. Our ten largest and 100 largest clients represented 20.0% and 53.8% of revenue for the twelve months ended March 31, 2024, respectively, and 19.3% and 52.7% of revenue for the twelve months ended March 31, 2023, respectively.

Current wording

In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors. Under our client-centric approach, we seek to broaden our relationships with all of our clients. Our largest client represented 2.9% and 2.8% of revenue for the twelve months ended June 30, 2024 and 2023, respectively. Our ten largest and 100 largest clients represented 19.7% and 53.6% of revenue for the twelve months ended June 30, 2024, respectively, and 19.8% and 53.6% of revenue for the twelve months ended June 30, 2023, respectively.

Previous wording

The period-over-period change in revenue and organic growth in our geographic markets was:

Current wording

The period-over-period change in revenue and organic growth in our geographic markets:

Previous wording

In North America, organic revenue growth for the three months ended March 31, 2024 was primarily driven by strong performance in the United States, especially in the Advertising & Media discipline, led by our media business, and our Precision Marketing, Healthcare and Experiential disciplines, partially offset by negative performance in our Execution & Support discipline, which faced difficult comparisons to the prior year period, and our Branding & Retail Commerce discipline. Acquisitions net of dispositions positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisitions in the prior year in our Public Relations discipline, partially offset by dispositions in the Execution & Support discipline in the prior year.

Current wording

In North America, organic revenue growth period-over-period for the three and six months ended June 30, 2024 was primarily driven by strong performance in the United States, especially in the Advertising & Media discipline, led by our media business, and our Precision Marketing, Healthcare, Experiential, and Public Relations disciplines. Our U.S. Public Relations discipline was helped by spending on the upcoming election cycle. The organic growth was partially offset by underperformance in Canada, and by negative performance in our Execution & Support and Branding & Retail Commerce disciplines in the region. Acquisitions net of dispositions positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisitions in the prior year in our Public Relations discipline. In the six months ended June 30, 2024, the acquisition growth was partially offset by dispositions in the Execution & Support discipline.

Previous wording

In Latin America, organic revenue for the three months ended March 31, 2024 increased in substantially all our disciplines, led by Advertising & Media, and in all countries in the region, compared to the prior year period. The strengthening of most currencies, especially the Colombian Peso, Brazilian Real and Mexican Peso against the U.S. Dollar, partially offset by the weakening of the Chilean Peso and Argentine Peso, increased revenue in the three months ended March 31, 2024 compared to the same period in 2023. Acquisitions positively impacted revenue and were primarily related to acquisition activity in our Advertising & Media discipline during the prior year.

Current wording

In Latin America, organic revenue growth for the three and six months ended June 30, 2024 increased in all our disciplines, led by Advertising & Media, and in all countries in the region, compared to the prior year period. The weakening of several currencies against the U.S. Dollar decreased revenue in the three and six months ended June 30, 2024 compared to the same period in 2023. Acquisitions positively impacted revenue and were primarily related to acquisition activity in our Advertising & Media discipline during the prior year.

Previous wording

Experiential disciplines, which faced difficult comparisons to the prior year period. Foreign currency changes increased revenue for the three months ended March 31, 2024, primarily as a result of the strengthening of the British Pound and Euro against the U.S. Dollar period-over-period. Acquisitions, net of dispositions positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisition activity in our Advertising & Media discipline, partially offset by the impact of dispositions in our Execution & Support discipline in the second half of the prior year.

Current wording

In Europe, compared to the prior year period, organic revenue for the three and six months ended June 30, 2024 increased in most countries and disciplines driven by strong performance in our Advertising & Media discipline, led by our media business, and in our Execution & Support, Precision Marketing and Healthcare disciplines, partially offset by under performance in our Public Relations discipline. Foreign currency changes decreased revenue for the three months ended June 30, 2024, primarily as a result of the weakening of the Euro against the U.S. Dollar period-over-period. Foreign currency changes increased revenue for the six months ended June 30, 2024, primarily as a result of the strengthening of the British Pound against the U.S. Dollar period-over-period. Acquisitions, net of dispositions for the three and six months ended June 30, 2024 positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisition activity in our Advertising & Media discipline in the prior year.

Previous wording

In the U.K., organic revenue growth for the three months ended March 31, 2024 of 3.2% was led by our Advertising & Media and Healthcare disciplines, partially offset by weakness in our Precision Marketing discipline. In Continental Europe, which includes the Euro Zone and the other European countries, organic growth for the three months ended March 31, 2024 of 3.5% was led by Italy, Germany, and Spain and in most disciplines, except for Experiential, which faced difficult comparisons to the prior year period.

Current wording

In the U.K., organic revenue growth period-over-period for the three and six months ended June 30, 2024 of 6.9% and 5.1%, respectively, was led by our Advertising & Media and Experiential disciplines, partially offset by weakness in our Public Relations and Precision Marketing disciplines. In Continental Europe, which includes the Euro Zone and the other European countries, organic growth for the three and six months ended June 30, 2024 of 4.5% and 4.0%, respectively, was led by Germany, Italy, Netherlands and Spain and in most disciplines, partially offset by under performance in our Public Relations discipline.

Previous wording

In the Middle East and Africa for the three months ended March 31, 2024, organic revenue decreased period-over-period, primarily as a result of decreases in our Advertising & Media discipline, which faced a difficult comparison in the region.

Current wording

In the Middle East and Africa, for the three and six months ended June 30, 2024, organic revenue increased period-over-period, driven by our Experiential discipline and partially offset by decreases in our Advertising & Media discipline, which faced a difficult comparison in the region to the prior year periods.

Previous wording

In Asia-Pacific, organic revenue increased period-over-period for the three months ended March 31, 2024 led by our Advertising & Media discipline. Most major markets in the region, especially China, India, and Japan, had positive organic growth period-over-period. The organic growth in the region was partially offset by an underperformance in Australia and Singapore and the weakening of certain foreign currencies against the U.S. Dollar, especially the Japanese Yen, Australian Dollar, and Chinese Renminbi. Acquisition activity, including the purchase of Flywheel Digital in January 2024, increased revenue in the period compared to the prior year period.

Current wording

In Asia-Pacific, organic revenue was flat period-over-period for the three months ended June 30, 2024 and increased slightly in the six months ended June 30, 2024. Organic growth in our Advertising & Media discipline was partially offset by underperformance in our Experiential discipline, which faced difficult comparisons to the prior year periods. Several major markets in the region, especially Hong Kong and India, had positive organic growth as compared to the prior year periods. The organic growth in the region was partially offset by an underperformance in China, Australia, and Singapore. The weakening of most foreign currencies in the region against the U.S. Dollar, especially the Japanese Yen, Australian Dollar, and Chinese Renminbi, decreased revenue period to period. Acquisition activity, including the purchase of Flywheel Digital in January 2024, increased revenue compared to the prior year periods.

Previous wording

Revenue by type of client industry sector was:

Current wording

Revenue by type of client industry sector:

Previous wording

The period-over-period change in operating expenses was:

Current wording

The period-over-period change in operating expenses:

Previous wording

We measure cost of services in two distinct categories: salary and service costs and occupancy and other costs. As a service business, salary and service costs make up the significant portion of our operating expenses and substantially all these costs comprise the essential components directly linked to the delivery of our services. Salary and service costs include employee compensation and benefits, freelance labor, third-party service costs, and third-party incidental costs. Third-party service costs include vendor costs when we act as principal in providing services to our clients. Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs, which are billed back to the client directly at our cost. Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses. Adverse and beneficial fluctuations in foreign currencies from period to period impact our results of operations and financial position when we translate our financial statements from local foreign currencies to the U.S. Dollar. However, substantially all of our foreign operations transact business in their local currency, mitigating the impact of changes in foreign currency exchange rates on our operating margin percentage. As a result, the changes in our operating expenses period-over-period from foreign currency translation were in line with the percentage impact from changes in foreign currencies on revenue for the three-month period ended March 31, 2024.

Current wording

We measure cost of services in two distinct categories: salary and service costs and occupancy and other costs. As a service business, salary and service costs make up the significant portion of our operating expenses and substantially all these costs comprise the essential components directly linked to the delivery of our services. Salary and service costs include employee compensation and benefits, freelance labor, third-party service costs, and third-party incidental costs. Third-party service costs include vendor costs when we act as principal in providing services to our clients. Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs, which are billed back to the client directly at our cost. Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses. Adverse and beneficial fluctuations in foreign currencies from period to period impact our results of operations and financial position when we translate our financial statements from local foreign currencies to the U.S. Dollar. However, substantially all of our foreign operations transact business in their local currency, mitigating the impact of changes in foreign currency exchange rates on our operating margin percentage. As a result, the changes in our operating expenses period-over-period from foreign currency translation were in line with the percentage impact from changes in foreign currencies on revenue for the three- and six- month periods ended June 30, 2024.

Previous wording

Salary and service costs, which tend to fluctuate with changes in revenue, are comprised of salary and related costs, third-party service costs, and third-party incidental costs. Salary and service costs for the three months ended March 31, 2024 compared to the prior year period increased $149.7 million, or 5.9%, to $2,692.6 million. Salary and related costs for the three months ended March 31, 2024 increased $69.3 million, or 3.9%, to $1,847.3 million. Headcount increased for the three months ended March 31, 2024, primarily as a result of our acquisition of Flywheel Digital. Third-party service costs for the three months ended March 31, 2024 increased $58.9 million, or 9.2%, to $698.2 million, primarily as a result of organic growth. Third-party incidental costs for the three months ended March 31, 2024, increased $21.5 million, or 17.1%, to $147.1 million.

Current wording

Salary and service costs, which tend to fluctuate with changes in revenue, are comprised of salary and related costs, third-party service costs, and third-party incidental costs.

Previous wording

Occupancy and other costs for the three months ended March 31, 2024, which are less directly linked to changes in revenue than salary and service costs, increased by $22.5 million or 7.7% to $314.1 million, primarily resulting from our acquisition activity. Increased occupancy costs were partially offset by lower rent expense in the period.

Current wording

Occupancy and other costs for the three and six months ended June 30, 2024 which are less directly linked to changes in revenue than salary and service costs, increased by $16.5 million, or 5.5%, to $314.2 million and increased by $39.0 million, or 6.6%, to $628.3 million, respectively, primarily resulting from our acquisition activity. Increased occupancy costs were partially offset by lower rent expense in the periods.

Previous wording

SG&A expenses primarily consist of third-party marketing costs, professional fees, and compensation and benefits and occupancy and other costs of our corporate and executive offices, including group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs. SG&A expenses for the three months ended March 31, 2024 compared to the same period in 2023 decreased by $3.9 million.

Current wording

SG&A expenses primarily consist of third-party marketing costs, professional fees, compensation and benefits and occupancy and other costs of our corporate and executive offices, including group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs. SG&A expenses increased for the three and six months ended June 30, 2024 compared to the same period in 2023 by $11.9 million and $8.0 million, respectively primarily due to professional fees related to our acquisitions and investments in strategic initiatives.

Previous wording

Operating income for the three months ended March 31, 2024 compared to the same period in 2023, increased $132.4 million to $478.9 million, and operating margin increased to 13.2% from 10.1%. EBITA increased $139.1 million to $500.4 million, and EBITA margin increased to 13.8% from 10.5%. In the three months ended March 31, 2023, the effect of real estate repositioning costs reduced operating income and EBITA by $119.2 million, and decreased operating margin by 3.4% and EBITA Margin by 3.5%.

Current wording

Operating income for the six months ended June 30, 2024 compared to the same period in 2023, increased $92.0 million to $989.2 million, and operating margin increased to 13.2% from 12.7%. EBITA increased $105.5 million to $1,032.2 million, and EBITA margin increased to 13.8% from 13.1%. The effect of the repositioning actions in the second quarter of 2024 reduced operating income and EBITA by $57.8 million and decreased both operating margin and EBITA margin by 0.8%. The effect of the real estate and other repositioning costs and the gain on disposition of subsidiaries in the six months ended June 30, 2023 reduced both operating income and EBITA by $112.7 million, and reduced both operating margin and EBITA margin by 1.6%.

Previous wording

Net interest expense for the three months ended March 31, 2024 increased $7.5 million period-over-period to $26.8 million. Interest expense on debt for the quarter increased $0.4 million period-over-period to $50.6 million, primarily related to the issuance of €600 million 3.70% Senior Notes due 2032. Interest income in the first quarter of 2024 decreased $8.6 million period-over-period to $27.0 million, principally due to lower cash balances.

Current wording

Interest expense on debt for the three and six months ended June 30, 2024 increased $5.0 million and $5.4 million period-over-period to $56.8 million and $107.4 million, respectively, primarily related to the issuance in the first quarter of 2024 of €600 million 3.70% Senior Notes due 2032, or 2032 Notes.

Previous wording

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. tax positions of $7.5 million. The effective tax rate for the three months ended March 31, 2023 includes the favorable impact 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.

Current wording

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 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.

Previous wording

Net income - Omnicom Group Inc. in the three months ended March 31, 2024 increased $91.1 million to $318.6 million from $227.5 million. The period-over-period increase is due to the factors described above. Diluted net income per share - Omnicom Group Inc. increased to $1.59 in the three months ended March 31, 2024, from $1.11 in the three months ended March 31, 2023, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock. For the three months ended March 31, 2023, the impact of the real estate repositioning costs reduced net income - Omnicom Group Inc. by $91.0 million and diluted net income per share - Omnicom Group Inc. by $0.45.

Current wording

Net income - Omnicom Group Inc. in the three months ended June 30, 2024 decreased $38.2 million to $328.1 million from $366.3 million. The period-over-period decrease is due to the factors described above. Diluted net income per share - Omnicom Group Inc. decreased to $1.65 in the three months ended June 30, 2024, from $1.82 in the three months ended June 30, 2023, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock. For the three months ended June 30, 2024, the impact of repositioning costs reduced net income - Omnicom Group Inc. by $42.9 million and diluted net income per share - Omnicom Group Inc. by $0.22. For the three months ended June 30, 2023, the net impact of the real estate and other repositioning costs and gain on disposition of subsidiaries increased net income - Omnicom Group Inc. by $1.4 million and diluted net income per share - Omnicom Group Inc. by $0.01.

Previous wording

Primary sources of short-term liquidity are net cash provided by operating activities and cash and cash equivalents. Additional liquidity sources include our $2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, with a termination date of June 2, 2028, and our $600 million Delayed Draw Term Loan Agreement, or Term Loan Facility, with a termination date of December 31, 2026. We also 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. In addition, certain of our international subsidiaries have uncommitted credit lines, aggregating $507.0 million, that are guaranteed by Omnicom. Our liquidity sources fund our non-discretionary cash requirements and our discretionary spending.

Current wording

Primary sources of short-term liquidity are net cash provided by operating activities and cash and cash equivalents. Additional liquidity sources include our $2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, terminating on June 2, 2028. We also 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. In addition, certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom, aggregating $503.5 million. Our liquidity sources fund our non-discretionary cash requirements and our discretionary spending. The $600 million Delayed Draw Term Loan Agreement, or Term Loan Facility automatically terminated on July 15, 2024.

Previous wording

Cash and cash equivalents decreased $1.3 billion from December 31, 2023. During the first three months of 2024, we used $618.5 million of cash in operating activities, which included the use for operating capital of $1.0 billion, primarily related to our typical working capital cycle. Discretionary spending for the first three months of 2024 was $1.2 billion, compared to $495.1 million for the first three months of 2023. Discretionary spending for the first three months of 2024 was comprised of capital expenditures of $23.1 million, dividends paid to common shareholders of $138.8 million, dividends paid to shareholders of noncontrolling interests of $13.3 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and related tax benefits and common stock sold to our employee stock purchase plan of $178.0 million,the acquisition of businesses, net of cash acquired, and acquisition of additional shares of noncontrolling interests, and payment of contingent purchase price obligations of $812.4 million. During the first quarter of 2024, we acquired Flywheel Digital for approximately $845 million. 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. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were approximately $643.1 million. The net impact of these transactions reduced cash and cash equivalents by approximately $202 million from December 31, 2023.

Current wording

Cash and cash equivalents decreased $1.7 billion from December 31, 2023. During the first six months of 2024, we used $760.2 million of cash in operating activities, which included the use for operating capital of $1.7 billion, primarily related to our typical working capital cycle. Discretionary spending for the first six months of 2024 was $1.5 billion, compared to $917.8 million for the first six months of 2023. Discretionary spending for the first six months of 2024 was comprised of capital expenditures of $62.3 million, dividends paid to common shareholders of $278.9 million, dividends paid to shareholders of noncontrolling interests of $34.2 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and related tax benefits and common stock sold to our employee stock purchase plan of $246.3 million, the acquisition of businesses, net of cash acquired, primarily attributable to the acquisition of Flywheel Digital and acquisition of additional shares of noncontrolling interests, and payment of contingent purchase price obligations of $829.4 million. Discretionary spending was partially offset by the proceeds from financing activities of approximately $650 million. The impact of foreign exchange rate changes decreased cash and cash equivalents by $108.7 million.

Previous wording

Based on past performance and current expectations, we believe that net cash provided by operating activities and cash and cash equivalents will be sufficient to meet our non-discretionary cash requirements for the next twelve months. In addition, and over the longer term, our Credit Facility and Term Loan Facility are available to fund our working capital and contractual obligations.

Current wording

Based on past performance and current expectations, we believe that net cash provided by operating activities and cash and cash equivalents will be sufficient to meet our non-discretionary cash requirements for the next twelve months. In addition, and over the longer term, our Credit Facility is available to fund our working capital and contractual obligations.

Previous wording

Our regional treasury centers in North America, Europe and Asia manage our cash and liquidity. Each day, operations with excess funds invest those funds with their regional treasury center. Likewise, operations that require funds borrow from their regional treasury center. Treasury centers with excess cash invest on a short-term basis with third parties, with maturities generally ranging from overnight to 90 days. Certain treasury centers have notional pooling arrangements that are used to manage their cash and set-off foreign exchange imbalances. The arrangements require each treasury center to have its own notional pool account and to maintain a notional positive account balance. Additionally, under the terms of the arrangement, set-off of foreign exchange positions are limited to the long and short positions within their own account. To the extent that our treasury centers require liquidity, they have the ability to issue up to a total of $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, or borrow under the Credit Facility, Term Loan Facility or the uncommitted credit lines. This process enables us to manage our debt more efficiently and utilize our cash more effectively, as well as manage our risk to foreign exchange rate imbalances. In countries where we either do not conduct treasury operations or it is not feasible for one of our treasury centers to fund net borrowing requirements on an intercompany basis, we arrange for local currency uncommitted credit lines. We have a policy governing counterparty credit risk with financial institutions that hold our cash and cash equivalents, and we have deposit limits for each institution. In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility, or the Term Loan Facility. These institutions generally have credit ratings equal to or better than our credit ratings. In countries where we do not conduct treasury operations, all cash and cash equivalents are held by counterparties that meet specific minimum credit standards.

Current wording

Our regional treasury centers in North America, Europe and Asia manage our cash and liquidity. Each day, operations with excess funds invest those funds with their regional treasury center. Likewise, operations that require funds borrow from their regional treasury center. Treasury centers with excess cash invest on a short-term basis with third parties, with maturities generally ranging from overnight to 90 days. Certain treasury centers have notional pooling arrangements that are used to manage their cash and set-off foreign exchange imbalances. The arrangements require each treasury center to have its own notional pool account and to maintain a notional positive account balance. Additionally, under the terms of the arrangement, set-off of foreign exchange positions are limited to the long and short positions within their own account. To the extent that our treasury centers require liquidity, they have the ability to issue up to a total of $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, or borrow under the Credit Facility, or the uncommitted credit lines. This process enables us to manage our debt more efficiently and utilize our cash more effectively, as well as manage our risk to foreign exchange rate imbalances. In countries where we either do not conduct treasury operations or it is not feasible for one of our treasury centers to fund net borrowing requirements on an intercompany basis, we arrange for local currency uncommitted credit lines. We have a policy governing counterparty credit risk with financial institutions that hold our cash and cash equivalents, and we have deposit limits for each institution. In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility. These institutions generally have credit ratings equal to or better than our credit ratings. In countries where we do not conduct treasury operations, all cash and cash equivalents are held by counterparties that meet specific minimum credit standards.

Previous wording

At March 31, 2024, our foreign subsidiaries held approximately $1.5 billion of our total cash and cash equivalents of $3.2 billion. Substantially all of the cash is available to us, net of any foreign withholding taxes payable upon repatriation to the United States.

Current wording

At June 30, 2024, our foreign subsidiaries held approximately $1.4 billion of our total cash and cash equivalents of $2.7 billion. Substantially all of the cash is available to us, net of any foreign withholding taxes payable upon repatriation to the United States.

Previous wording

At March 31, 2024, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $1.9 billion to $3.1 billion from December 31, 2023. The increase in net debt primarily resulted from the use of cash of $618.5 million for operating activities, which included the use for operating capital of $1.0 billion, primarily related to our typical working capital requirement during the period, discretionary spending of $1.2 billion, as discussed above, and the net increase from foreign exchange rate changes on cash and cash equivalents and our foreign currency denominated debt of $54.9 million.

Current wording

At June 30, 2024, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $2.3 billion to $3.5 billion from December 31, 2023. The increase in net debt primarily resulted from the use of cash of $760.2 million for operating activities, which included the use for operating capital of $1.7 billion, primarily related to our typical working capital requirement during the period, discretionary spending of $1.5 billion, as discussed above, and the net decrease from foreign exchange rate changes on cash and cash equivalents and our foreign currency denominated debt of $70 million.

Previous wording

On March 6, 2024, OFH issued €600 million 3.70% Senior Notes due 2032. 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.

Current wording

On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued €600 million of the 2032 Notes. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $643.1 million.

Previous wording

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. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFH to obtain funds from their subsidiaries through dividends, loans, or advances. The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFH and each of Omnicom and OCI, as applicable.

Current wording

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% 2032 Notes, 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. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFH to obtain funds from their subsidiaries through dividends, loans, or advances. The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFH and each of Omnicom and OCI, as applicable.

Previous wording

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.

Current wording

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.