Omnicom Group Inc (OMC) reported fourth-quarter 2013 net income of $300.5 million or $1.13 per share versus $307.1 million or $1.13 in the year-ago quarter. The reported earnings were affected by $13.3 million pre-tax charges following Omnicom's proposed merger with Publicis Groupe, S.A.
Net income for 2013 stood at $991.1 million or $3.71 per share versus $998.3 million or $3.61 in the year-ago quarter.
Excluding the merger-related expenses, non-GAAP net income for the reported quarter stood at $313.8 million or 1.18 per share compared with $307.1 million or $1.13 per share in the year-ago quarter. The adjusted earnings beat the Zacks Consensus Estimate of $1.16 per share.
Excluding the merger-related expenses Omnicom's non-GAAP net income for 2013 was $1,026.0 million or $ 3.84 per share versus $998.3 million or $3.61 in the year-ago period. The adjusted earnings beat the Zacks Consensus Estimate of $3.83 per share
Revenues
Quarterly revenues rose 2.9% year over year to $4,058.1 million, exceeding the Zacks Consensus Estimate of $4,033 million. From a geographical perspective, domestic revenues rose 1.6% to $2,058.6 million. International revenues increased 4.3% year over year to $1,999.5 million.
Increased revenues were primarily driven by 4.2% revenue rise in organic growth, partly offset by 0.7% revenue decline in acquisitions, net of dispositions and 0.6% drop in revenues due to foreign currency translation effects.
Revenues for 2013 edged up 2.6% year over year to $14,584.5 million and exceeded the Zacks Consensus Estimate of $14,565 million.
Domestic revenues for 2013 increased 2.8% year over year to $7,569.7 million. International revenue for 2013 increased 2.3% year over year to $7,014.8 million.
Increased revenues were primarily driven by 3.5% revenue rise in organic growth, partly offset by 0.3% revenue decline in acquisitions, net of dispositions and 0.6% drop in revenues due to foreign currency translation effects.
Excluding the impact of merger-related expenses, non-GAAP earnings before interest, taxes and amortization (EBITA) for the reported quarter improved 2.6% year over year to $589.0 million, while non-GAAP operating income rose 3.0% to $564.5 million.
Revenues by Segment
By segment, organic revenues for Advertising was up 4.1% to $1,992.4 million; CRM (customer relationship management) organic revenues increased 6.8% year over year to $1,445.5 million; PR (public relations) organic revenues of $340.8 million were down 3.7% year over year; and Specialty organic revenues of $279.4 million increased 2.5% year over year.
Balance Sheet & Cash Flow
Omnicom generated free cash flow of $1,457.7 million for 2013 versus $1,426.1 million in the year-ago period. The company had a total debt of $4,040 million as of Dec 31, 2013 compared with $4,455 million in the year-ago period. Cash and short-term investments aggregated $2,729 million at year-end compared with $2,699 million in the prior year period.
Omnicom declared a quarterly dividend of 40 cents per share payable on Apr 1, 2014 to shareholders of record at the close of business on Mar 4, 2014. Omnicom also has a share buyback program in place, under which it repurchased shares worth $485.2 million during 2013.
Omnicom has a track record of winning new clients while receiving additional deals from the existing ones. The company’s business mix is well diversified geographically and benefits largely from growing markets.
Omnicom currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth considering in the industry include Millennial Media Inc. (MM), Huron Consulting Group Inc (HURN) and Accenture plc (ACN), each carrying a Zacks Rank #2 (Buy).
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