) reported third-quarter 2013 net income of $196.0 million
compared with $203.9 million in the year-earlier quarter.
However, earnings per share (EPS) were flat year-over-year at 74
cents and below the Zacks Consensus Estimate of 80 cents per
The reported earnings were affected by $28.1 million pre-tax
charges pursuant to Omnicom's proposed merger with Publicis
Excluding the merger-related expenses, non-GAAP net income for
the reported quarter rose 6.8% to $217.7 million or 82 cents per
share, compared with $203.9 million or 74 cents per share in the
Quarterly revenues climbed 2.5% to $3,490.5 million and
exceeded the Zacks Consensus Estimate of $3,478 million. From a
geographical perspective, domestic revenues accounted for 52% of
the total revenue and rose 3.2% to $1,815.5 million.
International revenues (constituting the remaining 48% of the
total revenue) increased 1.6% year over year to $1,675.0
The increase in revenues was primarily driven by 4.1% rise in
organic growth, partly offset by a 1% decline in inorganic growth
and a 0.6% decrease due to foreign currency translation
Excluding the impact of merger-related expenses, non-GAAP
EBITA (earnings before interest, taxes and amortization) for the
reported quarter improved 4.5% year over year to $433.3 million,
while non-GAAP operating income rose 5.2% to $407.5 million.
By segment, organic revenue for Advertising was up 4.8% to
$1,644.4 million; CRM (customer relationship management) organic
revenues increased 2.3% year over year to $1,270.3 million; PR
(public relations) organic revenues of $332.5 million were up
4.6% year over year; and Specialty organic revenues of $243.3
million increased 8.3% year over year.
Balance Sheet & Cash Flow
Omnicom generated free cash flow of $1,014.1 million for nine
months ended Sep 30, 2013, up from $966.0 million for the same
period in the previous year. The company had a total debt of
$4,054 million at quarter-end, compared with $4,462 million in
the year-ago period. Cash and short-term investments aggregated
$1,534 million at quarter-end, compared with $1,973 million in
the prior year.
During the reported quarter the company paid a quarterly
dividend of 40 cents per share. Omnicom also has a share buyback
program in place, under which it repurchased shares worth $492.3
million during nine months ended Sep 30, 2013. However, the
company did not repurchase any shares in the reported
Omnicom has a track record of winning new clients and
receiving additional deals from the existing ones. The company's
business mix is well diversified geographically and benefits
largely from growing markets. In addition, the company's efforts
to maintain its strong global reputation are commendable.
Omnicom currently carries a Zacks Rank #4 (Sell). Some
better-placed stocks in the same industry worth considering
Clear Channel Outdoor Holdings Inc.
Huron Consulting Group Inc.
). While Clear Channel and WPP both carry a Zacks Rank #2 (Buy),
Huron Consulting carries a Zacks Rank #1 (Strong Buy).
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