Omnicom Group Inc ( OMC ) reported third-quarter 2014 GAAP net income of $239.5 million or 95 cents per share versus $191.2 million or 74 cents in the year-ago quarter. Reported earnings per share beat the Zacks Consensus Estimate of 91 cents. The robust results were driven by a rise in revenues.
Quarterly revenues rose 7.4% year over year to $3,749.6 million, exceeding the Zacks Consensus Estimate of $3,687 million. From a geographical perspective, domestic revenues improved 10% over the prior-year period to $1,996.3 million. International revenues increased 4.7% year over year to $1,753.3 million.
Higher revenues for the reported quarter were primarily driven by a 6.5% rise in organic growth. Acquisitions, net of dispositions led to a 0.5% increase in revenues and the impact of foreign exchange rates led to a 0.4% increase in revenues.
Non GAAP earnings before interest, taxes and amortization (EBITA) for the reported quarter improved 13.6% year over year to $460.5 million.
Segment-wise, organic revenues for Advertising were up 12.5% year over year to $1,853.3 million; CRM (customer relationship management) organic revenues increased 1% year over year to $1,306.7 million; PR (public relations) organic revenues of $343.3 million exhibited a 2.5% year-over-year rise; and Specialty organic revenues of $246.3 million decreased 0.1% year over year.
Across regional markets, North America reported growth of 8.9% ($2124.4 million) in organic revenues. Latin America recorded an increase of 2.5% ($102.6 million), Asia Pacific recorded an increase of 4.4% ($405.3 million), while organic revenues for Europe and Africa Mid East increased 2.2% ($1,053.5 million) and 18.1% ($63.8 million), respectively.
Balance Sheet & Cash Flow
Omnicom generated free cash flow of $1125.0 million for nine months ended Sep, 2014, versus $1014.1 million in the prior-year period. The company had a total debt of $3,811 million as of Sep 30, 2014, compared with $4,054 million a year ago. Cash and short-term investments aggregated $850 million as of Sep 30, 2014, compared with $1,534 million a year ago.
Omnicom has a share buyback program in place, under which it repurchased shares worth $7.9 million in the third quarter of 2014. Omnicom has consistently distributed more than 100% of net income to shareholders through dividends and share repurchases. Omnicom achieved a 33.7% return on equity (ROE) for the twelve months ended Sep 30, 2014.
Omnicom has a track record of strengthening its business and expanding its global client base through acquisition of complementary companies.
The market reacted positively as share prices went up in pre-market trading .
Omnicom currently has a Zacks Rank #3 (Hold). Other stocks that look promising include MDC Partners Inc ( MDCA ), and TubeMogul, Inc ( TUBE ) each sporting a Zacks Rank #1 (Strong Buy) and Clear Channel Outdoor Holdings Inc ( CCO ), carrying a Zacks Rank #2 (Buy).