Omnicom Group Inc.

Good afternoon and welcome to the Omnicom fourth quarter and full year 2022 earnings release conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. To participate, please press 1 then 0. And if you need assistance during the call, please press star then 0. As a reminder, this conference call is being recorded. At this time, I'd like to introduce you to your host for today's conference, Senior Vice President of Investor Relations, Gregory Lundberg. Please go ahead.

Thank you for joining our fourth quarter and full year 2022 earnings call. With me today are John Wren, Chairman and Chief Executive Officer, and Phil Angelastro, Executive Vice President and Chief Financial Officer. On our website, omnicomgroup.com, we've posted a press release along with a presentation covering the information we'll review today, as well as a webcast of this call. An archived version will be available when today's call concludes. Before we start, I would like to remind everyone to read the forward-looking statements and non-GAAP financial and other information that we have included at the end of our investor presentation. Certain of the statements made today may constitute forward-looking statements, and these statements are our present expectations. Relevant factors that could cause actual results to differ materially are listed in our earnings materials and in our SEC filings, including our Form 10-K, which should be filed tomorrow. During the course of today's call, we will also discuss certain non-GAAP measures. You can find the reconciliation of these to the nearest comparable GAAP measures in the presentation materials. We'll begin the call with an overview of our business from John, then Phil will review our financial results for the quarter, and after our prepared remarks, we'll open up the lines for your questions. I'll now hand the call over to John.

Thank you, Greg. Good afternoon, everyone, and thank you for joining us today for our fourth quarter and full year 2022 results. I'm pleased to report our fourth quarter performance was very strong on both the top and bottom lines, and we finished an outstanding year in 2022. We entered 2023 with a high level of confidence in our strategic and financial position while remaining cautious and being prepared for possible changes in the geopolitical and macroeconomic environment. For the fourth quarter, organic growth of 7.2% exceeded our expectations. Growth was broad-based across our disciplines, geographic regions, and client sectors. We again saw double-digit growth in our precision marketing, public relations, and experiential disciplines. Full-year organic growth was 9.4%. Operating margin for the fourth quarter was 16.6%, an increase of 50 basis points compared to the prior year. For the full year, operating margin adjusted for certain non-GAAP items illustrated on page 10 of our investor presentation was 15.4%, which is 40 basis points higher than our operating margin in 2021. Earnings for share for the quarter was $2.09, up 7.2% versus the fourth quarter of 2021. The negative currency impact on EPS of the strong US dollar was approximately 6%. On a constant currency basis, EPS increased by approximately 13%. For the year, we generated over 1.7 billion in free cash flow and returned more than 65% to shareholders in dividends and share repurchases. Our liquidity and balance sheet remain very strong and continue to support our primary uses of cash, dividends, acquisitions, and share repurchases. A strong performance validates the growing role we play as clients increasingly turn to us for advice in navigating through a complex marketing and communications environment. We're also advising our clients on transforming their organizations by deploying new processes and marketing technology platforms that can provide more connected experiences for their consumers. During the quarter, we expanded and further strengthened our talent. At the time of our Q3 remarks, we had just appointed Andrea Lennon to the new role of Chief Client Officer. In the fourth quarter, we added two prominent leaders, Kathleen Saxton, previously of MediaLink, joined as Chief Marketing Officer, and Alex Hess, previously of Adam and Eve DDB, joined as Chief Strategy Officer. Andrea, Kathleen, and Alex will strengthen our position in the marketplace, identify and pursue new business opportunities, and work with our global client leaders and agencies to deliver innovative and transformational ideas to our clients. We're fortunate to be adding this team from a position of strength. We ended 2022 with significant new business wins and deepened our relationship with many of our enterprise level clients. In the fourth quarter, L'Oreal named Omnicom Media Group its US media agency of record. This marked one of the biggest wins of 2022, with an estimated $1 billion in U.S. media billings, as reported by Convergence. L'Oreal selected LMG due to its deep specialization and integration of expertise, talent, and technology to deliver modern marketing outcomes. A recently launched commerce agency, Transact, along with our best-in-class analytics and insights team at Analyte, which supports the Omni operating system, played instrumental roles in winning the L'Oreal business. Also on the media front, OMD secured a major win as it was named Media Agency of Record for Burberry. The win includes an innovative and bespoke agency model created specifically for Burberry. Our healthcare group, which had 6.4% growth in the fourth quarter, won a significant new business pitch with Merck, capping off the year in which it won the four largest healthcare pitches of 2022. A key component of our new business success was driven by our e-commerce capabilities, an area where we've made and continue to make significant investments. We recently expanded our e-commerce capabilities through a partnership with Albertsons Media Collective, a retail media arm for the Albertsons companies. This partnership will provide first-to-market solutions that will enable marketers to better target and measure ROI in connected TV environments. Going forward, we plan to continue to invest in and expand our capabilities. to solidify our position as best in class provider of retail, media, and e-commerce services, as well as in other high growth areas such as precision marketing, performance media, and health. I want to thank our people around the world for helping us close out 2022 on such a positive note. It's your dedication and commitment and outstanding work that allows our agencies, clients, and Omnicom to succeed. We entered 2023 in a very strong position, supported by our strong financial performance, new business wins, and steady progress on our key strategic initiatives. We also continue to see strong demand for our services. Based on current market conditions, we're targeting 2023 organic revenue growth of 3% to 5%. and expect our operating margin to be between 15% and 15.4%. At the same time, we remain extremely cautious of macroeconomic and geopolitical factors, including the ongoing war in the Ukraine, the economic risks posed by rising interest rates, and higher inflation around the world. To be prepared, we continue to actively develop plans to respond to the headwinds from macro factors, and I'm confident we can manage through this economic cycle. And we have the leadership teams in place to minimize the impact on our top and bottom lines. I'll now turn the call over to Phil for a closer look at our financial results.