Omnicom Group Inc.

simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I'd like to turn the conference over to Greg Lundberg, Investor Relations. Please go ahead.

Thank you for joining our fourth quarter and full year earnings call. With me today are John Wren, Chairman and Chief Executive Officer, and Phil Angelostro, Executive Vice President and Chief Financial Officer. On our website, OmnicomGroup.com, you will find a press release and a presentation covering the information we'll review today. An archived webcast will be available when today's call concludes. Before we start, I'd like to remind everyone to read the forward-looking statements and non-GAAP financial and other information that we've included at the end of our investor presentation. CERTAIN OF THE STATEMENTS MADE TODAY MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. THESE REPRESENT OUR PRESENT EXPECTATIONS, AND RELEVANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY ARE LISTED IN OUR EARNINGS MATERIALS AND IN OUR SEC FILINGS, INCLUDING OUR 2023 FORM 10-K. DURING THE COURSE OF TODAY'S CALL, WE WILL ALSO DISCUSS CERTAIN NON-GAP MEASURES, AND YOU CAN FIND THE RECONCILIATION OF THESE TO THE NEAREST COMPARABLE GAP MEASURES IN THE PRESENTATION MATERIALS. WE WILL BEGIN THE CALL WITH AN OVERVIEW OF OUR BUSINESS FROM JOHN, THEN PHIL WILL REVIEW OUR FINANCIAL RES After our prepared remarks, we'll open the line for your questions. I'll now hand the call over to John.

Thank you for joining us today. I'm pleased to report our fourth quarter and full year 2024 results were very strong and we were well positioned as we entered 2025. After I finish commenting on the quarter and the year, I'll provide you an update on the proposed acquisition of Interpublic. Organic growth was 5.2% for the quarter. This growth was driven by very strong performance in our three largest disciplines, media and advertising, precision marketing, and public relations. Our strong finish to the year resulted in our organic growth of 5.2% for the full year, which exceeded the high end of our guidance. Adjusted EBITDA margin for the fourth quarter was 16.7%. For the full year, adjusted EBITDA margin was 15.5%, in line with our target. Non-GAAP adjusted diluted earnings per share for the quarter was $2.41, up 6.6% versus the fourth quarter of 2023. In 2024, our cash flow continued to be very strong. We generated almost $2 billion in free cash flow and returned over $900 million to shareholders through dividends and share repurchases. During the year, we continue to expand and deepen our capabilities with the acquisition of Flywheel and the formation of two new strategic practice areas, Omnicom Production and Omnicom Advertising Group. Using our Omni operating platform, our teams across practice areas can connect these services, leveraging high-fidelity data sets and custom AI tools to plan, create, target, optimize, and attribute campaigns with a single workflow. We are the unrivaled leader in linking marketing to sales, allowing us to deliver measurable outcomes that drive substantial growth and ROI for our clients. Our success year after year also leads to our industry recognition. TBWA was recently named Adweek's 2024 Global Agency of the Year. Convergence announced that Omnicom Media Group had the highest billing growth rate among global media groups in 2024. Wins like Amazon, Unilever, and HP fueled over $7 billion in new business. Omnicom Media Group also ranked first in client retention rate for the year. Additionally, Omnicom's Media Group achieved the highest rating in Forrest's 2024 Media Management Services Wave, specifically emphasizing the group's transparent business practices. Finally, for the second year in a row, Omnicom was named Holding Company of the Year by MediaPost. I'm very pleased with our strategic progress and the financial results in 2024. We entered 2025 in a very strong position. Given it's early in the year, we're exercising a level of caution on our outlook for 2025. As of now, we expect organic growth to be between 3.5 and 4.5 percent and adjusted EBITDA margins to be 10 basis points higher than what we achieved in 2024. I want to express my gratitude to our people around the globe for helping us finish the year on a high note. Your unwavering dedication to delivering exceptional work to our clients places Omnicom and its agencies in an excellent position as we enter the new year. Let me now shift to the proposed acquisition of IPG and our progress since the announcement on December 9th. While we are incredibly excited about the combination of the two organizations, I want to emphasize that Omnicom and IPG continue to operate as independent businesses until the transaction is finalized. Omnicom's solid foundation and organizational structure positions us to seamlessly integrate IPG into our group once the acquisition closes. Combined, our complementary cultures in businesses will create an unmatched suite of services and products for our clients, leading to significant revenue growth potential. After closing, we expect diluted earnings per share accretion driven by strong revenues, expanding margins, and a strong balance sheet. Our combined free cash flow will also be substantial. and we expect to increase our historical capital allocations for dividends, share buybacks, as well as investments necessary to maintain our leading position in technology, data, and AI, including the integration of Axiom, Omni, and the Flywheel platform. For decades, Axiom has established itself as the gold standard for managing clients' first-party data in some of the most highly regulated industries. Axiom's client contracts are multi-year, ranging from four to six years. Its clients include seven of the top ten retail banks, nine of the top ten credit card issuers, and three of the top five pharmaceutical manufacturers and several automotive companies. When these leading first-party data management capabilities are integrated with Omni and Flywheel Commerce Cloud, we will provide the most accurate identity solution and comprehensive understanding of consumer behaviors and transactions on the buy side. This platform will drive the industry towards a higher standard of metrics, linking ad spend, sales, and value-based outcomes. Regarding synergies, we're confident in our ability to achieve the projected $750 million goal in run rate cost savings. Importantly, these cost synergies will not impact employees dedicated to servicing our clients and generating revenues. Instead, they will arise from streamlining the holding company, middle office, and regional positions, as well as from eliminating duplicative overhead, back office, and third party expenses across our larger combined global footprint. The combined company will generate approximately 85% of its revenues from its top 10 markets, with the remainder primarily distributed across an additional 40 markets worldwide. After closing, we plan to continue to support IPG's advertising brands in the marketplace while aligning them with the current operating structure of Omnicom Advertising Group. More specifically, in our top 10 global markets, agency brands will continue to be fully present in order to drive growth. The remaining markets will function under a single OAG leader who will manage the agency brands at a local level and report to a regional OAG lead. Similarly, it is our intention that IPG's other advertising and marketing services businesses will be aligned within our respective practice areas. This will enable us to combine and expand our talent, equipping them with dedicated technology and data tools, in a single practice area to optimally deliver services and products to our clients. In assessing talent, we will adopt an approach focused on selecting the best individuals across the organizations irrespective of their current affiliation. With unified practice area leadership teams at a global, regional, and country level, we will eliminate redundant roles, functions, and back-office operations, which we expect will generate cost savings exceeding $130 million. A larger portfolio of clients and businesses will enable us to combine our efforts and leverage a more centralized technology and data platform, significantly improving capital efficiency across a larger enterprise. Additionally, more resources will be available for future investments. We expect this will result in initial savings of approximately $25 million in administrative costs. The largest cost savings will result from merging two publicly traded companies. We will combine and streamline senior leadership and operation teams across finance, accounting, IT, legal, real estate, and HR. Additionally, we will eliminate duplicative G&A costs. We expect to cut approximately 40% of the company's combined corporate expenses, resulting in compensation savings of around $200 million and G&A savings of about $110 million. Establishing a unified procurement organization to maximize benefits from third-party vendors in key areas such as IT software and infrastructure, as well as duplicative third-party research and data, is projected to save more than $150 million. Integrating our internal IT and shared service organizations will improve the way we deliver services to our employees and reinforce our infrastructure and platforms. We expect to realize synergies of approximately $70 million across these areas. Aligning our real estate portfolios following the closing will yield approximately $65 million in savings, which amounts to less than 10% of the combined total rent and occupancy costs. Not included in our synergy projections are the following three areas, revenue opportunities, near and offshoring, and automation. We believe revenue growth opportunities are substantial from the combination. We will expand client opportunities on day one by offering our combined client base a broader suite of products and services. For example, the capabilities of Flywheel, Axiom, and our Precision Marketing Group will be available to a much broader set of clients. Additionally, the combined company will drive greater product and service innovation, creating new revenue streams. Following the closing, we will continue leveraging our near and offshore global centers of excellence to improve service delivery and lower labor costs. In 2024, we established four state-of-the-art centers of excellence in India and expanded our near-shore operations in Latin America. We quickly scaled up teams for Flywheel after that acquisition, and we are now ready to capitalize on a significantly larger opportunity with Interpublic. Omnicom is making significant progress in utilizing automation by leveraging new processes, platforms, and AI. We have a dedicated central team spearheading our automation initiatives and expect to expand our efforts in this area following the closing of the acquisition. As a result, I'm quite comfortable with the $750 million in synergies targeted at the time of the announcement. We anticipate identifying even more savings once the companies are combined. Going forward, we plan to provide regular updates on our progress towards this target. Regarding our efforts to close the transaction, we are well into the shareholder approval and regulatory review process. Our proxy became effective last week, and a shareholder vote to approve the transaction is set for March 18th. We also initiated the process for antitrust approval in the U.S., and we're pleased with the progress we're making. The planning for regulatory approval in 17 other jurisdictions is progressing well. While predicting the exact timing is challenging, we still anticipate the deal closing in the second half of 2025. In the coming months, we will provide further updates on our regulatory approvals. In the meantime, we're committed to maintaining our momentum. We are utilizing the time we have to plan for the integration and keeping it to a small centralized team. This will eliminate distractions for our people and ensure client-facing teams stay focused on their day-to-day roles. Thank you for listening to our call, and I'll now turn it over to Phil.