Ladies and gentlemen, good morning and welcome to the Omnicom Fourth Quarter 2014 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I would like to now introduce you to your host for today’s conference call, Vice President of Investor Relations, Shub Mukherjee. Please go ahead.

Good morning. Thank you for taking the time to listen to our fourth quarter 2014 earnings call. On the call with me today is John Wren, President and Chief Executive Officer and Phil Angelastro, Chief Financial Officer. We hope everyone has had a chance to review our earnings release we have posted on our website at www.omnicomgroup.com website, both our press release and the presentation covering the information that we will be reviewing this morning. This call is also being simulcast and will be archived on our website. Before we start, I have been asked to remind everyone to read the forward-looking statements and other information that we have included at the end of our Investor Presentation and to point out that certain of the statements made today may constitute forward-looking statements and that these statements are our present expectations and that actual events or results may differ materially. I would also like to remind you that during the course of the call, we will discuss some non-GAAP measures in talking about Omnicom’s performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the presentation material. We are going to begin this morning’s call with an overview of our business from John Wren. Then Phil Angelastro will review our financial results. And then we will open up the line to your questions.

Thank you, Shub. Thank you for joining us. Good morning. I am pleased to speak to you about our fourth quarter and the full year 2014 business results. As you have seen in our press release, Omnicom had a solid fourth quarter with organic growth of 5.9% giving us strong finish to the year. Before I discuss our results in detail, I want to reflect upon a number of factors that impact Omnicom, our clients and their consumers in countries where they operate. First, from a macroeconomic perspective, recent declines in oil and commodity prices are helping the consumer and many industries and countries. At this point, the U.S. economy looks to be the biggest beneficiary of these changes with the decline in oil prices likely being additive to U.S. GDP in 2015. When you move from the U.S. to the global economy, we are seeing a divergence for the first time in central bank policies and actions. Central banks from Australia to Europe, Canada have been lowering borrowing cost to try to kick start growth in their economy. As a result, their currencies have declined versus the U.S. dollar. At Omnicom, a little over 46% of our revenues are generated outside the United States. The significant change in exchange rates resulted in a 3.1% reduction in our revenue in the fourth quarter and will impact our reported results in 2015. At the same time, it’s important to point out that most of our non-U.S. operations are naturally hedged as both revenue and expenses are in the same currency. Both Phil and I will discuss the impact of foreign currency fluctuations in more detail later in the call. From an industry perspective, we are undergoing a major transformation as new digital tools and platforms emerge with media and technology evolving…

Thank you, John and good morning. As John said, our operating companies have continued to perform very well delivering against their operating and strategic objectives and maintaining their focus on meeting the needs of their clients. As a result of the excellent performance of our agencies, revenue for the quarter came in at just about $4.2 billion, up 3.4%. The year-over-year increase was driven by continued strong organic growth of 5.9%, this despite a considerable FX headwind this quarter of 3.1%. FX was negative this quarter across virtually every currency we operate in. I will discuss our revenue growth in detail in a few minutes. Turning to the figures below revenue, a quick reminder, as you know, we terminated the merger this past May. During the fourth quarter of ‘13, we incurred $13.3 million of merger-related costs. These costs are included in our GAAP results for 2013. In discussing our performance for the quarter, my comments will compare the current quarter to last year’s Q4 results excluding the impact of the merger-related expenses. You can find this non-GAAP presentation in the supplemental financial information section on Slides 19 through 24. Turning to Slide 19, our EBITDA for the quarter increased to $609 million from $589 million, an increase of 3.5% compared to Q4 last year. The resulting EBITDA margin for the quarter was 14.5% unchanged versus Q4 last year. As said previously, the sharp decline in value relative to the U.S. dollar of virtually all currencies we operated in negatively impacted our revenues across all of our international operations, because the vast majority of our expenses are denominated in same local currencies as our revenues, the negative impact of FX on our margins in the quarter was manageable. Despite this FX headwind, we continue to see a positive impact from…

Thank you. [Operator Instructions] Our first question today comes from the line of Alexia Quadrani representing JPMorgan. Please go ahead.

Thank you. My first question is just on the strong growth you saw the organic growth picks in the U.S. in the quarter, is there anyway you can give us the sense about how much contributions the programmatic was to that growth in the quarter. And then I have a follow-up question really about the FX headwinds you are going to be seeing in 2000 – or continue to be seeing in 2015, do you think it’s possible to still maintain your margins in ‘15 with that headwind maybe from the natural leverage you get from the healthy organic growth you are seeing? Thanks.

Good morning, we were cycling on our programmatic business during the fourth quarter. And I believe the contribution to the gross in the quarter was about $20 million. Your second question on FX, at this point we are hoping that FX moderates as we go through the year. And looking at the first quarter and we have looked at in detail we believe we can maintain the margins in the first quarter. As Phil was speaking, I am looking at the news of a little bit and seeing Egypt came out this morning, every central bank seems to do something new everyday. So I can give you the assurance through the first quarter.

Okay. And then just a quick follow-up on the client loss in Latin America, I think you mentioned which created difficult performance in that quarter, do you know if that was the one-time sort of project or is that something that will be a headwind for the whole year?

That was a project – that was the client in Chile. We expect in the first half of ’15, that’s going to have a bit of a headwind as we cycle on it. It started kind of the end of the second quarter of ’14, so there will be a little bit of negative impact in showing that beginning in next year.

Okay. Thank you very much.

Sure.

Our next question comes from the line of David Bank with RBC Capital Markets. Please go ahead.

Hey, thanks very much. Actually a little bit of a follow-up to the first question on the margin target, I guess which realizing the difficulty of reading the tea leaves in a macro landscape that’s hugely volatile and central banks doing all kinds of conflicting things, but can you give us a broad sense of what the organic top line range needs to be in order for you to maintain your current level of margins?

I will let Phil take a shot of this and then I will add.

Yes. I mean I am not sure that we – I am not sure we look at it that way, but certainly the key to a lot of our businesses is being able to manage utilization rate. And the more growth we have the easier it is to manage those utilization rates, the easier it is to maintain and/or grow your margins. What we strive to do that regardless of what the growth rates are across all of our businesses. So FX has certainly posed a bit of a challenge for us from the margin perspective which is why I think we are not projecting and predicting and committing to what our margin is going to be for the full year ’15. But we always strive to find the right balance, we are always looking for efficiencies and trying to make our businesses more effective in the way they manage their cost structure. We had a number of initiatives that have been going on for sometime in the areas of real estate, IT and some others that we certainly continue to see the benefit of. And we are expecting if we need to push those initiatives in ’15, so that they can help us to offset whatever challenges the FX does present. And as we have said earlier, the businesses themselves are largely hedged naturally in terms of the local currency of the expenses is the same as the local currency of the revenues. So, that’s helpful, but it’s still certainly a challenge and we are going to continue to work through it everyday.

Okay. John, you said you had a follow-up?

As soon as I said I have listened to Phil and he added all.

Thanks. Thanks guys.

Our next question is from the line of Peter Stabler with Wells Fargo securities. Please go ahead.

Good morning. Thanks for taking the question. John, want to ask you about the media business separate from the programmatic stuff, media has been called out by you guys and your leading competitors as a significant contributor and outperform our – I don’t know maybe for the last four to six quarters, wondering if you could give a little perspective on what you think the drivers of this outperformance is? Is it the complexity of the landscape? We hear a lot about pricing pressure in media pitches, but it just doesn’t seem to be the case. So, any perspective here would be great? Thanks very much.

Certainly. I do think the complexity of the marketplace has caused people to pay more attention to media and in the thinking about media, God knows how many places you can place your messaging today, but focusing and getting that right is becoming increasingly important. So, the analysts, the people that we employ, the digital channels or channels that we select through the client to place that media is a critical attention in this environment. And we won I believe more than our fair share of media accounts being planning assignments or buying assignments over the last several years and it’s being reflected in the numbers now. If you saw the trade magazines yesterday, OMD was named agency of the year. So, we are getting the recognition not only in the business that we get, but also from peer groups and industry groups.

I know, it’s tough for you to forecast, but as you look at ‘15, do you think media could be an out-performer for this year as well?

I do.

Thanks very much.

Our next question is from the line of Tim Nollen representing Macquarie. Please go ahead.

Hi, thank you very much. I wonder if you could give a comment please at this stage beginning of the year of what client, how client budgets feel if I could put it that way. It seems like your organic performance has been very strong despite what is felt like some crimping of budget. I wonder if you would comment a bit on if there is any expansion of budget opportunities this year in general or maybe if you are seeing some pent-up demand or do you still feel like advertisers are just kind of holding back? And if you have any specific sector commentary that will be great considering especially the consumer packaged goods sector? Thanks.

In general, what we have seen to-date in process is the budgets are similar to the budget for ‘14 with growth in few categories more so than others. I think the other dynamic that’s occurring is as channels are developed and utilize them and you measure a better ROI on them, you will see a shift in the dollars, which for some it will look like growth, because it will be and for others as that money shifted from different channels in media, it will seem like there is the lack of growth. So, overall though, I think budgets are growing consistent with GDP growth in most markets.

Any specific sector commentary?

I suspect that German Cargill is going to have a brand time in 2015 because of the currency slinks. There are different sectors, different dynamics which drove those sectors.

Okay, thanks so much.

And we have a question from Craig Huber with Huber Research Partners. Please go ahead.

Yes, good morning. I have got a few questions. Your comment about the currency impact on the margin in the quarter, I think you said was a slight, should we assume that’s zero to 7 basis points year-over-year, it’s my first question?

I didn’t understand the question.

What was the impact, please on currency on margins year-over-year in the quarter, can you quantify that number?

In Q4, I would say that there was an impact, but it was relatively small less than 10 basis points in the quarter.

Okay. And then typically each quarter you guys shoot to have net new business wins of $1 billion and a little bit higher, what was that in the fourth quarter, please?

That was about $1.25 billion for the quarter.

Okay. Phil on the debt side, how much room do you think you have to add more debt potentially to buyback more stock or small acquisitions and not impact your credit rating?

I think we don’t exactly look at it that way in terms of how much more leverage we could or we would like to add. I think the goal here and the approach has always been to maintain our rating, which I guess you commented on there. But I think we are going to look at our free cash flow in ‘15 the same way we always have. And I think I am calling it up what we do with our cash. We are going to continue to pay healthy dividend. We will do acquisitions opportunistically as the opportunities arise. And we would certainly like to do more of those in ’15, there maybe some opportunities given some of the weaknesses in currencies, perhaps. But we don’t have a fixed number going into ‘15 that we plan on expending on acquisitions or plan on spending on share buybacks, but certainly it will be a healthy component of how we use our cash.

And then lastly John, if I could ask as you think about this year in terms of organic revenue growth for 2015, if I recall correctly, I think a year ago you guys thought organic revenue for 2014 would be up 4% to 4.5%, is your feeling somewhat similar as you are heading into 2015?

I am actually a little bit more cautious than that. At this point, I see it is more around 3.5%. And then we will see as markets and the business develop. That – I mean the way to read that prediction is, I am cautiously optimistic. And we will do our best to beat it, but that’s as much as I will be willing to commit over phone in February.

Thank you.

Our next question is from the line of Julien Roch representing Barclays. Please go ahead.

Yes, good morning. Thank you for taking the question. The question on use of cash, I know you have just said that you didn’t have a fixed number in mind in terms of buyback and M&A for 2015, but it would be a healthy proportion of the cash, but I guess if we start with your current net debt-to-EBITDA, maybe you have an indication of where you would like to be at the end of the year, in that way we can make our own assumption between dividend, buyback and M&A, but having a – maybe an indication of the overall envelop for 2015 would be useful, that’s my first question. The second one is on programmatic, you said that the impact was about $20 million in Q4, could we have the same number for the full year, please? These are my two questions.

On the first one, I think where we are at year end ‘14 in two times range for total debt to EBITDA is probably where you can expect us to be. That’s roughly then where we have been historically, we continue to look to maintain that ratio and I think that would be a good guide. I think the net debt number is a little bit harder to predict given the currency impact on that number. So I think we are going to focus on the later or the gross debt number a little bit more. And in terms of programmatic, I think we may have mentioned it earlier in our responses, but the contribution to growth was about $20 million or so that reflects from the cycling in Q4 on a strong performance in Q4 of ‘13 that we had mentioned, you can recall.

No, you did mention the $20 million that was for Q4, I was hoping we could get that number for the full year.

While the full year, the business itself for the full year is little less than 2% of our revenues and for the full year I think the number was just give me a minute – okay, the full year, the number was probably around in the $140 million range.

Okay, thank you very much. Very useful.

Our next question today is from the line of Dan Salmon with BMO Capital Markets.

Hey, good morning, everyone. Phil, just a quick one for you, you’ve noted in your prepared remarks a little higher international cash balance contributing to investment income, I was just curious are we facing a situation where that balance is growing a little bit faster than you are finding uses of it for considering that’s largely M&A. Do we have a situation where you feel like you are feeling a little constricted in what you can do with that? I am just curious to hear how those dynamics of where the cashes are changing?

No, I think the comment specifically related to higher international cash in Q4 versus Q3 of this year, so that we typically see in the fourth quarter relative to the third quarter. I think it was part of the explanation of the change in interest from Q3 to Q4. So, we don’t see it growing any different than we have in the past. I think we certainly are focused on bringing as much cash that’s overseas back to the U.S. as we can in a tax efficient way. That’s something we focus on a daily basis frankly, because we would rather have it back to the U.S. to deploy it, but I think given the current FX environment, current economic environment, we think we are likely to see some opportunity in Europe and frankly in some of the other markets outside the U.S. that might be a little more traffic to us from a pricing perspective. And if we do find them in ‘15, we are going to be happy to complete those acquisitions.

Okay, great. Thank you.

We have a question from the line of Ben Swinburne representing Morgan Stanley. Please go ahead.

Thanks. Good morning. Two questions. John, just going back to your outlook for ‘15, last year you guys did almost 6% organic, I realized programmatic drove part of that strength, but the underlying business grew quite nicely. Why do you think ‘15 will grow couple of 100 basis points slower? Is programmatic part of that deceleration? It would seem like the macro tailwinds in the U.S. are strong, QE in Europe is potentially going to help. I am just curious to get a little more color there? And then I just wanted to ask you about the Facebook relationship there.

Sure. Well, the programmatic, we have cycled on that and we have not gone into the supply side of that. So, I am expecting good growth from it, but not the type of growth we have had as we were starting it up. In terms of the marketplace, we continue to win business, there is no question, thank God we do, but with all the unrest in the world, I am just being optimistic but conservative in observing the obvious that it appears that the entire world’s economy is slowed down a bit. And we can make claims that we are going to outgrow that historically. We have been – historically, we do at least 100 basis points better than GDP growth. But there is a great deal of unrest out there. And so we will alter that estimate as we get more sight on it, as we go through the year, but right now, very comfortable with the 3.5% and I think that’s what we are going to see for – until some of these things start to clear up.

Got it. And just on the Facebook relationship announced with a lot of fanfare back in the fall, can you just update us on client response and sort of how that partnership is progressing from a data perspective? And if I could sneak one more back on programmatic to Phil on, is there is any impact to free cash flow particularly working capital from programmatic, a big year-over-year swing in working cap that impacted free cash flow, just wanted to see if that had to with programmatic?

Programmatic, no, not at all.

Okay.

And our relation with Facebook has been outstanding. They have been – they have given us a great deal of resources associated with the projects we are working on together, and relationship between Omnicom, Annalect and Facebook is very, very strong. We are good partners.

Okay. Thanks.

Yes, one more.

I think, given the timing operator of the market open, I think we have time for one more call.

Thank you. Our final question today will come from line of James Dix with Wedbush Securities. Please go ahead.

Good morning, guys. Just one follow-up on your growth outlook for 2015, John you mentioned the potential impact in the U.S. from lower energy prices, just curious whether you are seeing any impact on the client budget planning so far or is that just something you expect to see, if those lower oil prices continue. And then secondly just longer-term, John, you also mentioned you expect an accelerating shift to digital. Some of your senior operating management has been public about, trying to get clients to think about moving more of their budgets to video, in particular just curious to what is your view is of the potential impact on television budget since that’s really biggest source of spending for most of your clients globally and how do you think that dynamic plays out of the digital shift? Thank you?

The first part of your question, gas prices at this point, we haven’t seen clients come in with new budgets as a result of it. It just seems the current gas prices from where we said is like a tax break for the American consumer. And if history bears out that consumer will be out spending money. Clients will anticipate and react to that as it becomes reality later and I think later throughout ‘15. At least, we are hopeful that that’s going to be the case. And the second part of your question, I am sorry, I didn’t write it down, can you repeat the second part?

Sure, just what you think the impactions are in particular for TV budgets given your commentary that you think the shift to digital could be accelerating over the longer term and some public commentary by some of your senior operating management, the clients should be thinking about shifting more of their budget to video in particular?

Yes. Our folks too believe that there will be a shift – a greater shifts or continuing shift to digital or really streaming type of activities. The device in which it gets streamed on is not as important to us, so we don’t focus on it. So, there are lot of TV owners that own, media owners that own ultimate channels or own content that would be interested in order to get it to be streamed. So, I am not expert enough to comment in general on the TV business, but I do see anything that can be streamed on whatever device, you have to stream it on that’s where I see the increase coming.

Great. Thank you very much.

Thank you. Thanks everybody for joining the call.