Good morning, ladies and gentleman and welcome to the Omnicom First Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] 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, Chief Communications Officer, Joanne Trout. Please go ahead.

Good morning. Thank you for taking the time to listen to our First Quarter 2021 Earnings Call. On the call with me today is John Wren, our Chairman and Chief Executive Officer and Phil Angelastro, our Chief Financial Officer. We hope everyone has had a chance to review our earnings release. We have posted to www.omnicomgroup.com this morning's press release, along with a presentation covering the information that we will review this morning. This call is also being simulcast and will be archived on our website. Before we start, I've 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 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 a reconciliation of those measures to the nearest comparable GAAP measures in the presentation materials. 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 for the quarter. And then we will open the line for your questions.

Thank you, Joanne. Good morning. I hope everyone on the call is staying safe and healthy. I'm pleased to update you on how we continue to respond to and overcome the challenges of the pandemic. I'll first discuss our financial results. Then we'll cover our performance with respect to our strategic priorities and operations and will end with our expectations for the remainder of 2021. For the first quarter, organic growth was negative 1.8%, which positions us for a very strong recovery for 2021. Going forward, we expect to see positive organic growth. Before I go into our results in more detail, as you have seen in our investor presentation slides, we have provided a further breakdown of our CRM discipline. The new disciplines we have disclosed are as follows. CRM Precision Marketing which includes our market consulting, digital and direct marketing agencies; CRM Commerce and Branding Consultancy includes our branding consultancies, shopper marketing and specialty production agencies. CRM Experiential includes our event agencies and CRM Execution and Support is unchanged for the most part from our prior reporting and includes primarily our field marketing, research agencies and our agency servicing the not-for-profit sector. We believe this additional level of disclosure will allow you to have a better understanding of our operations. Getting back to organic growth geography, in the United States, organic growth was down 1%, an improvement of over 8% from the fourth quarter. Advertising and Media and CRM Precision Marketing were positive in the US, while the rest of our disciplines continue to be negative, with CRM Experiential having the largest negative impact on our growth. Europe continued to face significant challenges due to the pandemic in Q1, although overall the markets continue to improve while the rollout of the vaccine in Europe like that of the…

Thanks, John and good morning. As John said, as we move through the first quarter of 2021, we continue to see an improvement in business conditions, particularly when compared to the peak of the pandemic during the second quarter of 2020. As we anticipated, we again saw sequential improvement in our organic revenue performance, a decrease of 1.8% in the first quarter of this year, which is a considerable improvement in comparison to the last three quarters of 2020. And now that we've cycled through a full year of operations since the start of the pandemic, we expect to return to positive organic growth in the second quarter and for the full-year. We continue to see operating margin improvement year-over-year resulting from the proactive management of our discretionary addressable spend cost categories and the benefits from our repositioning actions taken back in the second quarter of 2020. Turning to Slide 3 for a summary of our revenue performance for the first quarter; organic revenue performance was negative $60.6 million or 1.8% for the quarter. The decrease represented a sequential improvement versus the last three quarters of 2020, including the unprecedented decrease in organic revenue of 23% in Q2, 11.7% in Q3 and 9.6% in Q4. Regionally, although we continue to experience declines in the Americas, we continue to see improvement when compared to what we experienced over the previous three quarters. In Europe FX gains helped to offset negative organic growth and our Asia-Pacific region saw positive organic growth with a mixed performance by country. The impact of foreign exchange rates increased our revenue by 2.8% in the quarter, above the 250 basis point increase we estimated entering the quarter, as the dollar continued to weaken against some of our larger currencies compared to the prior year. The impact on…

[Operator Instructions] Your first question comes from the line of Alexia Quadrani from JPMorgan. Please go ahead.

Thank you very much. So my first question really is on I guess the progression or the recovery. I mean if you can elaborate a little bit on sort of how you saw it in Q1, I'm not asking for like month-to-month, but just sort of any trends you saw. And if you saw a faster pace of improvement maybe than you expected anything surprised you? And then given I guess given what you know year-to-date, I'm curious if any more color about Q2, I know you said that there should be growth in the second quarter, but given the super easy comps I guess should we see outsized growth sort of at least mid-teens not higher in Q2. So any color you can provide would be very helpful? Thank you.

Phil, your two first.

Sure. As far as the months, Alexia, I'm not sure, yes, we focus on them and treat the trends that we might see as meaningful especially given COVID. But I think given the comps in Q1 going into the quarter, we expected the first quarter to be a challenge, but things broadly speaking, things have been improving throughout the end of the second half of 2020 and into 2021 pretty consistently. So we've seen those trends improve, we've seen it in our results as we gone through the year and as we've gone through the quarter, which is why we're optimistic about the rest of 2021. As far as Q2 growth, you know from the data we have today and we'll be getting an update again over the next two weeks in our meetings with our operating companies, but we're certainly optimistic that our growth expectations are not going to be what we would consider a normal or typical quarterly growth pattern given the comps of Q2 of 2020. We certainly expect to do better than we normally would and there's a lot of positive trends. There are some things that are happening or could happen that are out of our control in terms of some of the larger markets in Europe and some of the challenges they've been having with COVID, but as the vaccine continues to roll out in the US and globally, our growth expectation certainly for Q2 are pretty robust.

And then, just a follow-up if I may. Thank you for giving us further detail on CRM, that's very helpful in the release and then in the commentary. I'm just curious, though given the outsized decline in Experiential even before the pandemic it looks like it was underperforming. I'm curious what your thinking is about that business long-term?

The business that we have Alexia, really like it long-term just to truth. Domestically, our clients who generally -- big events, Olympic type of events and very well established events that aren't going to decline once people can actually return to attending activities. And there is also and we're still looking at domestic market, the things that we do with respect to recruiting people for the US government, which will keep us on the road for quite a while. I mean so positive in the US once movement and schools reopen and people are increasing number of people are allowed back into longstanding events. And with respect to our international business, that's very exciting. I mean, the biggest aspects of that business when it returns is China which is already started, established clients, big car companies, very well established very well financed markets in the Middle East and just the biggest markets in Western Europe. So it's a business that we've held on to and we've kept all the critical people and in some instances our individuals have expertise in certain categories that their clients have continued to pay us at least something with the promise that we keep them on board and don't lose them because the clients feel that they have great knowledge of their products and what their strategies are so. I mean it's not a huge business, it's big enough to hurt you in downtimes and makes a contribution both from a profit EBIT point of view, as well as our revenue point of view when things open up. And since we are positive about it and probably more positive than other people and some of their competitors, there might even be an additional boost when things do open up because a lot of people have been had the staying power to continue those businesses during this period of time.

The only thing I would Alexia is that there as we've gone through the pandemic, I think we found out that or the numbers have demonstrated internally that is quite a bit especially in the domestic business. Strategic work that our businesses are doing for their clients not just purely big event driven, so there is a base of business that clients find strategic value and engaging with our businesses that has been leads us to kind of conclude that, yes, there is a little more downside in the type of environment we've just been in, but there should be even more upside as we get back to a more normal environment in the future.

Thank you.

Sure.

Your next question comes from the line of Julien Roch from Barclays. Please go ahead.

Yes, good morning, John. Good morning, Phil. Thanks very much for the better disclosure and the recasting of CRM from Q4 to continuing the steam of improved disclosure Publicis not gives me the organic for the US 60% of the revenue was up mid-single digit in Q1. So if you could give me the media organic for the Group and then which gives me the organic for international. So, could we get other media organic for Q1 or indication of what media did in Q1 and approximately how much is media in total revenue, my first question. The second one is John said in his opening remarks that margin will be up year-on-year ex last year repositioning costs. So can we have more color, I mean is it up 10 basis, 20 basis points, 30 basis point. And then last one is, I know the welcome news resumption of buyback, can we have an idea of the kind of size you're going to do for the next quarters. Thank you.

So I'll start Julien, but could you just repeat the margin question for clarity?

Yes, so John said margin will be up, so can we have some more color, I mean when does up mean, does it mean 10 basis points, 20 basis points?

Okay. So just to start on the media point, yes, we don't break out specifically and frankly when you go through the practice areas and the disciplines that we report, the vast majority of those disciplines actually have media in their numbers. So we don't carve it out and look at it that way. Essentially businesses like PR and healthcare and precision marketing, there are media components to those businesses, they are integrated into those businesses, several markets throughout the world advertising and media are integrated and it isn't as simple is just pulling out a median number. Certainly, we did indicate that media grew in the first quarter not, I would say not robustly relative to the first quarter of last year, but we're comfortable with the disclosures we make as far as adding the disciplines and providing what we think is very useful and helpful information similar to how we look at the business from a management perspective. As far as margins go, I think what we said, we still hold to which is we look at 2019 as the best proxy of what ongoing margin expectation should be for our business. You know, I think we look at the first part of coming out of the pandemic when it's likely the travel and related and some of the other controllable cost can continue to be reduced relative to the past as likely benefiting our margins in the near-term. But in terms of looking at the business prospectively, you know, '19 is probably the best proxy and I can tell you what we've always said which is we always are looking for efficiencies and trying to expand our operating margins, but we're mostly focused on our operating EBIT dollars and the margins kind of fall into place. We're going to continue to invest where we believe the best organic growth opportunities are and we're going to continue to drive operating profits and our margin performance. We think will be a positive result if we continue that approach. Last question on the buyback front, I don't think we have today sitting here a margin, sorry a buyback dollar amount in mind. Yes, I think with very consistent approach to capital allocation, we'll continue to pay healthy dividend, we've been pursuing acquisition opportunities in the areas where we think there is most promise in our disciplines that we're in today as we said before. And the amount of money we spend on buybacks is going to be the residual if we can find more acquisitions, we're going to put more of our free cash flow in any one year into those acquisitions that we less for buybacks as a result and certainly that approach in that strategy we're planning on consistently following that as we emerge from the pandemic and get back into growth mode.

Thank you very much.

Thank you.

Your next question comes from the line of Michael Nathanson from MoffettNathanson. Please go ahead.

Thanks. One for John, one for Phil. John, I know we're still early in our recovery, but I guess want to take you to wherever the new normal looks like and I wonder what's your view of organic growth for your company when we get out of this, right, all the structural changes we've seen in digital and consumer behavior. What -- so what's your view, will Omnicom grow faster because of that when we get back to whatever that you said it looks like that's one. And so can you talk a bit about the impact of the pandemic on the field marketing business, right, it's down a time. And maybe you could share about may be cadence when that returns back to normal that's hurting the institutions core business that would be helpful too. So, thanks.

Sure. I know absolute proof points of this, but I've been in the business, as you know forever and I'm really confident that because of changes, minor strategic which shifts in our portfolio, doubling down and focused on the area of growth that emerging from COVID, we will see when we compare to the past couple of years continued growth at a faster pace for certain, and as we've always said, on and for a number of years as far as difficult to achieve. Our objective is GDP plus and I really think that that is what's in our future over there and very bullish as we emerge from COVID on the positions, the strategies we put in place, some of the other actions that we've taken. And so there's a lot of confidence. Now remind you against that when we get into that accelerated growth going out 18 months, 24 months and probably expect wage pressures to go up for sure in key positions and things that we want to focus on. So, that being terribly specific, I'm very -- I feel very, very confident about the near term and the near longer term us getting back to better growth rates.

On the field marketing front, I think the business, our business is largely pan-European. We've done some dispositions over the years throughout the Group and really streamlining quite a bit. We expect the field marketing business to be back in growth mode as well just like the rest of our business, I'd say for looking at the 9 months beginning April 1st, we expect field marketing grow for the rest of 2021. It might be a bit choppy in the three quarters, I'm not quite sure I commit to every quarter being kind of sequential growth, but the field marketing business given its pan-European then had some setbacks recently in some of their key markets because of -- some of the shutdowns that happened recently in Europe. But we do expect them to get back into growth mode and you know I think that we are confident that the business itself will perform once some of the external factors kind of remove that have held it back throughout the pandemic. We also have part of the business in India that seems to be holding up pretty well right now.

Thanks, guys.

Sure.

Your next question comes from the line of Steven Cahall from Wells Fargo. Please go ahead.

Thanks. Phil, maybe first I wanted to just touch on that M&A commentary that you made, it sounds like you're -- you said you wanted to be a bit more aggressive in certain areas. I think that commentary it might just maybe sound a little stronger than the way you've discussed it in the past. So I'm just curious if there is more sizable acquisition opportunities out there the last few years, it's really exceeded a few 100 million in a single year. So, just curious if you're seeing something that might be a little bit more strategic and the tuck-ins that you've done more historically?

Yes. I think your view of that is correct. We've certainly got more of an emphasis and more of a focus that we've been placing on not just dealing with inbound M&A candidates, but also seeking appropriate opportunities in the areas that we want to invest in. And we've been I think clear on our last call in particular where we're focused certainly, broadly speaking the precision marketing space, e-commerce, media and healthcare and in John's prepared remarks, he commented on that specifically. So yes, we do currently plan to be a little more aggressive in terms of looking for the right opportunities. We won't lose our discipline in terms of pricing expectations, but we will be more aggressive in terms of pursuing those opportunities. I don't think there is going to be a dramatic change though while we'll look at big deals, the deals we can successfully integrate with our existing platforms are the ones that we found were best. We're going to consider any and all deals in the areas that we're committed to and want to invest in, but we are going to do, we are going to pursue acquisition opportunities in a variety of sizes and to the extent that we can do more rather than less that's certainly our intention.

Yes. The only thing I might add is I'm happy today with our M&A team and the efforts that they're going through then certainly then any of the time in the last decade. And just to echo what Phil said having that positive outlook, we'll look to do only accretive acquisitions and there is a lot of silly money that sometimes we're competing against. So we're not planning to get silly and try to explain to you as strategic.

That's great. [Indiscernible].

Go ahead, sorry.

I'm sorry, I just had a quick follow-up on the media side, maybe not so giving specific color on it, but I'm just curious if that's been a leading indicator of growth to come, so maybe be growing a little faster than the Group. And I think we've seen a couple of media, big media accounts come up for review this year. I'm just wondering if I sort of back on the cycle where you think there's going to be a lot of media business progress this year. Thanks.

Sure. Media will grow faster this year based upon the forecast we've seen to date. The mix may change, it won't change, our mix dramatically because we're so big, but digital has really taken over and we've crossed the threshold that's never really going to change from kind of one or two things on that. And what was the second part of your question, I'm sorry?

I think we're comfortable with the media business and the media assets we have. We certainly, we certainly think that we're close to being past a very difficult year, continue to grow as we head into growth mode here starting in the second quarter and we're comfortable with the assets we have. I don't think we would expect to see in 2021 as media appaloosa [ph] 3, but we have seen quite a bit of activity and interest from across a bunch of different industries. Frankly because during the pandemic, it was difficult for them to make a change in their service providers and internally throughout their organization but I think as things normalize and they come out of it, we do expect activity in terms of new business opportunities to pick up.

Yes. One final point on this that I want to add which is really a fundamental point is when we look at our Omni product as you hear us talking about three years ago, it started primarily in the media area and we've been very successful and I think in some ways COVID has helped us in moving its use and as their fundamental base operating philosophy across our practice areas, which really allows the benefits that it brings to work very closely with our creative assets in a way that in the past was up more forced outcome, it's now becoming more of a natural outcome across the practice areas that we're functioning in. And I think that it makes us more competitive going forward.

Great, thank you very much.

Operator, I think -- thank you. I think we have time for one more question operator.

Okay. That question comes from the line of Tim Nollen from Macquarie. Please go ahead.

Sure, for fitting me in here. I just wanted to ask a question, could you just explain a little bit more about what that business entails. I know you mentioned the shopper marketing component was led to that business being down 4%, but what are the other things you do there and what might the growth be in that division if you were to take shopper marketing out? Thanks.

So, on -- in CRM Commerce and Consulting, our Brand Consulting businesses are in there and we've got some specialty production assets which are relatively small in that group. You know, I think we've seen growth in the quarter in the specialty production assets, the Brand Consulting business we expect once we're through Q1 to get back into growth mode and we expect the shopper commerce businesses to get back to growth mode, but the challenges they need to need to overcome relate more to I think some of the client losses they've had recently that they need to cycle through. So we're comfortable with the assets that we have, we're going to continue one of the areas we're focused on as far as potential acquisition opportunities as e-commerce to build on that business, but we think the commerce and consulting discipline, the components of it are businesses that we have high expectations for in terms of that future growth profiles.

I think we're running out of time.

Thank you all for taking the time to join us on the call today.

Thanks, everybody. Stay safe.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.