Q4 2021 Omnicom Group Inc Earnings Call

Speaker 1: you

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Speaker 2: earnings release conference.

The earnings release conference call.

Speaker 2: 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.

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And if you need assistance during the call. Please press Star then zero.

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.

Speaker 2: Senior Vice President of Investor Relations, Gregory Lundberg. Please go ahead. Thank you for joining our fourth quarter and full year 2021 earnings call. With me today are John Ren, our Chairman and Chief Executive Officer, and Phil Angelastra, our 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 An archived version will be available when today's call concludes.

Thank you for joining our fourth quarter and full year 2021 earnings call with.

With me today are John Wren, our chairman and Chief Executive Officer, and Phil Angela Oster, Our Chief Financial Officer.

On our website Omnicom group Dotcom with posted a press release, along with the presentation covering the information will review today as well as a webcast of this call an archived version will be available when today's call concludes before.

Before we start I'd like to remind everyone to read the forward looking statements 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 2020 Form 10-K , and our September 2021 Form 10-Q .

During the course of today's call. We will also discuss certain non-GAAP financial measures you can find a reconciliation of these to the nearest comparable GAAP measures in the presentation materials.

We will 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 will open up the lines for your questions.

Speaker 2: Phil will review our financial results for the quarter. And after our prepared remarks, we will open up the lines for your questions. I'll now hand the call over to John . Thank you.

I'll now hand, the call over to John .

Thank you Greg.

Good afternoon, everybody and thank you for joining today.

We're pleased to share our fourth quarter and full year performance.

Speaker 3: We exceeded our expectations for the quarter and for the year.

We exceeded our expectations for the quarter end to the year, our organic growth for the fourth quarter was 9.5%.

Speaker 3: organic growth for the fourth quarter was 9.5% and was broad-based across geographies and disciplines.

And was broad based across geographies and disciplines.

The full year finished at 10, 2% organic growth.

Speaker 3: Our improved performance was underpinned by our precision marketing discipline, which is helping con-

Our improved performance was underpinned by our precision marketing discipline.

Which is helping clients transform their business. So they can engage directly with consumers through digital platforms.

Speaker 3: so they can engage directly with their consumers through digital.

Speaker 3: We also benefited from the continuing rebound in our experiential discipline as more in-person.

We also benefited from the continuing rebound in our experiential discipline is more in person events resumed in Q4.

Speaker 3: Our revenue performance flowed through to our operating profit and bottom.

Our revenue performance flowed through to our operating profit and bottom line.

Speaker 3: Our operating profit margin for the fourth quarter was 16.1%, resulting in full year margin of 15.4%.

Our operating profit margin for the fourth quarter was 16.1%, resulting in full year margin of 15, 4%, earning.

Speaker 3: Earnings per share for the quarter was $1.95, up 6% versus 2000 and...

Earnings per share for the quarter was $1.95 up 6% versus 2020.

Speaker 3: For the full year, EPS increased 49.

For the full year EPS increased 49%.

Speaker 3: Finally, our cash flow and balance sheet remain very strong. Overall, I'm very pleased with our financial performance for the quarter and year, and optimistic about our prospects heading into 2020.

Finally, our cash flow and balance sheet remained very strong overall I'm very pleased with our financial performance for the quarter and year and optimistic about our prospects heading into 2022 looking forward, we're forecasting organic revenue growth of between five to <unk>.

Speaker 3: Looking forward, we're forecasting organic revenue growth of between 5 to 6 percent.

6% for the full year 2022, and we anticipate delivering the same strong margin that we delivered in 2021.

Speaker 3: and we anticipate delivering the same strong margin.

Speaker 3: with the pace of change in the digital space accelerates.

With the pace of change in the digital space accelerating we've continued to evolve our existing capabilities and invest in new and innovative offerings to meet the needs of our clients and future prospects.

Speaker 3: We've continued to evolve our existing capabilities and invest in new and innovative offerings to meet the needs of our clients and future.

Speaker 3: These efforts have allowed us to be extremely competitive in the marketplace by providing a suite of services.

These efforts have allowed us to be extremely competitive in the marketplace by providing a suite of services and capabilities that position us to re imagine and strengthen our clients' businesses brands services and products seamlessly connect them with their consumers.

Speaker 3: that position us to reimagine and strengthen our clients businesses, brands, services.

Speaker 3: seamlessly connect them with their consumers across the marketing journey by leveraging Omni our inside

Cross the marketing journey by leveraging omni, our insights and orchestration platform transfer.

Speaker 3: transform their marketing and customer relationship technology.

Transform their marketing and customer relationship technology platforms, and innovate in digital E Commerce, and new media channels.

Speaker 3: and innovate in digital e-commerce and new media.

Speaker 3: One area where these investments are making a demonstrable impact is in our Omnicham's position marketing group, which offers more tech and digital

An area, where these investments are making a demonstrable impact is in our omnicom's precision marketing group, which offers martech and digital transformation consulting decision sciences customer experience design and targeted customer marketing programs for our clients.

Speaker 3: Custom experience design and targeted customer marketing programs.

Speaker 3: In November , we closed on the acquisition of Brightgen, a Salesforce summit.

In November we closed on the acquisition of Bright Jan is sales force summit partner that will extend O P. M G salesforce capabilities and reach in Europe .

Speaker 3: will extend OPMG Salesforce capabilities and reach in your success. of an registering scope.

The success of Omnicom's precision marketing offering is reflected by the group's wins with some of the world's largest brands such as Philips Mercedes Nike and Dr. Gerald and by his financial results the precision marketing discipline and grew by 19% in 2021.

Speaker 3: reflected by the group's wins with some of the world's largest brands such as Philips, Mercedes, Nike and Diageo and by its financial results the precision marketing discipline grew by...

Much of the work conducted within Omnicom precision marketing is supported by foundational AI Decisioning layer and technology integrated with omni are open operating system that orchestrates better outcomes on.

Speaker 3: supported by foundational AI, decision-winning layer and technology integrated with

Speaker 3: Army is built for collaboration across the entire company. Acting as a single source of data and process workflow.

<unk> is built for collaboration across the entire company acting as a single source of data and process workflow from insights to execution. It empowers, our people and clients to make better and faster decisions maximizing efficiency and ROI.

Speaker 3: It empowers our people and clients to make better and faster decisions. Maximizing efficiency.

A key emphasis for us going forward is to continue to fill the demand for services across the marketing journey by offering more services to our existing clients and winning new business relationships our objective in part.

Speaker 3: Going forward is to continue to fill the demand for services across the marketing journey by offering more services to our existing clients and winning new

Speaker 3: to increase the number of clients who consolidate more of their services with Amnika. These

Is to increase the number of clients, who consolidate more of their services with omnicom.

These are significant growth opportunities for us, where our suite of services creativity and culture of collaboration all supported by omni give us a competitive advantage.

Speaker 3: where our suite of services, creativity and culture of collaboration all supported by Omni, give us...

Speaker 3: In addition to our integrated wins, our world class talent and agencies had numerous recent new business wins within their specialties and across the world.

In addition to our integrated wins, a world class talent and agencies had numerous recent new business wins with in their specialties and across geographies. Our success on our wins in 2021 has resulted in us expanding our services and continues to inform our priority.

Speaker 3: Our success on our wins in 2021 has resulted in us expanding our services and continues to inform our prayer.

Investments and M&A strategies.

Speaker 3: We are also increasing our investment in such areas as AI and automation, e-commerce, performance media, data and analytics, as well as in high growth industry opportunities.

We are also increasing our investment in such areas as AI and automation E Commerce performance media data and analytics as well as in high growth industry opportunities such as gaming and the meta versus.

Speaker 3: We recently completed the acquisition of Propeller, a digitally native engagement agency that's

We recently completed the acquisition of propeller of digitally native engagement agency that specializes in healthcare. Another area. We expect we will continue to see strong growth.

Speaker 3: Another area we expect will continue to see strong

Speaker 3: Propelor is a fast growing on the channel strategy, content and delivery agency that embraces and mobilizes data to do-

For power is a fast growing omnichannel strategy content and delivery agency that embraces and mobilizes data to deliver meaningful results for its clients.

Speaker 3: On the come today, our emphasis is on developing our future talent and continuing our discipline succession.

At Omnicom today, our emphasis is on developing our future talent and continuing our disciplined succession planning with this in mind, we made important senior management changes this past quarter.

Speaker 3: With this in mind, we made important senior management changes.

Speaker 3: Daryl Sim moved into the newly created position of President and

Daryl Simm moved into the newly created position of President and Chief operating officer of Omnicom.

Speaker 3: Deserving as CEO of On the Com Media Group for more than two

After serving as CEO of Omnicom media group for more than two decades.

Speaker 3: Darrell will now work directly with me to oversee business operations across

<unk> will now work directly with me to oversee business operations across Omnicom.

Speaker 3: Florian Damski, who was previously CEO of OMD world.

Florian Dansky, who was previously CEO of OMD worldwide and help the agency earn back to back Adweek Global Media agency of the year titles in 2019 in 2020 has succeeded Daryl as the CEO of Omnicom media.

Speaker 3: and help the agency earn back-to-back ad-week global media agency of the year titles. In 2019,

Speaker 3: succeeded Daryl as the CEO of the Omnicom Media

Group.

Speaker 3: If there are more than two decades of overseeing the growth of our DOS network, Dell Adams, as planned, step down as Chairman at the end of 2020.

After more than two decades of overseeing the growth of our Das network Dow items as planned stepped down as chairman at the end of 2021, we are grateful for his many years of leadership and commitment to omnicom and wish him all the best.

Speaker 3: We're grateful for as many years of leadership and commitment to Omnicam and wish him all the best.

Michael Lawson and John Doolittle had been promoted to CEO of Dos and C. E. All of the newly created communications consultancy network, respectively reporting to me.

Speaker 3: Michael Lawson and John Doolittle have been promoted to CEO of Goss and CEO of the newly created Communications Consultancy Network.

Speaker 3: Both of them have worked closely with Dell and have been a driving force within DOS for many years.

Both of them have worked closely with Dell and had been a driving force within das for many years. They are highly talented executives who are skilled at managing agencies in a range of disciplines.

Speaker 3: are highly talented executives who are skilled at managing agencies in arranging.

Speaker 3: With these leadership changes, I couldn't be more confident about the continued success.

With these leadership changes I couldn't be more confident about the continued success of our group. Our people are our greatest asset and we are constantly looking to invest and create opportunities for them across the enterprise.

Speaker 3: Our people are our greatest asset, and we are constantly looking to invest and create opportunities for them across

Speaker 3: Especially during a time when the war for talent is fierce. Attracting and retaining talent is a top priority.

Especially during a time when the war for talent is fierce attracting and retaining talent is a top priority.

Speaker 3: We've made many changes. We've also instituted new programs that provide greater career mobility across our agencies, allow for agile and flexible work arrangements, and expand our investments in technology, learning, and develop...

We've made many changes we've also instituted new programs that provide greater career mobility across our agencies allow for agile and flexible work arrangements and expand our investments in technology learning and development programs, while maintaining competitive <unk>.

Speaker 3: while maintaining competitive benefits and capital.

And if it's and compensation programs. We also want omnicom to be a company that our people can be proud of and want to work for over the years. We've been focused on the role we play in critical areas, such as environmental sustainability and diversity equity and inclusion.

Speaker 3: We also want Omnicom to be a company that our people can be proud of and want to

Speaker 3: Over the years, we've been focused on the role we play in critical areas.

Speaker 3: language at full Education

Speaker 3: In 2021, we named New Leadership and expanded our teams in these high priority areas so that we can continue acting on our goals.

In 2021, we need new leadership and expanded our teams in these high priority areas. So that we can continue acting on our goals and implement new initiatives.

Speaker 3: In fact, this past year, we're the only company in our industry named to Newsweek's list of America's most responsible.

In fact, this past year, we were the only company in our industry named to Newsweek's list of America's most responsible companies.

Speaker 3: We aim to achieve more in the new year so we can ensure on-the-com agencies are a destination of choice for top-town. We're entering the new year in a very strong position.

We aim to achieve more in the new year. So we can ensure omnicom agencies are a destination of choice for top talent.

We're entering the new year, and a very strong position with a sharp eye on our key strategic initiatives, which remain our talent dedication to creativity and building out our already strong capabilities in precision marketing and Martech consulting E Commerce.

Speaker 3: to remain our talent, dedication to creativity, and building out already strong capable...

Speaker 3: and Mark Tech consulting, e-commerce, digital and performance media, and predictive data driven insights.

Digital and performance media.

And predictive data driven insights all of which are fully supported by omni.

Speaker 3: In closing, I'd like to recognize and thank our people around the world.

In closing I'd like to recognize and thank our people around the world.

Speaker 3: You are the reason we delivered such strong results this quarter and for the full year.

You are the reason we delivered such strong results this quarter and for the full year you kept your focus and commitment to omnicom's client in operations, even with the ongoing challenges of the pandemic.

Speaker 3: and keep your focus and commitment to on-becomes, client and operations, even with the ongoing challenges.

Speaker 3: and these tough times are noticed and appreciated.

Your efforts in these tough times are noticed and appreciated.

Thank you.

Speaker 3: I will now turn the call over to Phil for a closer look at our financials. Phil? Thanks, John , and good afternoon. Thank you for taking the time to...

I will now turn the call over to Phil for a closer look at our financials Phil.

Thanks, John and good afternoon.

Thank you for taking the time to join us today.

Our fourth quarter results continued the momentum of the third quarter and helped us finish the year in a strong position.

Speaker 4: The world isn't the same as it was pre-pandemic.

While the world isn't the same as it was pre pandemic, we're in a stronger position to serve our clients in 2022 and beyond.

Speaker 4: We're in a stronger position to serve our clients in 2022 and beyond. Let's begin with...

Let's begin with a brief look at our income statement on slide three.

Speaker 4: Growth and revenues and operating profit flowed through to net income for both the quarter and the year. Combined with the resumption of our share buyback program, we had 6% growth and diluted earnings per share. Divinends grew 7.7% in 2021, and we're pleased to resume this growth after maintaining our dividend payments throughout the pandemic.

Growth in revenues and operating profit flowed through to net income for both the quarter and the year.

Combined with the resumption of our share buyback program, we had 6% growth in diluted earnings per share.

Dividends grew seven 7% in 2021.

And we're pleased to resume this growth after maintaining our dividend payments throughout the pandemic.

Please turn to slide four and we'll go through our results in more detail starting with revenues.

Our total revenue growth in the quarter was two 6%.

While our organic growth for the quarter was nine 5% or $358 million.

Speaker 4: The impact of foreign exchange rates decreased our revenues slightly in the quarter by just 30 basis points.

The impact of foreign exchange rates decreased our revenue slightly in the quarter by just 30 basis points. However, if rates stay where they were a January 31st.

Speaker 4: We estimate that the impact of foreign exchange rates will reduce our revenue by approximately 2% in both the first and second quarters of 2022. The impact on revenue from our net acquisitions and this...

We estimate that the impact of foreign exchange rates will reduce our revenue by approximately 2% in both the first and second quarters of 2022.

The impact on revenue from our net acquisitions and dispositions decreased revenue by 6.6%.

This was consistent with our expectations and is primarily the result of disposition activity from Q2 of 2021.

Speaker 4: Also, acquired some excellent businesses in key growth areas, which I will discuss later. Based on transactions completed to date, we asked...

We have also acquired some excellent businesses in key growth areas, which I will discuss later.

Based on transactions completed to date, we estimate the impact of acquisitions net of dispositions.

Speaker 4: reduce our revenue by approximately 9% in the first quarter, and by approximately 5% in the

We will reduce our revenue by approximately 9% in the first quarter.

And by approximately 5% in the second quarter of 2022.

And we expect positive acquisition growth in the second half of 2022.

Speaker 4: Slide 5 presents the changes in our total revenues by business discipline. Advertising our largest category.

Slide five presents the changes in our total revenues by business discipline.

Advertising, our largest category posted seven 4% organic growth in the quarter.

Speaker 4: both are media agencies and our creative agencies contributed nicely to this growth. Precision marketing grew 19.6% organically in the quarter and is now 8%

Both our media agencies and our creative agencies contributed nicely to this growth.

Precision marketing grew 19.6% organically in the quarter and is now 8% of our total revenues.

As John discussed the businesses in this discipline are doing exceptionally well and have a great pipeline for their work in digital and marketing transformation consulting services.

Speaker 4: a great pipeline for their work in digital and marketing transformation consulting services, e-commerce, marketing sciences, and digital experience design. Commerce and brand consulting was up 12.4% with widespread strength across our larger ages.

E Commerce marketing Sciences, and digital experience design.

Commerce and brand consulting was up 12, 4%.

With widespread strength across our larger agencies.

E Commerce, our agencies experienced strong growth, although off a reduced base and.

And brand consulting, we're seeing benefits and good activity in the technology sector.

And from corporate branding aimed at reputation.

S G and D Eni.

Experiential as growth in excess of 50%.

Speaker 4: from a return of some in-person events throughout the fourth quarter before the Omicron variant took hold. And weeks back continued growth in 2022, although likely choppy, the brands left engaged with consumers in person.

Benefited from a return of some in person events throughout the fourth quarter.

Before the Omicron Varian took hold.

We expect continued growth in 2022.

Although likely choppy.

As brands love to engage with consumers in person.

Execution and support was up five 2% with.

With growth in the U S businesses exceeding the performance of our businesses in Europe , where our field marketing business was impacted by the new variant.

PR was up 4.4% and health care was up 4.5%.

Speaker 4: Both of these disciplines reflected strong performance across their agencies. It's worth remembering that they perform...

Both of these disciplines reflected strong performance across their agencies.

Worth remembering that they performed relatively well throughout the pandemic. So we're pleased with the results.

Speaker 4: Flipping to slide six, you can see that we grew organically in each of our regions, and growth came from most of our disciplines within these geographies. In the US, our 7.8% organic growth was slightly higher than the last one.

Flipping to slide six you can see that we grew organically in each of our regions.

Growth came from most of our disciplines within these geographies.

In the U S or seven 8% organic growth was slightly higher than last quarter.

Led by advertising and media as well as precision marketing or growth remains over 20%.

Also results of our experiential business in the U S. This quarter.

White strong as I mentioned.

Speaker 4: Outside the U.S. growth was led by the U.K. and the Asia-Pacific region, with strong PR, media, and commerce and consulting results in the U.K. and broad strength across the board in Asia. Swarth mentioning the strong organic growth of 48 percent for the Middle East and Africa or smallest region. Revenue in Q4 of 2020 was down over 35 percent. Then its premium?? budget for free on another$ ended on April 3rd, 2021.

Outside the U S growth was led by the U K and the Asia Pacific region, with strong PR media and Commerce and consulting results in the U K.

And broad strength across the board in Asia.

It's worth mentioning the strong organic growth of 48% for the Middle East and Africa, our smallest region.

Revenue in Q4 of 2020 was down over 35%.

In Q4, 2021 advertising media performance was strong.

And this quarter's results were also positively impacted by experiential revenue related to the Dubai Expo, which was initially scheduled for 2020.

Looking at revenue by industry sector on slide seven.

Relative to full year 2020, there was a two point increase in our revenue mix from technology clients offset by a one point reduction in the revenue mix from pharma and health.

Let's now turn to slide eight for a review of our operating expenses.

Salary related service costs, our largest category increased by 11, 1%.

As expected.

These costs, which include freelance support increased along with our increase in revenue as they travel and entertainment costs.

Speaker 4: that they travel and entertainment costs. Which aligns with the fact that our people are slowly going out in certain markets and meeting with clients in person. The next line item. The next line item.

Which aligns with the fact that our people are slowly going out in certain markets and meeting with clients in person.

The next line item third party service costs will.

We're down 11, 2%.

They decreased by approximately $220 million from dispositions.

And were offset by an increase of approximately $100 million from growth of our businesses.

Speaker 4: Occupancy and other costs, which are less directly linked to changes in revenue, were up 4.2% year on year due to higher general office expenses as we return to the office. Offset by lower rent and other occupancy costs, as we continue to use our spaces more

Occupancy and other costs, which are less directly linked to changes in revenue were up 4.2% year on year.

Due to higher General office expenses as we return to the office.

Offset by lower rent and other occupancy costs as we continue to use our spaces more efficiently.

SG&A expenses were up 8.4% on a year over year basis due to an increase in marketing professional fees and new business costs.

In total our operating expense levels were up slightly less than 3%.

From the fourth quarter, 'twenty 'twenty to 2021 .

Speaker 4: with this growth because it is linked to a return to the pre-pandemic environment, as well as our continued revenue growth, new business opportunities, and investments for future growth. If you turn to slide 9, you can see our operating profit growth and our margin performance.

We're comfortable with this growth because it is linked to a return to the pre pandemic environment.

As well as our continued revenue growth new.

New business opportunities and investments for future growth.

If you turn to slide nine you can see our operating profit growth and our margin performance.

For the quarter operating profit increased one 3% and represented a 16.1% operating margin.

This is a slight margin decline from the fourth quarter of 2020 when expense levels were well below normal.

Our fourth quarter EBITDA change in margin performance was similar.

For the full year operating profit was up 37, 5% with a margin of 15, 4%.

Speaker 4: A full year operating profit was up 37.5% with a margin of

And EBITDA was up 35, 4% with a margin of 15, 9%.

Speaker 4: As we look forward, while we expect to continue to see a return of certain costs to more normalize.

As we look forward, while we expect to continue to see a return of certain costs to more normalized levels.

Speaker 4: We also expect that they will be offset in part by reductions in certain discretionary and infrastructure costs, resulting from new ways of working...

We also expect that they will be offset in part by reductions in certain discretionary and infrastructure costs, resulting from new ways of working and efficiencies achieved during the pandemic.

Speaker 4: John mentioned earlier, for the full year 2022, we anticipate delivering the same strong reported operating profit margin of 15.4% that we delivered in 2021.

As John mentioned earlier for the full year 2022 we anticipate delivering the same strong reported operating profit margin.

15.4%.

That we delivered in 2021.

And as always we will continue to focus on growing our operating profit dollars.

Let's now turn to our cash flow performance on slide 10.

Speaker 4: Find free cash flow as net cash provided by operating activities, excluding changes in working capital, which are generally positive for us on an annual basis. Free cash flow of 1.8 billion grew 5.4 percent. We're pleased with the strength of this important metric. Regarding our uses of cash, we used 592 million of cash to pay dividends to provided free cash flow. Jag Lee Onerd has kept the money.

We define free cash flow as net cash provided by operating activities, excluding changes in working capital, which are generally positive for us on an annual basis.

Free cash flow of $1 8 billion grew five 4%.

We're pleased with the strength of this important metric.

Regarding our uses of cash.

We used $592 million of cash to pay dividends to common shareholders.

And another $113 million for dividends to Noncontrolling interest shareholders.

We maintained our dividend throughout the pandemic in 2020 and.

And increased by seven 7% in 2021.

To a quarterly rate of <unk> 70 per share.

I'm going to discuss capital expenditures in two pieces.

Our normal capital expenditure levels were unchanged from 2020.

Additionally, in the fourth quarter of 2021 .

Speaker 4: We had a very unique opportunity to purchase our primary office building in London for approximately $575 million. Subsequent to the purchase during the fourth quarter of 2021, we issued 325 million pounds sterling notes due in 2033 with an attractive 2.5 million pounds.

We had a very unique opportunity to purchase our primary office building in London for approximately $575 million.

Subsequent to the purchase during the fourth quarter of 2021.

We issued 325 million pound Sterling notes due in 'twenty 33.

With an attractive 2.25% coupon.

To give you some background.

We have more than 5000 people at work there for multiple agencies.

It's our largest office building globally, and our second largest market.

We've been consolidating space in London for some time and have exited 31 buildings since 2015.

London is a key market for our future.

Speaker 4: Building is in the South Bank area west of London Bridge near the tape modern. Culturally vibrant area of London, key to attracting and...

And this building is in the South Bank area West of London Bridge near the Tate modern.

Culturally vibrant area of London key to attracting and retaining talent.

Financially, it's an attractive opportunity for our business.

Speaker 4: will avoid expected market increases on our rent that didn't compare favorably to ours.

And we will avoid expected market increases on a rent that didnt compare favorably to outright ownership.

Speaker 4: purchases of this building has not changed our capital allocation strategy and did not impact our credit rating. Acquisitions picked up relative to 2020 at $202 million. As we talked about last call, we are investing in the area's most important to our clients and therefore to our future revenue growth.

The purchase of this building has not changed our capital allocation strategy and did not impact our credit rating.

Acquisitions picked up relative to 2020 at $202 million as we talked about last call.

We're investing in the areas most important to our clients and therefore to our future revenue growth.

Two acquisitions in the fourth quarter of 2021 are highlighted back of this deck.

Jumped $4 50 media.

Performance Media agency that is now part of Omnicom Media group.

And bright Jen.

The digital business transformation specialists.

That is a significant implementation partner for the sales force marketing stack.

Bright Gen is now part of our precision marketing group.

Speaker 4: And lastly, we ramped up our stock repurchases during the fourth quarter, bringing the year to $518 million. As you know, our pre-pandemic annual range was 500 to 600 million, so we are solidly back on track with this important total return component for our shareholders. Our historical capital allocation has been very consistent, using our free cash flow for for dividends, stock repurchases, and acquisitions.

And lastly, we ramped up our stock repurchases during the fourth quarter.

The year to $518 million.

As you know our pre pandemic annual range was 500 to 600 million so.

So we are solidly back on track with this important total return component for our shareholders.

Our historical capital allocation has been very consistent.

Using our free cash flow for dividends stock repurchases and acquisitions.

We don't expect this change going forward.

Although we do see more opportunities for acquisitions similar to those we completed in 2021.

These tuck in type acquisitions are efficient for us because they acquired agencies and their service offerings can contribute across our group to serve an embedded base of clients and to help win new ones.

Slide 11 shows our credit and liquidity.

Notwithstanding that Sterling note I just mentioned.

You can see that our other financing activities throughout the year lowered our outstanding debt from December 2020 to December 2021.

Speaker 4: lowered our outstanding debt from December 2020.

At year end, our total leverage was two four times. In addition to the $5 3 billion of cash on the balance sheet at year end.

Speaker 4: In addition to the 5.3 billion of cash on the balance sheet at year

Speaker 4: We also have a $2 billion US dollar commercial paper program backed up by our $2.5 billion revolving credit.

We also have a $2 billion U S dollar commercial paper program Backstopped by our 2.5 billion dollar revolving credit facility.

I'll end my prepared remarks today on slide 12, which shows our strong return on invested capital of 33, 4% for the fiscal year 2021 and.

Speaker 4: shows our strong return on a vested capital of 33.4% for the fiscal year 2021 and 44.3% return on equity. Both of these took notable step less and taken effective measures.

And 44, 3% return on equity.

Both of these took notable steps up from 2020 and remain very healthy indicators of the strength of our business and its attractiveness to shareholders.

At this point operator, please open the lines for questions and answers. Thank you.

Speaker 5: And ladies and gentlemen, if you wish to ask a question, please press 110 when you're touched on phone. You may remove certain cue at any time by pressing 10 again. If you're using a speaker phone, you can pick up the answer before pressing numbers. Once you get it, they have a question, please press 110.

And ladies and gentlemen, if you wish to ask a question. Please press one to zero and you touched on Pone, you may remove yourself from queue at any time by pressing one zero again.

If you're using a speakerphone please pick up the handset before pressing the numbers once again to ask a question. Please press one them zero.

And I'll start with David.

<unk>. Please go ahead.

Speaker 6: Hi, thank you. John was wondering if you could provide some additional color around your organic outlook for 2022. What assumptions are you making around pandemic or supply chain headwinds? And does your outlook at this point account for a full return to your events and execution businesses?

Hi, Thank you John I was wondering if you could provide some additional color around your organic outlook for 2022, you know what assumptions, you're making around pandemic or supply chain headwinds and does your outlook at this point accounted for a full return to your events and execution businesses.

Speaker 3: Well, certainly we've taken all of that into consideration. Um,

Okay.

Well certainly we've taken all of that into consideration.

I'll first start off with.

Hum.

Speaker 3: The last part of you question, which is, you know, the in person.

Last part of your question, which is you know the in person.

Speaker 3: execution type of event businesses. They're certainly, we anticipate that they're going to be a little slower in the first quarter and possibly even the first five months of the year because of the variant.

Execution type of event businesses.

There's certainly we anticipate that they're going to be a little slower in the first quarter.

And possibly even in the first five months of the year because of.

The variance.

Speaker 3: And that kind of put markets back on the seals a bit, but we see it fully coming back by the second half of the year. So we've taken that consideration and given the guidance that we're given. We've also taken into consideration and we've looked very closely at our

And that.

That kind of put markets back on feels a bit.

But we see it slowly coming back.

By the second half of the year, so we've taken that into consideration when you're giving the guidance that we've given.

We've also taken into consideration and we work very closely.

At our.

Speaker 3: companies that serve as certain sectors that have had more difficult time with supply chain than others. And we've been, I think,

Companies that service certain sectors that have had more <unk>.

Difficult time with the supply chain than others.

We then I think.

Speaker 3: Re-in-able if not conservative in our estimates of what kind of revenue we expect to see there.

Reasonable if not conservative in our estimates of what kind of revenue we expect to see there.

Speaker 3: The growth that we're projecting really is a result.

The growth that we're projecting.

Really.

Result.

Speaker 3: The many wins that we had this year are both new clients, but also expanding our services to existing clients.

The many wins that we had this year of both new clients, but also expanding our services to existing clients.

Hmm.

Speaker 6: Is that answer here? Yeah, no, that was great. And then for Phil, wonder if you just speak a little bit more to the puts and takes on the margin outlook. You know, how does both purchase of your London headquarters impact that? And then just to confirm, is the guide for consistent margin against your reported figure? And I just wanted to check as you did have the 50 million gain from the icon sale in there.

Does that answer here.

Yeah, No that was great and then third Phil wondering if you can just speak a little bit more of the puts and takes on the margin outlook.

How does the purchase of their London headquarters impact that and then just to confirm is the guide for a consistent margin against your reported figure and just wanted to check as you did have the $50 million gain from the icon sale in there.

Speaker 4: Yeah, you know, in terms of the margin, I think we gave a number. So I think the number is the number. And that's our expectation for...

Yeah, you know in terms of the margin I think we gave a number so I think.

Yeah the numbers the number.

And that's our expectation for.

Speaker 4: 22. You can view it as it happens to be the same number as 21.

22.

You can view it as it happens to be the same number of 'twenty one.

Speaker 4: What's in it? In 22 will be a lot different than what's in it in 21. There's going to be a lot of puts and takes.

What's in it.

And 'twenty two will be a lot different than whats in it in 'twenty, one there's going to be a lot of puts and takes.

Speaker 4: in the cost structure as the business continues to ramp up and grow. And some costs come back into the business that I've taken a little time to get there offset by some efficiencies from outsourcing and automation. And...

In the cost structure as the business continues to ramp up and grow.

And some cost come back into the business that that has taken a little time to get there offset by.

You know some efficiencies from outsourcing and automation.

Speaker 4: you know, other discretionary costs being controlled and reduced. So, so there's going to be a lot of puts and takes in the cost structure in 22 relative to 21. But we're confident that we'll deliver what we delivered.

Other discretionary costs being control then reduced so so there's going to be a lot of puts and takes on the cost structure in 'twenty two relative to 'twenty one.

But we're confident that we'll deliver.

What we delivered.

Speaker 4: Sorry, in 22 what we were confident will deliver in 22 what we delivered in 21 from a margin percentage perspective

Oh, sorry in 'twenty two what we we're confident we'll deliver in 'twenty two what we delivered in 'twenty, one from a margin percentage.

Perspective.

Very clear thank you.

Sure.

Next we'll go to the line of Jason Bazinet <unk>. Please go ahead.

Speaker 7: I just had a question on the on the disposition headwinds you talked about minus nine

I just had a question on the on the disposition headwinds you talked about minus nine in the first quarter minus five in the second quarter.

Speaker 7: Is that a few more acquisitions coming in, or is that just the normal?

Does that assume more acquisitions sort of coming in or is that just the normal.

Sort of.

Sort of seasonal profile of the businesses that were disposed of but accounts for sure.

Speaker 3: I'll take a stab at it and then fill in that.

I'll take a stab at it and then Phil can add.

Okay.

As we've said I think on the last couple of calls.

Speaker 3: We more or less completed our review of and actions taken on major dispositions by the second quarter of last year. And since that

We more or less completed a review of.

And actions taken on major dispositions by the second quarter of last year.

And since then we've been.

Speaker 3: Very actively engaged in trying to purchase

Very actively.

<unk> engaged in trying to purchase.

Speaker 3: services in the areas that we have outlined. So what you see in the first half of this year and tells comments is the residual of actions taken through June 30th the last year for the most part. And we fully expect.

The services in the areas that we've outlined.

So what you see in the first half of this year I am until his comments is the residual.

Ive actions taken through June 30 of last year for the most part and.

And we fully expect.

Speaker 3: When you look at the second half and beyond that acquisitions will be what you see.

When you look at the second half and beyond that acquisitions will be what you see.

And in our numbers.

Speaker 4: There is some, you know, there's some choppiness under a seasonality in the dispositions in the first.

There is some you know, there's some choppiness and or seasonality in <unk>.

The dispositions in the first.

Speaker 4: in the first quarter of last year, while the numbers a little bit bigger. But the way we calculate that number, we do an estimate based on transactions that have closed to date.

In the first quarter of last year, while the number is a little bit bigger, but the way we calculate that number we do an estimate based on on transactions that have closed to date.

Speaker 4: So we certainly have a robust pipeline of acquisitions that we're looking at.

So we certainly have a robust pipeline of acquisitions that we're looking at.

Speaker 4: You know, some of them we will do, some of them won't work out.

You know some of them, we will do some of them won't work out.

But as we look out at the year, knowing what we know today in terms of what's been completed today.

Speaker 4: But as we look out at the year knowing what we know today in terms of what's been completed today, that's our expectation for the first quarter and the second quarter. We expect that number will change the net number.

That's our expectation for the first quarter in the second quarter.

Yeah, we expect that number will change the net number.

Speaker 4: You know, we'll change as we complete some transactions or as we complete some acquisitions, I should say.

You know it will change as we as we complete some transactions as we complete some acquisitions I should say.

Speaker 4: throughout 2022. So we expect that acquisition growth net in the second half on the third quarter and the fourth quarter.

Throughout 2022 so.

We expect acquisition growth net in the second half are in the third quarter and the fourth quarter.

Speaker 4: And if we close on some transactions earlier in 22, that we've been negotiating, you know, the negative number might come down a bit. But that's where we stand today. Okay, that's very helpful. Thank you.

And if if we close on some transactions earlier in 'twenty two.

We've been negotiating.

The negative number might come down a bit.

But that's where we stand today.

Okay. That's very helpful. Thank you.

Sure.

And next we'll go to the line of Ben Swinburne. Please go ahead.

Thanks, Good afternoon.

Speaker 6: John , five to six percent, obviously very strong guide for 22. I think that would be your highest organic growth year since obviously other than, you know, the COVID rebound 21 since back in 2015. When you step back and think about the repositioning of your portfolio, is that the biggest?

John 5% to 6%, obviously very strong guide for 'twenty, two I think that would be your highest organic growth year since I'm honestly other than the Covid rebound 21 since back in 2015, when you step back and think about the repositioning of your portfolio is that the biggest sort.

Speaker 8: sort of difference between what we saw in the several years before the pandemic when growth was sort of 2 to 3% and what you expect now Would you chalk it up sort of changes in

Sort of difference between what we saw in the in the several years before the pandemic when growth is sort of two to three per cent of what you expect now would you chalk it up sort of changes in.

Speaker 8: you know, product offerings or anything else you'd add to be interested in through your your high level perspective on that. And then I just was wondering if you guys saw a lot of variability on that five to six through the quarters because the comps from 21 are all over the place. I was just wondering if you had any advice in thinking about the quarterly progression.

Our product offerings or anything else you'd add I'd be interested in sort of the year you a high level perspective on that and then I. Just was wondering if you guys saw a lot of variability on that five to six through the quarters because the comps from 'twenty. One are all over the place. So I'm just wondering if you had any.

Advice and thinking about the quarterly progression. Thank you.

Speaker 3: Well, you know, you've been on quite a few of our calls, so I know you've heard version of this in the past. You know, it was starting to...

Well yeah.

You bet you bet on quite a few of our calls so I know you've heard this from.

Starting 2015.

Speaker 3: The primary focus post that was looking at the portfolio and looking at the assets that we had.

Our primary focus post that one.

Looking at the portfolio and looking at the assets that we had.

Speaker 3: And with the critical eye of, would we want to own these assets five years from now? That was an ongoing process, and it resulted in us doing dispositions, and being less focused, I would say, on acquisitions. I was two years ago now.

And with a critical eye of would we want to own these assets five years from now.

That was an ongoing process and it resulted in us.

I'm doing dispositions and being less focused I would say on acquisitions.

Two years ago now.

Speaker 3: that clarity during actually during COVID, we were very happy that most of the dispositions that we had planned for were able to execute.

That clarity during during actually during Covid.

We were very happy that most of the dispositions that we had planned for we were able to execute.

Speaker 3: And we started to gear up our M&A machine again, which had been dormant, I would say, in the 16, 17, 18 periods.

And we started to gear up our M&A machine again, which had been dormant I would say.

In the 16 17 18 period.

Speaker 3: And that includes both the efforts that are made here, corporate plus in certain select practice areas where we've decided to focus on growth because that's where we see the business going. And in speaking to our largest clients, the types of service.

And that includes both the efforts that are made here at corporate plus in certain select practice areas, where we've decided to focus on growth because that's where we see the business growing.

And speaking to our largest clients.

The types of services that.

Speaker 3: going to be required in the future and that they're very happy to extend their relationship with us.

I'm going to be required in the future and that they're very happy.

You know too soon.

To extend their relationship with us on.

Speaker 3: And as you know, we've always had a very disciplined approach to this.

And as you know, we've always had a very disciplined approach to this.

Speaker 3: And if we couldn't buy it at the right price, we build it. Sometimes that hurt our PNL. But I think we're in a very good position today and we're very comfortable with the portfolio. And we're very purposely looking at certain acquisitions in the areas that are kind of outlined because we think that's where the market is going.

And if we couldn't buy it at the right price, we build it sometimes that hurt our P&L.

But I think we're in a very good position today, and we're very comfortable with the portfolio.

And we're very purposely looking at certain acquisitions in areas that are kind of outlined.

Because we think that's where the market is going.

Right.

Speaker 8: Guys, anything to the quarters? I don't know if you were feeling a comment or...

Got it.

I don't know if you were fill out a comment or.

Speaker 4: yeah you know as far as the quarters go bad i think

Yeah, you know as far as the quarters go bad I think.

Yeah at this point in time in the year.

Speaker 4: You know, at this point in time in the year, as you can imagine, we don't have a lot of visibility into certainly the fourth quarter and or as much into the second half. We're certainly very comfortable with our expectations in the first half of the year. And.

As you can imagine we don't have a lot of visibility into certainly in the fourth quarter, an indoor as much into the second half.

We're certainly very comfortable with our expectations in the first half of the year.

And.

Speaker 4: You know, I don't think I would look at the quarters right now based on what we know as varying significantly or bouncing around a tremendous amount, other than our typical approach, we're pretty conservative about the fourth quarter because we don't have as much visibility for certain until we get closer. Okay. Thank you both. The

I don't I don't think I would I would you got to look at the quarters right now based on what we know is as varying.

You know significantly more bouncing around a tremendous amount.

Other than you know our typical approach, where we're pretty conservative about the fourth quarter, because we don't have as much visibility.

Certainties.

Until we get closer.

Okay. Thank you both.

Sure.

Yeah.

Next we'll go to line of Michael Nathanson. Please go ahead.

Speaker 2: Thanks, Ajahn Abtuthia. Follow me up on Ben's question on organic revenue growth. I wonder if you can talk a bit about how do you think the impact of all these new privacy initiatives like IDFA?

Thanks, Hey, John at two P. M. Following up on Ben's question on organic revenue growth.

Wonder if you could talk a bit about how do you think the impact of all these new privacy initiatives like idea Fay.

Speaker 3: the end of cookies, how that's impacting your outlook for growth. Are you seeing the shift in shareholder shifts in demand for your services in areas that address those shortcomings? And if you would agree that we're seeing accelerate growth in behavior from clients and customers, how do you juggle maybe the big

At the end of cookies, how that's impacting your outlook for growth. There are you seeing a shift to a material shift in demand for your services in areas that address those shortcomings and if you would agree that we're seeing accelerated growth in behavior from clients and customers. How do you juggle maybe the big.

Speaker 3: transformative acquisition from the appears and done versus the tuck-ins. And how would you, you know, how do you balance the thinking on maybe doing a big deal that push you further along versus smaller tuck-in deals that may be more creative?

Transformative acquisition and some of your peers have done versus the tuck ins and how would you how do you balance and thinking on maybe doing a big deal that pushed you further along versus smaller tuck in deals that may be more accretive.

Hum.

Wow.

Speaker 3: I'm going to attempt to answer questions best I can.

And then attempt to answer your question as best I can.

Speaker 3: I have enough trouble running on the comp, so I don't really worry about the huge acquisitions that...

I have enough trouble running omnicom, so I don't really worry about it.

Huge acquisitions that.

Speaker 3: that my competitors are making. You know, when it comes to...

That my competitors are making.

When it comes to.

Speaker 3: us. And I think there's an article far as there in some of the other.

Us.

And I think there's an article forest or.

And some of the other.

Speaker 3: magazines and other publications are picked up yesterday.

<unk> and other publications or picked up yesterday.

Speaker 3: with a client speaking to this subject more than, so it should carry more credibility than me saying something about it. And I'm the come up on I'm the come about, I'm the investments we've made, the transparency that we've stayed absolutely committed to. In an ever changing environment where the transparency, I mean, with privacy rules.

With our client speaking to this subject more than so it shouldn't carry more credibility than me, saying something about it and omnicom on omnicom about made the investments we've made.

Transparency.

We stayed absolutely committed to.

You know in an ever changing environment, where the transparency I mean, where the privacy rules.

Speaker 3: are changing and being reinterpreted as we sit here tonight, both outside the United States and even in certain of the larger states in the country.

Our changing and being reinterpreted as we sit here Tonight.

Both outside the United States and even in certain of the larger states in the country.

Speaker 3: And we don't think that that's over. We think that's

And we don't think that that's all we're we think that's.

Speaker 3: that's still an open subject, but we think we're in a great position to not have to defend any moves that we've made or revenues that we've purchased. And we can adapt our services and our partners to whatever their current market conditions.

That's still an open subject, but we think we're in.

A great position.

Do not have to defend any moves that we've made.

<unk> revenues that we purchased.

And we can.

Adapt our services and our partners.

So whatever the current market conditions.

Speaker 3: require, but we all would agree that this is

Require.

But we all would agree.

That.

This is something that governments that have been playing around with it and talking about it and courts in certain jurisdictions.

Speaker 3: that have been playing around with it and talking about it and courts and certain jurisdictions are actually starting to...

Starting to.

Speaker 3: Look at a lot closer than at any time in the past.

Look at it a lot closer than at anytime in the past.

Speaker 3: So we're very, very happy with it. I think the key takeaway, if you glance at that story that I referred to.

So we're very very happy with it I think the key takeaway if you.

Glance at that story that I referred to.

Speaker 3: is we built on the initially as a media product and for audiences and other things. And what we've been able to successfully accomplish in the last several years as we've been rolling it out is it's become the operating platform which informs every aspect of the services that we provide to clients that allow us to

Is we built omni initially as a media product.

And.

So audiences and other things.

And what we've been able to successfully accomplish.

In the last several years as we've been.

Rolling it out.

Has it become the operating platform, which informs every aspect of the services that we provide to clients that allow us.

Two two.

Speaker 3: to deploy it. And that's why in my comments, I noted that there are really two areas where we're gonna get growth next year. One is in continuing to win new business, but as importantly, to extend services in areas that we're not currently servicing longstanding client relations.

To deploy it and.

And that's why in my comments.

I know that there are really two areas, where we're going to get growth next year.

One is in continuing to win new business.

But as importantly to extend services in areas that were not currently servicing long standing client relationships. So.

Speaker 3: So the confidence is built on a pretty detailed look at ourselves versus our competitors in a marketplace and we're very, very comfortable with the decisions that we've made.

The confidence is built on a pretty detailed look at.

Ourselves versus our competitors in the marketplace and we're very very comfortable with the decisions that we've made.

Speaker 4: It relapsed to your question and some of the prior ones. One thing not to lose track of is...

Relative to your question and some of the prior ones won't one thing not to lose track of is even though you know we were largely focused on are the results. So what we.

Speaker 4: Even though we were largely focused on or the results show, we certainly pruned the portfolio, did some dispositions over the last three.

We certainly pruned the portfolio did some dispositions over the last three or four years and less in the acquisition area, we've been investing pretty heavily in.

Speaker 4: and less in the acquisition area. We've been investing pretty heavily.

Speaker 4: this space, data analytics and the omniplatform.

In.

This space data and analytics and the omni platform for well over 10 years, you know 10, 12 14 years.

Speaker 4: Well over 10 years, you know, 10, 12, 14 years.

Speaker 4: making some significant investments. So we've been preparing and adjusting our approach all along. We didn't have a need to do a multi-billion dollar acquisition from our perspective, our focus.

Making some significant investments so so we've been preparing and adjusting.

You know our approach all along we didn't have a need to do a multibillion dollar acquisition from our perspective our focus.

Speaker 4: you know, has been on building a platform that gave us the flexibility that John was talking about and focusing on intelligence and decisioning and activation and outcomes, not just data ownership and or first party data management. You know, there's a bit of risk there, given all the changes in the privacy rules and regulations.

Yeah. It has been on building a platform that gave us the flexibility that John was talking about.

And focusing on intelligence, and Decisioning and activation and outcomes.

Not just data ownership indoor first party data management, Yeah, there was a bit of risk there given all the changes in the privacy rules and regulations.

Speaker 4: but will certainly be monitoring those, you know, as things evolve at a pretty rapid pace. Thank you, Bob.

But that will certainly be monitoring those.

You know as as things evolve are at a pretty rapid pace.

Thank you both.

Sure.

Okay.

Okay.

And next we'll go to the line of Stephen Cahill. Please go ahead.

Speaker 6: Thanks. Maybe first just on compensation. I'm wondering what kind of salary and expense growth you've got baked into the flat margin guidance. And it sounds like with that really strong organic growth guide, you're gonna be bringing a lot of people on board this year. So we just love to get your view of what the wage inflation environment looks like. And then related to that, so I was wondering if you could help us with free cashflow conversion. Sometimes it's a little lower when you're growing and a little better in years when you might be shrinking. So anything we should be mindful of in terms of working capital or anything like that, it relates to your free cashflow conversion in this high growth year. Thanks.

Thanks.

Maybe first just on compensation I'm wondering what kind of a salary and expense growth you've got baked in to the flat margin guidance and it sounds like with that really strong organic growth guide youre going to be bringing a lot of people on board. This year. So would just love to get your view of what the wage inflation environment looks like and then related to that.

Phil I was wondering if you could help us with free cash flow conversion, sometimes it's a little lower when you're growing at a little better in years when he might be shrinking. So anything we should be mindful of in terms of working capital or anything like that as it relates to your free cash flow conversion in this high growth year. Thanks.

Speaker 3: Sure. Let me take part of it and then fill in supplement what I say and answer this specific question you've addressed to him.

Sure.

Let me take part of it and then Phil can supplement what I say and answer the specific question you dress to him.

Hmm.

Okay.

Speaker 3: I think we ended the year at the same employer employee level as we were pre-pandemic and I think in the last year.

I think we ended the year at the same employer employee level as we were pre pandemic and I think in the last year.

Speaker 3: 20 to 21, we went from about 65,000 folks to little over 70,000 employees. So that growth is there. There's no denying that there is wage inflation and that we've been coping with this and dealing with it. We've also...

'twenty to 'twenty, one we went from about 65000 folks to little over 70000.

Employees.

So that growth is there there's no denying.

That there is wage inflation.

And that we've been coping with this and dealing with it we've also.

Speaker 3: not anticipating inflation, but anticipating how do we improve our productivity. We've been making investments.

Not anticipating inflation, but anticipating how do we improve our productivity we've been making investments.

Speaker 3: As Phil mentioned in his comments, outsourced to automate to look to the future in terms of AI and what contribution he can make. So there are quite a bit of puts and takes in terms of what we expect.

As Phil mentioned in his comments.

Hum.

Outsource to automate.

To look to the future in terms of AI and what contribution that you can make.

There are quite a bit of puts and takes in terms of what we expect.

To face from you know from a salary and wage inflation.

Speaker 3: to face from a salary and wage inflation point of view. And we've been very careful before we got on this call and said that we could maintain our margins, our strong margins at the 21 levels. Phil, you might want to. Yeah, just one or two things that on margin front.

Point of view.

And we've been very careful.

Before we got on this call and said.

That we could maintain our margins are strong margins.

You know at less than the 21 levels.

So you might Wanna, Yeah just.

One or two things that on the margin front.

Speaker 4: you know as John said we're back to pre pandemic levels in terms of uh... the employee base

Yeah, as John said were back to pre pandemic levels in terms of of the employee base.

Speaker 4: you know we we also wouldn't necessarily look at twenty two uh... and the guidance we've given as far as margins and say uh... yeah it's just flat you know we think

You know, we we also wouldn't necessarily look at 'twenty two.

And the guidance, we've given as far as margins and say Oh, Yeah. It's just flat you know what we think.

Speaker 4: If you look at 21, 21's still not a normal year. Certainly 2020 is not a full year. Not all the costs.

Yeah. If you look at 'twenty, one 'twenty one is still not a normal year, certainly 'twenty 'twenty was not a normal year not all the costs have come back into the normalized business.

Speaker 4: I've come back into the normalized business. So there's some opportunities, certainly that we're gonna have to take.

So there's some opportunities certainly that that we're going to take advantage of for some cost reduction achievements in 'twenty. Two so you got to get to a normalized level, which is in a pretty meaningful way.

Speaker 4: for some cost reduction achievements in 22.

Speaker 4: going to get to this normalized level, which is

Speaker 4: in a pretty meaningful way better than pre-pandemic margin levels. So, you know, we're pretty satisfied with the performance in 21.

Better than pre pandemic margin levels.

Yeah, we're pretty we're pretty satisfied with the performance in 'twenty one.

Speaker 4: We're looking at, you know, our expectations for 22, we'd view them very positively in terms of the margins that we expected to deliver in 2022 as well. And then specifically related to the free cash flow question, I think it's...

We're looking at in our expectations for 'twenty two.

We view them very positively.

In terms of the margins that we expect to deliver in 2022 as well and then specifically related to the the.

Free cash flow.

And I think if you go back.

Speaker 4: through our numbers, you know, historically, you know, back to 2017, and prior, we've been delivering a billion, six, a billion, seven, up to about a billion, eight this year in Free Cash Flow, very consistently. We don't expect a meaningful drop-off in our performance, and in fact, if anything, we think, you know, the pandemic period, our people,

Through our numbers you know historically.

Yeah, you're back to 2017.

And and prior we've been delivering 1 billion six 1 billion seven up to about 1 billion eight this year in free cash flow I'm.

Very consistently.

We don't expect a meaningful drop off in our performance and in fact, if anything we think yeah. The pandemic.

Period, our people performed.

Speaker 4: You know, very well in this area. And I think we've gotten even better through some of the things we've learned managing or free cash flow during the pandemic. So we don't expect a meaningful drop off at this point. Great. Thanks for that contact.

You know very well in this area and I think we've gotten even better.

Through some of the things we've learned managing our free cash flow during the pandemic.

So so we don't expect a meaningful drop off at this point.

Great Thanks for that context.

Sure.

Next we have a question from the line of Tim Nolan. Please go ahead.

Speaker 6: Hi, thanks for taking the question. I've been jumping around a bunch of calls. So apologies to this question. It's our been asked if you've addressed it. But on your last earnings call, you talked about a pretty decent pipeline of deals that you're working on. I do know you set a few in the quarter here. Just wondering if you could talk a little bit more about what other assets you might be looking to acquire, what the pop-in looks like.

Hi, Thanks for taking the question I've.

I've been jumping around a bunch of calls so apologies. If this question has already been asked or if you've addressed it but on your last earning call earnings call you talked about.

You know a pretty decent pipeline of deals that you're working on I didn't know you set a few in the quarter here just wondering if you could talk a little bit more about.

What other assets you might be looking to acquire what the pipeline looks like.

Speaker 2: And after any of their divestitures in the work, you've done a number of these over the years. I think you're largely done with those. But if you could address that, and again, apologies if this has already been addressed.

And and if there's any other divestitures in the works you've done a number of these over the years I think you're largely done with those but if you could address that and again apologies. If this has already been addressed.

Speaker 3: No, it's okay. It's an important question to ask.

No. It's okay. It's an important question to ask.

Speaker 3: We don't have any major dispositions under consideration. So, you know, that her now is in a,

Hum.

We don't have any major dispositions.

Under consideration.

So you know that.

For now as you know.

In the rearview mirror.

We as.

Speaker 3: We've said, and we might have said it earlier, maybe you were jumping around. We've been focused on the fastest growing part of our business, which is the precision marketing, the data and analytics, business transformation consulting.

We've we've said than we might've said it earlier, when maybe you weren't doing jumping around.

<unk> been focused on the fastest growing part of our business.

Is the precision marketing the data and analytics business transformation consulting.

Speaker 3: e-commerce because everybody doing comp, it's really commerce.

Congress, because everybody's doing comp its really commerce.

Speaker 3: and performance media and help.

And performance media and health care.

Speaker 3: and our acquisition pipeline.

And our acquisition pipeline.

Speaker 3: is in those areas. And there are a number of conversations that are ongoing. And we fully expect that we'll be closing deals.

Is in those areas and.

There are a number of conversations that are ongoing.

And we fully expect that we'll be closing deals.

Speaker 3: you know, after this call and, you know, as we move through the rest of 2022.

Now after this call and you know as we move through the rest of 2022.

Speaker 3: in these areas. If some other great opportunity pops up, then God, we have the financial resources to look at it and take advantage of it because we have not.

In these areas if some of the great opportunity Pops up.

Thank God, we have the financial resources to look at it and take advantage of it because we have not.

Speaker 3: We maintain their agility and flexibility with respect to how we can view the needs of our clients and how we can best serve them.

We've maintained our agility and flexibility.

With respect to how.

How we can view the needs of our clients and how we can best serve those.

Speaker 9: Okay, thanks. If I could just follow up quickly, I assume that the pricing environment is...

Okay. Thanks, and if I could just follow up quickly I assume that the pricing environment is is.

Speaker 9: Good enough for you now that there are opportunities to be had.

Good enough for you now that there are opportunities to be had.

Speaker 3: I've never been happy reaching into my pocket and pen.

I've never been happy.

And in my pocket and painting.

Speaker 3: a checkal more than I've had to.

I check or more than I've had to.

Speaker 3: So the one thing that pivots off of the list of areas that

So.

The one thing that pivots off of the list of areas that.

Speaker 3: You know, I just recited is that

I you know I just.

Resided.

Is that.

Speaker 3: The acquisitions we're looking at,

The acquisitions, we're looking at.

Look.

Speaker 3: We'll be able to look at them independently and be happy with them, but we'll also, more importantly, believe that we can leverage them with our existing client base and the existing needs of our.

We'll be able to look at them independently and be happy with them, but will also more importantly, Billy.

I believe that we can leverage them with our existing client base and the existing needs of R. R.

Our clients.

Wow.

Speaker 9: Thanks, Don. Your history of deals, I think, speaks for itself, so appreciate the coming of it.

Thanks, Jon your your history of the deals I think speaks for itself. So I appreciate the color there. Thanks.

Speaker 3: and watch every check out as if it's my own.

But we watch every shekel Ziv Israel.

Yeah.

Yeah.

Thank you.

And next we go to the line of Craig Huber. Please go ahead.

Speaker 10: Thank you John my first question. Just sort of big picture. I think most investors being very happy If you guys delivered five to six percent organic revenue growth He may be share with us if you would the tone of the conversations with your clients as they sort of think about the market advertising Budges for this year how often optimistic are they are they really leaning into Brand awareness out there driving transactions. Let me just touch on that first place

Thank you John My first question, just sort of Big picture I think most investors would be very happy if you guys delivered 5% to 6% organic revenue growth can you maybe share with us if you would.

The tone of the conversations with your clients as they sort of think about them working advertising budget for this year I mean, how often optimistic are they you know they really leaning into.

Rand awareness out there driving transactions, let me just touch on that first please.

Sure I mean I think.

Speaker 3: The focus of every CEO out there is

The focus of every CEO out there is Pat.

Speaker 3: How did they create better relations with their customers, gain better knowledge of what their customers needs are, and develop a relationship with them. Because that will not only add to their performance in 22, but sets the foundation for their relationships going forward.

How do they create better relationships with their customers.

<unk> better knowledge of what our customers' needs are.

And develop a relationship with them.

Because that will not only add to their performance in 'twenty, two but it sets the foundation for their relationships going forward.

Speaker 3: No one is going to deny that there are challenges, both in the correction of what however long the splicing takes to.

No.

Is it going to deny that there are challenges.

Both in the correction of what however, along the supply chain stuff.

Speaker 3: to work its way through. I think we'll be a better place.

To.

Work its way through.

I think we'll be a better place.

Speaker 3: when that actually occurs. And the fact that we're at the moment.

When that actually occurs and the fact that we're at the moment.

Speaker 3: suffering from inflation, that we haven't seen in quite a long period of time. So our customers are very, you know, clients, I won't even call them customers, I'm sorry. A very focused on growth and also, they're keenly aware.

Suffering from inflation that we haven't seen in quite a long periods of time.

So our customers are very clear.

Clients, how long I'm, calling customers I'm sorry.

Oh very focused on growth and also.

They are keenly aware.

That.

Speaker 3: Each one of their customers are being influenced by messages.

Each one of their customers are being influenced by messages.

Speaker 3: 24-7 and bringing clarity about their products and identification and reasoning why they should be selected is what we're expert in.

24 seven.

And bringing clarity about their products and an indemnification and reasoning why they shouldn't be selected.

What we're expert in and.

So the.

Speaker 3: You know, there haven't been any celebrations or parties, but a lot of very strategic and tactical conversations about how we're going to grow the business and how they're going to grow their business.

No there hasn't been any celebrations of parties, but a lot of very.

Strategic and tactical conversations about how we're going to grow the business and how they're gonna grow their business.

Speaker 3: So it's not... Hard enough, you know, when you get on these calls.

So it's not all.

Are there enough you know when you get on these calls.

Speaker 3: Or are you getting in front of a potential client? Is it a tendency to talk about us? We're a service provider. We're here to sell clients product.

Are you getting in front of a potential client.

There's a tendency to talk about us where a service provider where heaters sell clients products.

Speaker 10: then John it is you know ever since facebook reported a few days ago there's been a lot of talk after that about tech talk and uh... taking a lot of share out there

Sean as you know ever since Facebook reported a few days ago, there's been a lot of talk after that.

Route tick tock and taken a lot of share out there.

Speaker 10: users time on their mobile devices and so forth. I'm curious from your standpoint from advertising, going to TikTok or somewhere platforms like a snap chat or what have you, they sort of viewed out there by your customers, is more of experimental or is it really sort of pick up steam after the advertising revenue shift?

Users time on their mobile devices, and so forth I'm curious from your standpoint from advertising going to tick talk or some more platforms like a snap snapchat or what have you.

Viewed out there about your customers, it's more of a experimental or is it really sort of pick up steam after the advertisement revenue shifting there.

Speaker 3: I can't really speak to Facebook.

Well I can't really speak to the Facebooks.

Speaker 3: issues, short-term or longer-term. But, you know, we're agnostic.

Issues short term or a longer term.

Right.

You know.

We are agnostic.

In terms of.

Speaker 3: where we, who we partner with, and where we...

Where are we who we partner with them.

And where are we.

Speaker 3: where we get the information that we need in order to sell those clients products. And, you know, you look beyond the immediate.

Where we get the information that we need in order to sell those clients products.

And.

You know you look.

Beyond the immediate.

Two the impact of gaming and the impact of yeah.

Speaker 3: Metaverse whenever and as that really folds out

Meta versus whenever and as that really pulls out.

Speaker 3: from just a word to really capturing the attention.

Hum.

Word to.

Really capturing the attention.

Speaker 3: of consumers and the great thing about

Oh of consumers.

The great thing about.

Speaker 3: the position that we're in today, and I think the decisions we've made.

The position that we're in today and I think the decisions we've made.

Speaker 3: is we've remained incredibly flexible and not tied to any

Is we remained incredibly flexible and not tied to.

Any.

Speaker 3: I would say not only any single, but any multiple sources of gaining that data. If it makes sense for our clients, for us to have a relationship with TikTok, it gets stronger. If it makes...

Yeah.

Not only any single, but any multiple sources.

Gaming that data.

And we.

If it makes sense for our clients for us to have a relationship with Tic Toc. It gets stronger if it makes you know.

Speaker 3: Since we're spending more money with Google and some of the efforts that it's doing, we can easily do that. We are an agent but...

Suntrust is spending more money with Google and some of the efforts that it's doing well.

We can easily do that we are.

An agent but.

Speaker 3: one that has built that flexibility. And almost a knowledge that we can't accurately predict that, but what we can accurately predict is the-

One that has built that flexibility.

And almost and knowledge that we.

We cannot accurately predict that.

But what we can accurately predict.

Is the fact that if we're a flexible.

Speaker 3: and we're not defending any previous decisions. We'll always be able to keep what's important in mind, which is the client and the client's requirements. Great, thank you, John .

And we're not defending.

Any previous decisions will always be able to keep what's important in mind.

Which is the client and the clients' requirements.

Great. Thank you John .

Okay.

I guess, it's coming up.

Yeah.

And then a question.

And we have no other questioners in queue at this time.

Yeah.

Okay. Thank you I wanted to thank you all join us.

Okay.

Well see on the next call.

Yeah.

Speaker 5: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using the TT teleconference. You may now discuss.

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

Yeah.

Yeah.

Speaker 11: We're sorry, your conference is ending now. Please hang up.

We're sorry your conferences ending now please hang up.