Omnicom Group Inc. (NYSE:OMC) Q3 2018 Earnings Conference Call Transcript
Oct 16, 2018 • 08:30 am ET
Good morning, ladies and gentlemen, and welcome to the Omnicom Third Quarter 2018 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.
At this time, I'd like to introduce you to your host of today's call, Vice President of Investor Relations, Shub Mukherjee. Please go ahead.
Good morning. Thank you for taking the time to listen to our third quarter 2018 earnings call. On the call with me today is John Wren, Chairman and Chief Executive Officer; and Phil Angelastro, Chief Financial Officer.
We hope everyone has had a chance to review our earnings release. We have posted 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.
(Forward-Looking Cautionary Statement)
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 up the line for your questions.
John D. Wren
Good morning. Thank you for joining our call this morning. I'm pleased to speak to you this morning about our third quarter 2018 results. It's been a very busy quarter as we successfully executed many of the repositioning plans and dispositions that we discussed on our last call on July 17.
On August 31, we completed the previously announced disposal of Sellbytel. In addition, during the third quarter, we disposed of 18 other companies, which were primarily in our CRM Execution & Support discipline, and to a lesser extent, in our CRM Consumer Experience discipline. These businesses were no longer aligned with our long-term strategy. The disposition activity resulted in a net gain to our P&L in the quarter, which Phil will cover during his remarks.
With respect to the company's result, we reduced headcount by approximately 7,000 people. We also accelerated certain planned cost reduction and real estate consolidation activities in the quarter. During the quarter, we took actions to reduce our staff in our ongoing operations by over 1,400 people, with annual payroll of approximately $135 million. These staff actions fell into three general categories.
Approximately, 500 positions will be replaced as we refresh and upgrade our talent to meet our agencies' current needs; the retirement of a number of senior executives in our networks, practice areas and at Omnicom Corporate. These retirements ensure that our succession plans are up-to-date and that we are creating opportunities for upcoming leaders, and the savings from the remaining reductions in the headcount will contribute to our goal of offsetting the EBIT lost from the dispositions we completed in the quarter.
During the quarter, we also accelerated our real estate consolidation plans by creating more, large open and modern campus style hubs, encouraging greater cross-agency collaboration. This move has resulted in