Jerome Leshne; Senior Vice President, Investor Relations; Interpublic Group of Companies Inc
Philippe Krakowsky; Chief Executive Officer, Director; Interpublic Group of Companies Inc
Ellen Johnson; Chief Financial Officer, Executive Vice President; Interpublic Group of Companies Inc
David Karnovsky; Analyst; JPMorgan
Michael Nathanson; Analyst; MoffettNathanson
Julien Roch; Analyst; Barclays
Jason Bazinet; Analyst; Citi
Cameron McVeigh; Analyst; Morgan Stanley
Craig Huber; Analyst; Huber Research Partner
Operator
Good morning and welcome to the Interpublic Group Fourth Quarter and Full Year 2024 conference call. How parties are in a listen only mode until the question and answer portion. At that time. If you would like to ask a question, you may press star one on this conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Mr. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.
Jerome Leshne
Good morning. Thank you for joining us this morning. We are joined by our CEO, Philippe quick housekeeping, and by Alan Johnson, our CFO. We have posted our earnings release and our slide presentation on our website, interpublic.com. We will begin with prepared remarks to be followed by Q&A. We plan to conclude before market open at nine 30 Eastern Time.
During this call, we will refer to forward-looking statements about our Company. These are subject to the uncertainties and the cautionary statements that are included in our earnings release and slide presentation. These are further detailed in our 10 K and other filings with the SEC. We will also refer to certain non-GAAP measures. We believe that these measures provide useful supplemental data that while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance.
At this point, it is my pleasure to turn things over to Philippe quick housekeeping.
Philippe Krakowsky
Thank you, Jerry, and thank you for joining us this morning. As usual, I'll start with a high-level view of our results in the quarter and for the full year, as well as our operating outlook for the year ahead. Alan will then add additional detail, and I'll conclude with thoughts on the compelling strategic benefits of our proposed acquisition by Omnicom.
Turning to performance and beginning with revenue. Organic revenue decrease in Q4 were 1.8% from 20 points. Our revenue change in the fourth quarter was largely due to the impact of the account activity over the previous 12 month period, which we had discussed with you on prior calls. Those headwinds intensified during the quarter, which was expected, but at a somewhat greater rate than we'd anticipated. As a result, the full year fell shy of our forecast, while we saw the impact of those headwinds broadly across a number of disciplines and geographic regions that was partially offset by notably strong growth in the food and beverage sector, as well as the return to solid growth in Technology and Telecom.
As discussed on our last call, the underlying tone of business in the quarter did pickup from earlier in the year. It's also worth noting that we had several headline wins close the year, including Amgen, Little Caesars and Volvo on the media front as well as Pizza Hut and the Kimberly-Clark creative consolidation, which took place in mid January. This represents solid new business momentum that those wins are too recent to benefit our fourth quarter and won't fully be online until a bit later in the year.
Turning to operating expenses and profitability. In the quarter, our adjusted EBITDA margin was 24.3%. And with that performance, we delivered against the full year margin target of 16.6% that we'd set at the beginning of 2024. That's sustained level of profitability reflects strong operating discipline by our teams, notwithstanding a challenging year, while continuing our significant investment in talent in our technology and platform capabilities.
Fourth quarter diluted earnings per share was $0.92 as reported and was $1.11 as adjusted for acquired intangibles. Amortization from initial deal expenses related to our planned combination with Omnicom and the non operating impact of non-strategic businesses sold or held for sale. Full year diluted earnings per share was $1.83 as reported and $2.77 as adjusted. That compares to $2.99 in 2023.
As a reminder, our EPS in full year 23 included the benefit of a $0.17 per share related to the resolution of routine federal tax audits of previous years. Over the course of the year. Total capital return to shareholders between dividends and share repurchased [$727 million], suspended repurchases in the fourth quarter due to the pendency of the merger and given regulatory limitations, we expect to be back in the market after our shareholder meeting.
It's also worth noting that while historically we've raised our dividend per share at this time of year, as we work towards the acquisition by Omnicom, both parties contractually agreed to no increases through the per pre-merger period. As you heard last week and John's remarks, the expectation is that the free cash flow of the combined companies will be very substantial. And as such effects to increase Omnicom's historical capital allocation for dividends and share repurchases, while also be able to invest meaningfully into the combined business to further enhance its strength in key areas such as technology and talent.
As we look ahead to 2025, of course, one very significant focus is our commitment to bringing the merger to full effectiveness. The number of our competitors are clearly concerned enough about the combination. It they've spent a lot of air time talking about are being distracted. But our frontline talent is fully focused on clients, which is obviously as it should be. And we have a small and clearly defined group here at corporate that we'll be working on the day-to-day activities required for a successful integration.
In the meantime, IPG. will, of course, continue to operate independently. So it's appropriate that we continue to share our standalone outlook with you as part of these calls entering the new year, we've seen that clients remain focused on the need to drive growth, and that means investing in the ongoing evolution of their businesses.
Specialty rent solutions at the intersection of media, creativity, technology and data, yes, global macroeconomic and geopolitical uncertainty, which we had seen abate in the latter part of 2024 remains. And that is showing up in a somewhat more cautious and deliberate approach to budgeting on client in certain industry sectors.
During this year will also continue to navigate the weight of trailing wins and losses on our top line. As we've discussed previously, we are on the wrong side of the outcome in defending a number of very significant media campaigns.
It's worth reminding everyone that the decisive factor on those largest decisions with principal media and specifically the commercial terms enabled by principal media at scale in one other important account shift in the healthcare vertical where our capabilities have led the market.
For many years, a competitor was able to leverage its much greater size to win a significant portion of a large creative accounts that we've been awarded not long prior looking at just the three largest of those decisions together, they will weigh on our growth for the year by 4.5 percentage to 5 percentage points.
Factoring that headwind and with an offset of otherwise sound underlying performance. We are therefore targeting an organic decrease for 2025 of 1% to 2%. We estimate that quarterly revenue phasing will be significantly more challenged in the first half of the year with a net impact of wins and losses easing in the year. Second half. It's important to highlight that our proposed combination with Omnicom will position us with greatly strengthen solutions for more competitive and better client outcomes.
Turning to our outlook on expenses and margin for the year. As most of you know, we've consistently challenged ourselves with respect to our opportunities to evolve the architecture of our Company, both for client service as well as operating efficiency. You've heard me speak before the structural changes that we need to make to improve our growth profile, namely investing in higher growth capabilities, increasing the integration of our offerings and constantly simplifying what it means to work with us. This also applies to our ways of working and our organizational structure with an eye on the rapid evolution of our industry and its impact on our business.
Over the course back half of last year, we undertook a wide-ranging strategic analysis that included multiple avenues to rethinking our operating structure, this strategic cities as an independent IPG. that these efforts will also clearly benefit us when it comes to the combination of our company into Omnicom. Our outlook for 2025, therefore, includes programming of restructuring over the course of the year designed to transform our business, enhance our offerings and drive significant structural expense savings.
This is a blueprint for accelerating change that includes beating our progress on strategic centralization of many corporate functions, greater offshoring and near-shoring in both corporate services in certain areas of client service delivery with the latter centers of excellence focused on platform benefits in key areas such as production and analytics.
We will also continue to improve efficiency, the operational structure at a number of our agencies as well as further improve real estate efficiencies. Specifically, we expect that our program will generate in-year savings of approximately [$250 million] in 2025. The associated charge should be of an equivalent amount with a significant portion being non-cash. We will recognize most of those expenses in the first and second quarters, and we'll call those out for you in our P&L, and we plan to provide additional details on this plan with our first quarter report in April.
To be clear, though, we believe these actions have very limited overlap with $750 million of cost synergies anticipated as part of our proposed combination with Omnicom. As you heard in some detail from John last week, those savings are enabled largely by the combination of our two companies in the areas of focus you called out or not those that I just identified. Additionally, as John mentioned on his call, the $750 million of synergies excludes revenue synergies, synergies from automation and incremental onshoring and offshoring. The restructuring is required, given the opportunities for greater efficiency within our company and will allow us to become a part of the new Omnicom in the strongest possible position in terms of 2025.
With these strategic actions on costs, along with our usual strong operating discipline, we're targeting adjusted EBITDA margin of 16.6% under our expected organic revenue decrease of 1% to 2%. As we look ahead, we remain confident in the many fundamental areas of strength within our company and the enormous potential of our planned combination with Omnicom, I'll come back with thoughts on the acquisition.
At this point, I'd like to turn things over to Ellen for a more in-depth review of our results.
Ellen Johnson
Thank you. I hope that everything as well. As a reminder, my remarks will track to the presentation slides that accompany our webcast beginning on Slide 2 of the presentation.
Our organic decrease of net revenue in the quarter was 1.8%. That brings our organic revenue growth for the year to 20 basis points. Adjusted EBITDA in the quarter was 591,200,000.0, and margin on net revenue was 24.3%. Adjustments exclude the amortization of acquired intangibles and at $9.3 million of G&A expenses and SG&A related to our acquisition.
But on the time for the full year adjusted margin of 16.6%, our diluted earnings per share in the quarter of $0.92 as reported, and $1.11 as-adjusted below the line of adjusting for non-operating losses from both a disposition of non-strategic businesses and assets held for sale, our adjusted diluted EPS was $2.77. For the full year, we concluded the year and a strong financial position with $2.8 billion of cash on the balance sheet and with only 1.7 times gross financial debt to EBITDA as defined in our credit facility.
Our share repurchase during the year totaled 7.3 million shares, which returned $230 million to our shareholders in 2024. As Philippe noted earlier, we suspended our activity in the fourth quarter due to the planned acquisition by Omnicom.
Turning to Slide 3, you'll see our P&L for the quarter. I'll cover revenue and operating expenses in detail in the slides that follow. Turning to fourth-quarter and full-year revenue on Slide 4. Net revenue in the quarter of $2.43 billion, a decrease of 5.9% from a year ago. Compared to Q4 and 23. The impact of the change in exchange rates was negative 50 basis points. The impact of distinctions and assets held for sale was negative 3.6%. Organic net revenue decrease was 1.8%, which brings us up organic revenue of 20 basis points for the full year.
Further down the side, you break-out segment net revenue performance. Our media data and Engagement Solutions segment decreased 60 basis points organically, very strong growth and Axiom was offset by continued decreases in MRM. Mediabrands decreased slightly in the quarter, less than 1% due to a significant impact of trailing account losses.
Organic growth for the full year of this segment was 20 basis points. The organic decrease at our integrated advertising and creativity LED Solutions segment was negative 4.7%. In large measure performance reflects the decision of assignable signals size of appliance in the healthcare sector early in the year. We continue to have strong growth in joints, and we had solid performance in the quarter at McCann, notably in the international markets.
For the year, the segment decreased organically by 20 basis points and our specialized communication and expansion solutions segment organic growth was 1.3% with growth at Golan in public relations, and it momentum in an up tick down in expansion offering, which will more than offset by softness elsewhere in the segment. For the year, the SG&A segment grew 1.3% organically.
Moving on to slide 5, our revenue growth by region in the quarter, the U.S., which was 60% of our fourth quarter net revenue decreased 3.2% organically, reflecting the impact of certain accounts last in late 23 and during 2020 for a weighed on our recent growth broadly across our domestic operations. International markets, 40% of our net revenue in the quarter and increased 30 basis points organically in the U. K, 9% of our which is 9% of our revenue in the quarter.
Organic decrease was 3.3% growth at Acxiom and output volume. Continental Europe was 10%. Our net revenue in the quarter and decreased 3% organically, which was against 11.7 growth percentage growth a year ago. Declines in regional vending by Global Clients weighed on performance, but the results notably soft in Germany and France.
In Asia Pac, which was 8% of net revenue in the quarter, our organic decrease of 7.9%. The loss of certain global accounts weighed on results across the region in Lat-Am, which was 6% of net revenue in the quarter, we grew 10.4% organically on top of 15% a year ago. Our strong growth with IPG Mediabrands and by market was led by Mexico, Argentina and Colombia.
Our other international markets group, which consists of Canada, the Middle East and Africa, was 7% of net revenue in Q4 and grew 12.1% organically. Performance was due to strong growth in the Middle East, where business rebounded from the impact of events the year. Before.
Moving onto slide 6 and operating expenses in the quarter. Our fully adjusted EBITDA margin in the quarter was 21.3%, which is the same level we attained in the fourth quarter of 2023. Our ratio of total salaries and related expenses improved 70 basis points to 58.7% compared with 59.4% in last year's fourth quarter. We had deleverage and base payroll and temporary labor partially offset a higher exposure for performance based incentive programs, do the timing of accruals over the course of the year and increased severance expense.
We ended the year that head count of 53,300, which reflects an organic decrease of approximately 5% from a year ago. And a total decrease 7%, including our net business dispositions, our office and other direct expense increased as a percent of net revenue by 20 basis points to 13.8%. Occupancy expenses flat as a percentage of net revenue by all other office and other direct expense increased by 20 basis points, mainly due to higher levels of investments in technology.
Our SG&A expense was 1.8% of net revenue, an increase of 90 basis points from a year ago to 9.3 million of expenses related to the planned acquisition by Amazon and strategic investments in senior enterprise towns and platform them develop. These expense ratios for the full year are available in the presentation. Appendix and reflect the same drivers that were at work in the fourth quarter. Strong leverage on salaries up, but offset by greater technology investments and increased strategic hiring in SG&A.
Turning to slide 7, we presented data on adjustments to our reported Q4 results in order to give you better transparency and a picture comparable performance. This begins on the left-hand side with our reported results and steps through to adjusted EBITDA and our adjusted diluted EPS. Our expense for the amortization of acquired intangibles in the second town was 20.4 million. This small restructuring reversal was 6.4 million.
Dual-class pertaining to the planned acquisition by Omnicom were 9.3 million below operating expenses. Our net loss due to assets held for sale and the sales of non-strategic businesses was $57.8 million. At the start of this slide, you can see the after-tax impact per diluted share of each of these adjustments, which bridges fourth quarter diluted EPS as reported at $0.92 to adjusted earnings of $1.11 per diluted share.
Slide 8, SIM-only to tax adjustments for the full year, again for continuity and tolerability, bridging diluted earnings per share as reported of $1.83 to our adjusted $2.77 per share. It's also worth noting, as shown on this schedule, our adjusted effective tax rate for the full year was 25.2%, which is in line with our expectations.
On Slide 6, we turn to cash flow for the full year. Cash from operations was 1.06 billion and was $1.22 billion before changes in working capital. Our investing activities used 151,100,000.0, mainly for CapEx of $141.8 million. Our financing activities used $1 billion, mainly as shown here forgiven by the common stock and the repayment of debt in April and repurchases of our shares. Our net decrease in cash for the year as the 198,700,000.0.
Slide 10 is the current portion of our balance sheet. We ended the year with 2.2 billion of cash and equivalents. Slide 11 depicts the maturities of our outstanding debt and our diversified maturity schedule. Total debt at year end and the 3 billion and our next scheduled maturity not until 2028.
In summary, a strong financial discipline continues and the strength of our balance sheet and liquidity me that we remain well positioned, both financially and commercially.
And with that, I'll turn it back to Philippe.
Philippe Krakowsky
Thanks, Ellen. As you've heard from us previously, until we have regulatory approvals and the proposed combination with Omnicom is complete, we continue to be in market as an independent company. So I'll review the particulars of our performance as a word on any other quarterly call, important announcement during Q4 related to the continued enhancement of interact the suite of integrated and technologies across our portfolio, and that's the latest evolution of core technology, infrastructure and marketing engine.
This operating system integrates data flows across the consumer journey from research and insights to creative ideation, production and commerce as well as the powering media activation built and developed by our in-house product team. Interact represents many years of investing, refining and unifying core capabilities to ensure we can drive sustainable growth for our clients. Whether in marketing or sales channels. And it's a foundational element of our go-to-market strategy. It's being used by a growing number of Interpublic companies on behalf of their clients.
In the quarter, we also announced the planned acquisition of intelligence knows a leading e-commerce intelligence platform, known for its data accuracy and global reach specific to retail data intelligence nodes. Aggregate annualized 1 billion of data points across thousands, thousands of retail categories in over 30 global markets, delivering dynamic insights into consumer sentiment and a range of product attributes, including pricing, product availability and inventory levels as well as retail media.
This move significantly enhances our existing commerce capabilities, providing clients with real-time intelligence to understand shopper trends, optimize performance in digital retail marketplaces and drive sales growth.
In terms of operating unit level performance during 2020. For IPG, Mediabrands posted solid growth than we saw a number of sizable new business wins to close the year in the fourth quarter. Amgen and HelloFresh test Mediabrands is there a are involved chose initiative as its global media agency network also retained Unilever in Lat-Am and grew the business in Canada and Mena as part of that clients.
Global Media Review. Media Hub was named a or for Little Caesars. And earlier this month, our air tap to UM. as its U.S. media partner, Axiom also posted good growth for the full year and in the quarter, which featured for large new business wins across industry sectors, including technology, financial services, healthcare and public sector. These new engagements reflect Axiom has expertise in leveraging first and third party data to solve complex business challenges and helping clients maximize their own tech investments.
We also consolidated all of IPG's sales force cloud services under Axiom, which now offers clients consulting, implementation and operational services across the full suite of Salesforce clouds as part of IPG's centralized platform services, IPG health continued to be the best in class creative network in its space, winning top honors at the MM. and M. awards in the London international awards. The network also expanded partnerships with clients certain key clients in the quarter, including AstraZeneca, Merck, Regeneron and Edwards Lifesciences. Our earned media solutions continued to evolve with leading offerings.
Weber Shandwick launched a differentiated influencer offering that marries Axiom data with cultural and commercial impact in the company's added nearly a dozen new clients assignments in the area using this tool and also won the Effie Award for the year's most effective influencer campaign for its work on behalf of killer Nova during the quarter, going committed to being the first fully AI. integrated PR agency by the end of this year, and over 80% of Golden staff are now using AI as part of their daily workflows with more than 100 brands and clients are benefiting from Goldman's AI. assisted workforce.
Our creative agencies continued to deliver powerful ideas that are winning in the marketplace for their clients. We're increasingly seeing significant wins when we bring together creative data in production with audience lead thinking and identity resolution powered by direct. This includes Kimberly Clark, which recently expanded its relationship with Interpublic as part of their global consolidation review process with FCB. as the lead agency and support from both MullenLowe and McCann.
And that is the second sizable win for us with this integrated team and offering after the Pinova consolidation last year, notably work from FCB. for another such client, Budweiser secured the number one spot in the USA Today Ad Meter ranking for best commercial and this weekend Super Bowl.
Given the requirements of sophisticated modern marketers, we have to not only maintain our commitment to great talent and tech-enabled capabilities, but give thoughtful consideration to new structures and ways of working was mentioned in my opening comments to for thoughts, finalized plans for the organizational restructuring we will be undertaking this year.
This program will include streamlining efficiencies with in our agencies, centralization, centralization of a number of corporate functions, focus on greater offshoring and near-shoring, accelerating our progress on strategic centers of excellence in areas where platform services can benefit delivery and cost, but just production and analytics as well as further improving our real estate footprint.
These actions are necessary to ensure the standalone IPG. is in the strongest possible position despite our top-line challenges. While some of the cost savings we generate will be invested in talent and technology capabilities in areas such as AI, identity, resolution, content management platforms, commerce and data.
The strategic restructuring and transformation will deliver savings in 2025 that positioned us to maintain margins this year and expand them going forward. These actions are independent of and importantly, complementary to our proposed combination, Omnicom, which will create the industry's most dynamic and well resource company. As I called out earlier, we believe there is limited overlap between the impact of these efforts and the synergies identified as a result of the proposed acquisition by Omnicom.
Turning now to slide 12, we outlined the full range of benefits that are combined, Omnicom and Interpublic will deliver to our various stakeholders for our clients. And our people expanded and enhanced products and services will mean significant value. Our combined operations will be positioned to offer clients multiple advantages that are unduplicated and superior to anything currently in market. They include media offerings that leverage and unparalleled scope and quality of investment, data and technology.
The proposed transaction will also enhance our collective commerce offerings and technology investments, bringing together specialized capabilities on both sides. In addition, our companies have highly complementary geographic footprints and I share foundation or common values and culture.
With respect to technology, the combined company will have exceptional identity resolution and commerce offerings based on a deeper understanding of consumers than any other provider. In terms of G&A, I technologies like some of our competitors at Interpublic. We've moved well beyond testing and are applying LLAM.s and proprietary tools across media, creative, experiential agencies and other areas of our business.
Together with Omnicom, we would be able to bring to market the combined resources of both companies, focusing our investment and then amplifying it against the larger platform for clients. This means a foundation of compelling benefits, creating a seamless ecosystem where data technology and creativity come together to drive innovation and deliver measurable business growth and outcomes against clearly defined CapEx.
That's why we reinitiated offerings that will result from the queue combination will drive exceptional future revenue growth opportunities. I think it needs to be said because there's been so much that has been said by others who are not part of the proposed transaction that our partners have been enthusiastic about our combination with Omnicom, our client-facing colleagues within Interpublic, from those who create ideas to those who advise clients on their investment decisions to those who innovate with tech and data, they're all looking forward to the wider array of capabilities that we would be able to bring to marketers. Our teams appreciate that.
Nobody in the industry has as comprehensive a solution as we will, together with Omnicom, as you'd expect. We've also spoken with our top clients. They see the benefits and understand that our partnerships and the value we can deliver for them will be meaningfully enhanced.
So what we understand that our competitors are trying to disrupt what we are looking to build it bears repeating that the integration will remain very focused and not get in the way of the services we deliver to clients every day heard about the financial benefits, both when we announced the deal and on Omnicom's call last week from the revenue and cost synergies to the powerful balance sheet that will support capital return and accelerate innovation to the accretive nature of the deal.
It is very compelling proposition position in terms of timing, the regulatory process is moving forward. We are progressing in the HSR review. And on February 10th, we refiled our HSR filing to continue that process, which is common place for transactions of this type. Foreign filing processes are also well underway. And the special shareholder meetings to approve the transaction are scheduled for March 18th. We continue to expect to close in the back half of this year. In the room.
As we've outlined for you today, we are taking steps to keep Interpublic competitively positioned for future success. Our strategic actions will bring us into the combination of the strongest possible company and will continue to build on our ability to deliver integrated client focus, services and solutions and further align and extend key data and technology capabilities as well as remain true to our long-standing commitment, operational discipline and a strong underlying financial foundation.
Thanks for your time today.
And at this point, let's open the floor to your questions.
Operator
(Operator Instructions) David Karnovsky, JPMorgan.
David Karnovsky
Thank you. Maybe just first with the limit on the underlying conditions, I think you noted improvement through last year, but maybe some incremental caution now due to the macro, especially in certain sectors. I wanted to see if you could expand on this a bit and also touch on tech where I think you said you return to growth.
And then second for Alan, on the accelerated business transformation, the 250 million of net cost savings, can you help us understand that figure against the flat margin guide? What is actually realized this year versus items like severance, subtle change in adjusted EBITDA?
Philippe Krakowsky
And then is it reasonable to be extrapolating those savings out to 26 with the application that you would see it notable step-up in margin, assuming steady revenue tax on on our revenue question to me, I think what I would just do is we've tried to give you clear line of sight to the ups and downs of 25 and the degree to which just a number of those very large losses are weighing on the performance. So if you're looking at 4.5 to five, some of drag, clearly the underlying business is getting us back to the guy, not that we're happy that that has to be the guide.
In terms of the fourth quarter, the runoff of certain of the accounts we mentioned was probably greater than expected. So no cumulative way in Q4 of, again, just a few trailing losses was about 4% in the quarter. So all that says to us that there's no new news, it's really timing. And then at a macro level?
No, I think you heard us say towards the back half of the year that it looked as if people were being passed and beginning to really get comfortable with the reality that they needed to just start to made plans and invest in growth from there's there's one or two client categories or there's just you look at the degree to which there's some, um, geo political and macro, and that is uncertain. So I think it's just giving people kind of it's just a slight downshift is nothing dramatic.
Ellen Johnson
Thanks, and good morning, David. Thank you for your question. Regarding the business transformation and how it relates to the restructuring. I would say it's a continuation of through 2024. We talked about how we were implementing common systems and standardizing our processing, which enables you to create centers of X science.
And a lot of what the restructuring is doing is doing just that, which is allowing us to be more efficient in the ways that we operate and more productive in the way we service our clients, the types of things that could cause our prepared remarks. And as far as expenses savings, we said, we think the charges in 25 will equate to approximately two the things in the year with more to come in future years, which has lead to expanded margins going forward.
David Karnovsky
Thank you.
Operator
Michael Nathanson, MoffettNathanson.
Michael Nathanson
Good morning, Philippe of tanks and Michael deal. It was notable that you called out potential media as a factor for some of the client losses on. Can you talk a bit about your ability is if this deal is done, how quickly do you think you can integrate their principal media business with with Mediabrands?
So that seems like a big opportunity on that on some of the top line to maybe fix some of the losses. Have somebody out like your thesis on a wireless is better to merge and then to build at that point from a potential media?
Philippe Krakowsky
Look, I mean, I don't think that you would I wouldn't I would reduce there's so many parts of in so many strategic benefits to the merger tour. Yes, for us in 24, our media business, which had been a very strong performer for a long time, Randon challenges in that it was an area that we felt was of concern.
So and to the extent that you got in our, you know, perspective soon to be partners for guard and then of presence, because you heard from us that we felt good about the rate at which we were able to bring new build a principal ourselves domestically kind of in the US, the opt-in we were getting from clients the degree to which we were able to put together a very sophisticated contemporary service offering and products there.
I think that marrying that up to connecting it, given the the fact that Omnicom is sophisticated in that regard that they do this well and that they do this globally clear benefit. But I think that there's just so much more about what and how the companies fit together there. Sandwiches complementary. The opportunity is much greater later than which is not to say that this does not one of the opportunity areas.
Michael Nathanson
Okay. Thanks, Philippe.
Philippe Krakowsky
Sure.
Operator
Julien Roch, Barclays.
Julien Roch
Yes. Good morning, Phil, and good morning, Neil. And my first question is in the proxy statement. You presented forecast where you have 110 basis point margin improvement in 26 and 100 basis point in 27, which is well above consensus. So can you confirm this forecast and add you need more than that to 50 of savings you announced today to get there we'll get another round of cost cutting next year or with today's announcement. That's how you get to those there. There's those margin improvements. That's my my first question.
The second one is, as you said, that those savings you've announced today of largely independent from the seven 50 on kind of philosophically, if I take the to get the EBITDA for the combined group, do I take what you have a proxy statement forecast and just add segment and 50 to get combined EBITDA because them from some clients are telling me that the yield that you'll have some cost creep and I feel like that.
And then the last one boost was join them yourself. I have said that the client facing would be absolutely fine will be better because they have better tools once you combine and that the merger benefit were mostly merging tobacco phase. But if you do that and we do not consolidate any brands, you will end up as a combined company with eight global media agencies and a global creative agencies there. Is that the right number?
Philippe Krakowsky
Thank you. That's an awful lot to wrap ones have around in the time that we've got. So I guess I will start with on the modeling that you'd have seen in the filings was billing for standalone. And clearly, it reflects the work that we've shared with you that we are doing now. You've seen us in the past ENaC programs like this, and you've seen that they lead to tangible success on the degree to which having gone through the exercise that led to be cost synergies around the acquisition, the merger with both John and his management team, we do understand these two big. There's very limited overlap there.
And then you start asking questions about running a very sizable enterprise and so on. The benefits of all of the things that John called out, some around these two large companies together, the corporate compensation, the corporate G&A, clearly our presence in market and vendor cost savings, shared services, things of that nature. They're very, very significant.
Our people on our clients are responding very, very well because as I've said and I laid it out, I think in fair amount of detail, um, they see that as our businesses continue to evolve and the investment that needs to happen in technology, um, you know, the fit that we've cut from a geographic point of view would fly with an axiom can do together on the strength that Omnicom has through crude thereof.
The Adobe back there, just many, many things that fit together to the point of the answer to Michael's question, I think that the sitting here now and kind of going to a kind of, gee, how many brands, what's the optimal organizational structure? I think what I would just add NTU is, um, no direction of travel and use.
You used the word philosophically, we're very aligned with Omnicom in terms of the fact that we have a commitment to strong agency brands. We win with talent by giving them the opportunity to come into the company within the the cultures of those brands. And then that talent wins for us with clients.
Clearly at the holding company level, we pick the strongest agency providers and put them into the teams that solve for the client and increasing. You've heard us talk about how we combine like-for-like to create centers of excellence and how that ties into the platform services. So I don't know that answering the question about, gee, how many events is the optimal number at this point is super productive.
But I think that we will have we'll we'll be able to go to clients and give them options and very strong options in every one of the capability areas that matter. And we've got very complementary capabilities. So again, the revenue quote, unquote, synergy, that revenue opportunity is meaningful and we'll sort out the flying formation.
But I don't think we'll do it next three minutes on on this call. But hopefully that gives you a line of sight. There was a lot of questions in a finite period of time. So I think I covered most of which two you asked.
Julien Roch
I know you did that sorry for being too ambitious, but so thank you for excellent.
Philippe Krakowsky
Great.
Julien Roch
Thank you.
Operator
Jason Bazinet, Citi.
Jason Bazinet
I just had one quick follow-up on the two 50 of savings. Can you just talk a little bit more about the cost to achieve those? I was just a little bit confused when you called out the non-cash component of those costs to achieve being a significant.
Philippe Krakowsky
I think I think it's equivalent, as we said, and there will be some real estate and there will be some degree to which we might also as we rationalize and standardize Ellen, to Alan's point, some of our tech investments, we might be writing off an asset or two there, but nothing dramatic. First thing on the stock based compensation side or anything now?
No.
Jason Bazinet
Okay, thank you.
Operator
Cameron McVeigh, Morgan Stanley.
Cameron McVeigh
Big say just curious how the health care is trending when you exclude the impact of recent account losses? And then secondly, when you think about given the CMO and a pitch and so their priorities have shifted at all recently in principle based media buying, is that the most important capability now to win or retain their business? Or how are you thinking about that? Thanks.
Philippe Krakowsky
Sure. On health care, independent of that one sizable swing we see is to health care as a growing this year. And as you know, it's one of our largest business through operating units. To sum up on middle, a modicum of immunoassay, can everybody whatever it's been four or five, six months. So I was asking questions around that. And we were clearly giving new line of sight into. We've got every channel covered. We've got very deep subject matter expertise.
And so if the playing field changes, all of those clients are still going to need to be in market, they're still going to need to be reaching not just consumers, but all of the other participants in the healthcare ecosystem, whether that's caregivers, whether that occurs, whether that's so on and so forth. And so and so they'll be some share shift in terms of how you reach some that might have an impact on the media owner side, both. But we were clear that we didn't see that as a meaningful concern sitting where we are.
And then on this on the CMO question, no, I think that we've called that principal because we built the media business that was very much about kind of consultative, highly database, sort of helping clients make the smartest possible investment decisions that pieces come into the equation. And for us is something we call out. I think it's important clearly.
But I think that you see the largest opportunities around media because that's where you have the fusion of technology, a lot of data. Clearly now commerce is a very important part of this, and there's conspicuous strengthen commerce on the Omnicom side. And we see a big opportunity connecting flywheel and Axiom and you see some sizable integration opportunities like Kellen of or Clark for us in the last six months of.
So no, I think I think it's more sophisticated than that, but that clearly has become, you know, a part of the decision matrix.
Cameron McVeigh
Got it. Thank you.
Philippe Krakowsky
Thank you.
Operator
Craig Huber, Huber Research Partner.
Craig Huber
Thank you, Philippe. I'd like to hear a little bit more if I could read about how three sectors are doing the health care technology and retail slash e-commerce. Maybe you could give us that organic growth for each or lack thereof did in the fourth quarter. Maybe touch on your outlook for the new year free chose. Thank you.
Philippe Krakowsky
I mean is that you're touching upon to and which we had the sizable losses, right? So obviously, no, we've talked a bit about the big health care when the turn into a much smaller healthcare win for us and is impacting our results. Some of the biggest media decision of the year last year was in the retail space. So as I said, I think independent of that one fixed one item in health.
We have health care growing this year and it touches other parts of our world. You see healthcare clients in the media business. We've got health. We've got a sizable healthcare practice on the PR side. Tom retail is just going to be up money for us just because just going to be the one very sizable loss there.
And then Tech & Telco, as mentioned, has come back and is now and in our growing for us. So I think that that probably covers it as best as I can add your happening to pick to where we've got one very sizable item that's going to distort the results.
Craig Huber
Fair enough. Obviously, they're important sector for you guys and elsewhere. Alan, if I could just ask you a nitpick question. The $250 million of in year 2025 cost savings, what does that on an annual basis as we as we exit 2025%, more like $350 million? How should we think about that, please? It's clearly going to be had and we don't have a full year of the benefit in 2025. And I would just reemphasize is that it's incremental to the to the synergies that we've called out in relationship to Omnicom.
Ellen Johnson
I mean, look, we're really talking about here, as I mentioned, was creating centers of excellence as such also allows us finding nearshoring and just creating a lot more efficient operating structure and the streamlining some of the operations and our agencies. So that should continue to benefit our margins. But again, very separate.
Craig Huber
And apart from that deal synergies that we called out and then its belief, I could just squeeze in one more here before the market open to buy. I'd love to hear from you the tone of business out there. Putting aside the various losses that you've talked about here, how do you feel that the tone of business right now, the macro environment versus a year ago right now? And when will you feedback from clients on that front? Thank you.
Philippe Krakowsky
Well, I mean, as we said to you a year ago, all the way back to a year ago, there are there was a measure of caution that as we move through 24 things that meaningfully better and we felt that people were leaning in towards the latter part of the year. And broadly speaking, I'd say that that's still the case, but there are one or two big items that are pending in terms of the macro.
But I think as we've tried to call out in the in the remarks, we're seeing no clients engage. We are seeing a fair bit of opportunity in terms of new business flow. There's there's some bigger than opportunities. So So it feels it feels pretty solid. I'd say.
Craig Huber
Great. Thanks, guys. You're sort of your asked me last year kind of had enough swing at it quarter to quarter that when you say compared to last year at a much, say compared to what point in the year last year.
Philippe Krakowsky
Yes.
Craig Huber
I'm just trying to get a sense from you what you're hearing from your clients versus how they were feeling a year ago, but they're spending levels for the upcoming year.
Philippe Krakowsky
And like I said, I mean, it does value sector to sector. You don't necessarily get the same read, but it feels like again pending one or two kind of open macro items that are geo, political things. Things are progressing. Very good. Thank you.
If you think you appreciate the time today and look forward to speaking to you all again in April. Thank you.
Operator
This concludes today's conference. You may disconnect at this time.
Philippe Krakowsky
Thanks.
Ellen Johnson
Thanks.
