Philip J. Angelastro
Executive Vice President and Chief Financial Officer at Omnicom Group
Thanks, john. We began the year with solid results, and we're optimistic about the year ahead. Let's review the first quarter performance in detail, beginning with revenue on slide four. Organic growth in the quarter was 4%. The impact from foreign currency was relatively flat, decreasing reported revenue by 0.1%. If rates stay where they are currently, we estimate the impact of foreign currency translation will be negative 1% for Q2 '24 and flat for the full year 2024. The net impact of acquisition and disposition revenue on reported revenue was positive 1.5% due primarily to the acquisition of Flywheel this January. Based on transactions completed to date, we expect a positive contribution of approximately 2.5% for Q2 and 2% for the year.
Now let's turn to slide five to review our organic revenue growth by discipline. During the quarter, advertising and media growth was very strong at 7%, driven by excellent performance at our global media businesses. Precision Marketing, which now includes Flywheel, grew 4.3%. We expect this to continue to be one of our fastest growing disciplines in the future. Public relations declined by 1.1% in the quarter. We expect this discipline will improve the rest of the year and benefit from the 2024 U.S. elections. Healthcare grew 2.1% during the quarter, as we continue to cycle through some client losses from 2023, which we expect to lap after Q2.
Branding and retail commerce declined by 3.8%, driven by a challenging environment for our branding agencies that are more reliant on project-based engagements and face a difficult comparison to Q1 of 2023, when they grew by 9%. You'll note that we've updated the name for this discipline, which was formally called Commerce and Branding. Experiential grew a strong 9.5%, led by the U.S., which offset a small reduction in revenue internationally. We expect this discipline to benefit later in the year from the Summer Olympic Games in Paris. And execution and support declined by 4.3% with mixed results that overshadowed continued strength in field marketing.
Turning to geographic growth on slide six, we saw growth in six of our seven regions, led by the U.S. and Europe and a strong growth in Latin America driven by advertising and media. Slide seven shows our revenue by industry sector. First quarter results were very similar to last year.
Now let's turn to slide eight for a look at our expenses. In the first quarter, salary-related service costs grew as a result of increased staffing levels, primarily as a result of our acquisition of Flywheel Digital. But they were down as a percentage of revenue year over year, driven by our repositioning actions last year and through ongoing changes in our global employee mix. Third-party service cost increased in connection with the growth in our revenue. Third-party incidental costs increased somewhat, primarily as a result of increases in reimbursed travel and incidental out of pocket costs. Occupancy and other costs increased primarily due to our acquisition activity during the period but were essentially flat as a percentage of revenue due to lower rents as a result of our prior year real estate rationalizations. And SG&A expense was down both in dollar amount and as a percentage of revenue.
Now let's turn to slide nine and look at our income statement in more detail. Our operating income increased 2.8% and the related margin was 13.2%, down slightly from the prior year adjusted margin of 13.5%, arising primarily from our acquisition activity, including Flywheel. As you may recall, our margin estimate this year is based on EBITA, which we have and continue to use as a measure of operating performance. Similar to our peers, and in response to requests from investors, this reflects an adjustment for the amortization of intangible assets. The adjustment now reflects amortization expense related to both acquired and tangible assets and internally developed strategic platform intangible assets. Strategic platform intangible assets relate to the costs we are required to capitalize and amortize over future periods in connection with the ongoing development of the Omni platform and the future ongoing development of the Flywheel Commerce Cloud platform.
The amortization expense added back to calculate EBITA does not include amortization expense for internally developed software related to administrative and backoffice operations tools such as ERP or workflow platforms. For the first quarter of 2024, this amortization was $21.5 million and we expect the remaining quarters of 2024 to approximate this amount. For comparability purposes, we've included a slide in the appendix of this presentation. It reflects the prior year amortization related to acquired intangible assets and internally developed strategic platform intangible assets for the four prior year calendar quarters of 2023 and the full year for 2023 and 2022.
EBITA on Q1 2024 of $500.4 million increased 4.1% year over year and the related margin was 13.8%. We continue to expect our fiscal year 2024 EBITA margin to be close to flat with our 2023 adjusted EBITA margin of 15.6% for the full year.
Moving down the income statement, our income tax rate of 26% was similar to the rate for the first quarter of 2023. For full year 2024, we continue to expect our income tax rate to approximate 27%. Changes in income from equity investments and income attributed to minority interest investments were not significant. As you can see at the bottom of the slide, we have also provided a new line item, non-GAAP adjusted net income per diluted share. Similar to EBITA, this also excludes the amortization on an aftertax basis that I just discussed related to acquired intangibles and internally developed strategic platform intangibles. This new reporting more closely measures the performance of our operating businesses year on year and is similar to our peer group's approach of adding back aftertax amortization expense when calculating non-GAAP diluted earnings per share. For the first quarter of 2024, this metric increased to $1.67 or 3.7% compared to the non-GAAP adjusted diluted earnings per share of $1.61 for Q1 2023.
Now let's turn to cash flow on slide ten. We define free cash flow as net cash provided by operating activities, excluding changes in operating capital. Free cash flow for 2024 was $415.1 million, a slight decrease of 3.2%. Regarding our uses of cash, we used $139 million of cash to pay dividends to common shareholders. And another $13 million for dividends to non-controlling interest shareholders. Our capital expenditures were $23 million, similar to last year, although we still expect fiscal year 2024 levels to be higher due to growth in capital investment at the newly acquired Flywheel. Total acquisition payments were $812 million, which reflects the $845 million acquisition of Flywheel, net of cash acquired.
Finally, our stock repurchase activity, net of proceeds from stock plans was $178 million in the quarter, which is in line with our estimate of total repurchases for the year of approximately half of our historical average given our Flywheel acquisition. Slide 11 is a summary of our credit, liquidity and debt maturities. At the end of the first quarter of 2024, the book value of our outstanding debt was $6.3 billion, up over $600 million from funding a portion of the Flywheel purchase price. As previously disclosed, we issued EUR600 million senior notes due March 2032 with a coupon of 3.7%. Net proceeds in U.S. dollars were approximately $643 million.
Our cash equivalents and short-term investments were roughly flat at $3.2 billion. We also have an undrawn $2.5 billion revolving credit facility, which backstops our $2 billion U.S. commercial paper program. We continue to monitor the credit markets with regard to our $750 million of 3.65% senior notes due November 1, 2024. At this point, given where interest rates are and our financing activity early in 2024, we expect that net interest expense for the full year 2024 could increase by approximately $45 million relative to full year 2023.
Slide 12 presents our historical returns on two important performance metrics, the 12 months ended March 31, 2024. Omnicom's return on invested capital was 22% and our return on equity was 44%, both reflecting very strong performance.
I will now ask the operator to please open up the lines for questions and answers. Thank you.
