Philip J. Angelastro
Executive Vice President and Chief Financial Officer at Omnicom Group
Thanks, John. We finished the year on a strong note in terms of revenue growth and profitability, even though the business environment was uncertain in 2023. As we look towards 2024, we're optimistic about the performance of our agencies in an improving economy. Let me spend a few minutes reviewing the financial details of the quarter and then we'll open the lines up for questions and answers.
Let's start with a review of our revenue performance on Slide 4. Organic growth in the quarter was 4.4%. The impact from foreign currency translation increased reported revenue by 1.2%. If rates stay where they are currently, we estimate the impact of foreign currency translation will be close to flat in Q1 2024 and for the full year. The net impact of acquisition and disposition revenue on reported revenue was negative 0.7%, primarily reflecting the sale in Q2 of '23 of our research businesses. In 2024, we expect a positive contribution beginning in the first quarter with an increase of about 1.5% and about 2% for the full year, reflecting recent acquisitions and/or [Phonetic] having moved past recent dispositions.
For the full year, organic revenue growth was 4.1%. This was in line with our revised guidance of 3.5% to 5%. We made some good progress toward this target despite a challenging comparison to 9.4% growth in 2022 and an uncertain macroeconomic environment during the year. As John discussed, our organic revenue growth outlook for the full year 2024 is between 3.5% and 5%.
Now let's turn to Slide 5 to review our organic revenue growth by discipline. During the quarter, Advertising & Media growth was very strong at 9.3%, once again driven by global media performance which was partially offset by softer results from our advertising agencies.
Precision Marketing growth contracted 1.1%, reflecting a difficult comp to 11.5% growth in Q4 of 2022 and cycling some client spending reductions from earlier in the year. As we look forward to 2024, we expect this to once again be one of our fastest-growing disciplines.
Commerce & Branding grew by 1% compared to growth of 7.5% last year, driven primarily by growth in specialty production, which offset reductions in the quarter at our branding and commerce agencies.
Experiential was down 8%, reflecting a difficult comp to 17% growth in Q4 of 2022 with the FIFA World Cup in Qatar, primarily offset by strong growth in Europe in the quarter. While quarterly results can be choppy based on the timing of certain client events, Experiential remains a solid business and is important to our clients' marketing plans.
Execution & Support declined by 0.4% with mixed results that included a solid performance in field marketing.
Public Relations declined 2.9% in the quarter due to difficult comps related to the U.S. midterm elections of 2022 when growth exceeded 12% as well as softness in certain international markets.
Finally, Healthcare continued its steady growth at 3.6% during the quarter.
Turning to geographic growth on Slide 6. We saw growth in our five largest markets, offset again by declines in Canada and the cyclical impact of Experiential revenue in Middle east and Africa. The U.S. was up 0.6% in the quarter on solid performances by Advertising & Media, led by media and our healthcare businesses, offset primarily by Execution & Support, Public Relations and Commerce & Branding.
Slide 7 shows our revenue by industry sector for the full year and the quarter. Looking at the full year, which tends to eliminate the volatility of client changes in the quarter, we saw a notable increase of 2 points in automotive and 1 point increases in both food and beverage and financial services. Weaker markets in technology and entertainment, which have been discussed widely in the industry over the course of the year, resulted in reductions of 3 points and 1 point, respectively.
Now let's turn to Slide 8 for a look at our expenses. In the fourth quarter, salary and related service costs were higher due to increased staffing levels, but were down as a percentage of revenue year-over-year, driven by our repositioning actions earlier in the year and through ongoing changes in our global employee mix.
Third-party service costs increased in connection with the growth in our revenues. We generated profit on these costs and the higher levels in the fourth quarter of 2023, compared to '22, were driven primarily by strong growth in our media business. Our disposition activity during the quarter and the year did not have much of an impact on this cost category.
Third-party incidental costs were close to the same level as last year and reflect client-related travel and incidental out-of-pocket costs that are billed to clients directly at our cost with no profit. Occupancy and other costs were down in both dollar amount and relative to revenue, driven by ongoing rationalizations in our real estate portfolio.
SG&A expenses were up primarily due to $14.5 million in professional fees related to acquisition costs incurred in the quarter, the majority of which related to Flywheel. Excluding these costs, quarterly SG&A levels were comparable to last year.
Now let's turn to Slide 9 and look at our quarterly and annual income statement. To make the numbers more comparable, the table and footnotes describe some of the other adjustments that were made during this year and last year that we discussed on prior calls.
Our operating income margin was negatively impacted by $14.5 million of costs in connection with the Flywheel acquisition as I just discussed. Adjusting for this amount results in an operating income margin of 16.3% and an EBITDA margin of 16.8%. For the full year, our adjusted operating income margin was 15.2%, within our expected range of 15$ to 15.4%.
As a result of the Flywheel acquisition, we'll have higher levels of amortization expense than past years and we will be focusing our margin expectations on EBITDA. We continue to expect integration costs as well as operating synergies related to the Flywheel acquisition during 2024 and that the acquisition will be accretive to diluted EPS adjusted for amortization expense by the fourth quarter. For the full year 2024, we expect adjusted EBITDA as a percentage of reported revenue to be close to flat with last year.
Also in this slide, you can see that our non-GAAP adjusted income tax rate of 26% for the full year 2023 was comparable to 2022. We do not expect the Flywheel business to change our tax rate outlook for 2024, but the 2024 rate will be negatively impacted, primarily related to increases in the statutory rates of certain international countries. For full year 2024, we expect our rate to approximate 27%.
Acquisition costs related to Flywheel and better performance at agencies with minority shareholders contributed to a decrease in reported net income of 1%, but an increase of 2.1% on an adjusted basis.
Lastly, adjusted diluted EPS of $2.20 for the fourth quarter increased 5.3% from last year. For the year, adjusted EPS increased by 6.9%.
Slide 10 is our cash flow performance for the year. We define free cash flow as net cash provided by operating activities, excluding changes in operating capital. Free cash flow for 2023 was $1.9 billion, an increase of 6.5%. This increase was driven in part from operational improvements compared to 2022 and the use of operating capital, which we expect to improve further in the future.
Regarding our uses of cash, we used $563 million of cash to pay dividends to common shareholders and another $71 million for dividends and non-controlling interest shareholders. Our capital expenditures were $78 million, similar to last year. We expect 2024 levels to be higher due to growth investments at Flywheel.
Total acquisition payments were $249 million. Although we closed the Flywheel acquisition on January 2, 2024 using cash on hand of approximately $845 million, it remains our intention, as we stated in the October 30th announcement, to finance two-thirds of the purchase price with new debt, which I'll discuss in a moment.
Finally, our stock repurchase activity, net of proceeds from stock plans, was $535 million year-to-date, within our expected range. Our capital allocation in 2024 will be consistent with our practice of returning cash to shareholders through a healthy dividend, making strategic acquisitions that lead to accelerated growth and using a portion of residual cash to repurchase common stock. Since 2024 began with the closing of a larger-than-normal acquisition, we expect that total share repurchases in 2024 will approximate 50% of our recent average.
Slide 11 is a summary of our credit, liquidity and debt maturities. At the end of the fourth quarter of 2023, the book value of our outstanding debt was $5.6 billion. There were no changes in outstanding balances during the quarter other than foreign exchange translations. Our $2.5 billion revolving credit facility, which backstops our $2 billion U.S. commercial paper program, remains undrawn, and our cash equivalents and short-term investments were $4.4 billion.
We will continue to monitor the credit markets throughout 2024 and we expect to enter the debt markets to finance approximately $550 million, or two-thirds of the $845 million we spent on Flywheel acquisition. And during the year, we will refinance the $750 million of 3.625% senior notes, which are due November 1, 2024.
Financing the Flywheel acquisition will increase our interest expense at 2024. It's also likely that refinancing November notes will increase interest expense by some amount, but it is too early to estimate. For 2024, we expect that our internal financing of the Flywheel acquisition in early January with cash on hand prior to an expected financing of two-thirds of the purchase price, coupled with a decline in global interest rates, will lead to lower interest income in 2024 compared to 2023.
Slide 12 presents our historical returns on two important performance metrics for the 12 months ended December 31, 2023. Omnicom's return on invested capital is 26% and return on equity is 41%, both reflecting very strong performance. Healthy returns like these reflect the strength of our industry, our operating discipline, and the preservation of our conservative balance sheet.
Operator, please open the lines up for questions and answers. Thank you.
