Philip J. Angelastro
Executive Vice President and Chief Financial Officer at Omnicom Group
Thanks, John. As John said, the third quarter performance of our business builds on the solid performance of the first half of 2024, and we continue to make the strategic investments needed to position Omnicom to meet the marketing needs of our customers through acquisitions like Flywheel and LeapPoint, and our ongoing investments in Omni, Flywheel Commerce Cloud, AI, and other technology platforms and tools.
Let's review our business performance in the third quarter, beginning with our revenue change on slide 4. Organic growth in the quarter was strong at 6.5%. The impact on revenue from foreign currency translation was nominal, decreasing reported revenue by just 0.1%. Given recent changes in the relative value of the U.S. dollar, if rates stay where they are currently, we estimate the impact of foreign currency translation will be positive 1% for Q4 of 2024 and flat for the full year 2024.
The net impact of acquisition and disposition revenue on reported revenue was positive 2.1%, due primarily to the acquisition of Flywheel in January, along with a few small acquisitions from prior quarters, which were partially offset by some smaller dispositions. Based on transactions completed to date, we expect the impact of acquisition and disposition revenue will approximate 1.75% for Q4 and 2.0% for the full year.
Now let's turn to slide 5 to review our organic revenue growth by discipline. During the quarter, Advertising & Media growth of 9% reflected continued strong growth in media and improved performance in advertising, including positive contributions from our production initiative. Precision Marketing growth of 1% was similar to last quarter, with continued strong growth at Flywheel. And our Precision Marketing Group performance was driven by strong growth in the U.S. at our customer experience agencies, which was offset by lower client spending, primarily concentrated in a few markets outside the U.S.
With the full contribution from recent client wins, we continue to expect stronger performance in our Precision Marketing Group in the fourth quarter and beyond. Public Relations grew 4%. This reflects growth related to U.S. election spending, offset by softer performance internationally.
Healthcare revenues were down 1%. By the end of this year, we will be lapping a significant client loss, and recent wins should start contributing to improved performance. Branding & Retail Commerce declined by 5%, resulting from reduced client spending in our branding agencies and flat performance in retail commerce. Experiential growth was very strong at 35%, driven by activations for the Summer Olympics. And Execution & Support was flat, reflecting good results in field marketing, offset by declines at our merchandising businesses.
Turning to geographic growth on slide 6. The U.S., our largest market, had organic growth of 6.5%, continuing a strong performance trend this year. Performance in Europe was also strong in most markets, and the Asia Pacific, Latin America, and Middle East regions all posted solid growth. Slide 7 is our revenue by industry sector for the quarter and year to date, both of which maintained their historical stability, with no significant changes in mix.
Now let's turn to slide 8 for a look at our expenses. In the quarter, salary-related service costs grew with increased staffing levels, primarily reflecting our acquisition of Flywheel Digital in January. Year over year as a percentage of revenue, these costs were down 1.5% as we continue to nearshore, offshore, and reposition our workforce toward the higher growth services that our clients need. Third-party service costs grew in connection with the growth in our revenue, especially in disciplines that have a higher level of these costs, such as Media, Experiential, and Field Marketing. Third-party incidental costs reflect out-of-pocket costs billed directly to clients and were up a bit. Occupancy and other costs increased due to the Flywheel acquisition and greater in-office activity, partially offset by lower rent expense. SG&A expenses increased primarily from increases in professional fees and other costs related to our strategic initiatives.
Now let's turn to slide 9 and look at our income statement in more detail. With no adjustments during the third quarter, EBITDA and non-GAAP adjusted EBITDA both grew 7.9% and the EBITDA margin was 16.0% versus the comparable 16.1% margin last year. EBITDA reflects the add-back to operating income for amortization of acquired intangible assets and internally developed strategic platform intangible assets. Approximately 85% of the amount added back relates to acquired intangible assets. We expect similar levels of amortization in the fourth quarter. The EBITDA margin reflects our performance and includes costs incurred in connection with our investments in Omni, Flywheel Commerce Cloud, AI, and other technology platforms and tools. We continue to expect this margin to be close to flat with our 2023 adjusted EBITDA margin of 15.6% as we balance cost savings initiatives with strategic investment opportunities that we believe will drive strong future revenue and EBITDA growth.
Moving down the income statement, net interest expense in the third quarter of 2024 increased $2.1 million to $40.4 million. The change was driven by a $12.9 million increase in interest expense due to higher outstanding debt from the Flywheel financing and the recent note issuance in advance of our November maturity. The change in net interest expense also reflects a $10.8 million increase in interest income due to higher average cash and short-term investment balances. Our income tax rate of 26.8% was in line with our expectation of 27%. We also expect the rate for the fourth quarter to approximate 27%.
Below the line, I'd like to point out that our strong growth in revenue and EBITDA were driven in part, as always, by some agencies that have minority interests, including recent acquisitions. This resulted in higher minority interest expense in Q3 compared to last year. Net income growth of 3.8%, coupled with fewer diluted shares outstanding from our buyback activity, drove a 4.8% lift in diluted earnings per share. On an adjusted basis, excluding after-tax amortization, diluted earnings per share was up 5.7% to $2.03.
Now please turn to slide 10. Free cash flow year-to-date is up 4% from last year. Our definition, like other peers, excludes changes in working capital. For the nine months ended September 30, our use of working capital improved by 8%, as you can see in the appendix on slide 18. We remain focused on working capital management and continue to work towards our historically neutral annual level over time. Regarding our uses of cash, we used $416 million of cash to pay dividends to common shareholders, and another $64 million for dividends to non-controlling interest shareholders.
Our capital expenditures were $94 million, which, as discussed on prior calls, reflect our investment in Flywheel and our strategic technology platform initiatives, as well as investments in our facilities. Total acquisition payments, which include earnout payments and the acquisition of additional non-controlling interests, were $953 million, which primarily reflects the $845 million acquisition of Flywheel, net of cash acquired in January, and the late September acquisition of LeapPoint.
Finally, our share repurchase activity, net of proceeds from stock plans, was $359 million year-to-date and $113 million in the quarter. Our expectation for the year has been for annual repurchases in 2024 to be approximately half of our historical average of about $600 million. While we exceeded that level as of September 30, Q4 repurchases will depend on a variety of factors.
Slide 11 is a summary of our credit, liquidity, and debt maturities. At the end of the third quarter of 2024, the book value of our outstanding debt was $6.9 billion, which reflects a $655 million euro financing, which we did earlier this year to fund a portion of the Flywheel acquisition and a $600 million financing this summer to be used with cash on hand to repay our $750 million notes due November 1, 2024. The effects of foreign currency translation also increased the book value of our debt by $98 million.
Our cash equivalents and short-term investments on September 30 were $3.5 billion, up from last year, primarily reflecting the $600 million note issued this summer. We also have an undrawn $2.5 billion revolving credit facility, which backstops our $2 billion U.S. commercial paper program. After the November maturity, we have no further maturities until April 2026.
The financing activity I just discussed has given us the opportunity to invest cash at favorable rates relative to the 3.65% coupon on our notes that are due in November. We will pay off the notes in November, and we currently estimate that net interest expense in Q4 will be a little higher than Q3 of 2024.
Slide 12 presents our historical returns on two important performance metrics for the 12 months ended September 30, 2024. Omnicom's return on invested capital was 20%, and return on equity was 41%, both of which consistently reflect our strong performance and solid balance sheet.
I will now ask the operator to please open the lines up for questions and answers. Thank you.
