MDC PARTNERS INC NEW YORK, Aug. 6, 2015 /PRNewswire/ --
SECOND QUARTER HIGHLIGHTS:
-- Revenue increased to $336.6 million from $299.4 million, an increase of
12.4%
-- Net income attributable to MDC Partners of $29.6 million versus $16.5
million in the same period last year
-- Organic revenue increased 8.3%
-- Adjusted EBITDA of $47.5 million versus $48.9 million in the same period
last year (see Schedules 2 and 3)
-- Adjusted EBITDA margin of 14.1% versus 16.3% in the same period last
year (see Schedules 2 and 3)
-- Adjusted EBITDA Available for General Capital Purposes of $27.7 million
versus $31.8 million in the same period last year (see Schedule 6)
-- Net New Business wins totaled $27.3 million
-- Declared cash dividend of $0.21 per share
YEAR-TO-DATE HIGHLIGHTS:
-- Revenue increased to $638.8 million from $574.2 million, an increase of
11.3%
-- Net loss attributable to MDC Partners of ($2.5) million versus income of
$7.6 million in the same period last year
-- Organic revenue increased 7.8%
-- Adjusted EBITDA of $78.6 million versus $84.7 million in the same period
last year (see Schedules 4 and 5)
-- Adjusted EBITDA margin of 12.3% versus 14.7% in the same period last
year (see Schedules 4 and 5)
-- Adjusted EBITDA Available for General Capital Purposes of $38.0 million
versus $52.3 million in the same period last year (see Schedule 6)
-- Net New Business wins totaled $55.3 million
(NASDAQ: MDCA; TSX: MDZ.A) - MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and six months ended June 30, 2015.
Scott Kauffman, Chairman and Chief Executive Officer of MDC Partners, said, "We delivered strong results in the second quarter with exceptional organic growth of 8%, total revenue growth of 12% and solid cash generation. Adjusted EBITDA, while down modestly year over year due to the timing of revenue recognition associated with certain accounts, is tracking as predicted to our annual growth forecast. Our partner companies continue to consistently deliver best in class results on behalf of their clients, we are winning new business on a larger and increasingly global scale, and importantly, our unique culture is fostering talent and innovation. In the short-term we are on track to achieve our annual financial guidance, and in the long-term, we have never been in a better strategic position to continue posting industry leading operational and financial results. I am very excited about the future of MDC."
Guidance for 2015 is reaffirmed as follows:
Implied
2014 2015 Year over Year
Actuals Guidance Change
------- -------- ------
Revenue $1.22 billion $1.300 - $1.330 billion +6.5% to +8.5%
Adjusted
EBITDA $179.4 million $195 - $205 million +8.7% to +14.3%
Implied
Adjusted
EBITDA
Margin 14.7% 15.0% to 15.4% +35 to 75 basis points
Adjusted
EBITDA
Available
for $98.8 million $109 - $119 million +10.3% to +20.4%
General
Capital
Purposes
Consolidated revenue for the second quarter of 2015 was $336.6 million, an increase of 12.4%, compared to $299.4 million in the second quarter of 2014. Adjusted EBITDA for the second quarter of 2015 was $47.5 million compared to $48.9 million in the second quarter of 2014. Net income attributable to MDC Partners in the second quarter was $29.6 million compared to $16.5 million in the second quarter of 2014. Diluted income per share from continuing operations attributable to MDC Partners common shareholders for the second quarter of 2015 was $0.56 compared to $0.35 per share in the second quarter of 2014. Adjusted EBITDA Available for General Capital Purposes was $27.7 million in the second quarter of 2015 compared to $31.8 million in the second quarter of 2014.
For the six month period ended June 30, 2015, consolidated revenue was $638.8 million, an increase of 11.3% compared to $574.2 million in the six months ended June 30, 2014. Adjusted EBITDA for the six months ended June 30, 2015 was $78.6 million compared to $84.7 million in the same period of 2014. Net loss attributable to MDC Partners in the six months ended June 30, 2015 was ($2.5) million compared to income of $7.6 million in the same period of 2014. Diluted income per share from continuing operations attributable to MDC Partners common shareholders for the six months ended June 30, 2015 was $0.05 compared to $0.18 per share in the same period of 2014. Adjusted EBITDA Available for General Capital Purposes was $38.0 million in the six months ended June 30, 2015, compared to $52.3 million in the same period of 2014.
David Doft, CFO of MDC Partners, said, "The fundamental performance of our business this quarter was strong and consistent with our expectations. We remain firmly on track for a successful second half of the year and to achieving our 17-19% mid-term margin outlook. We are particularly pleased with how we performed from a cash standpoint, despite $95.9 million of deferred acquisition consideration and step-up closing payments in the quarter. Our liquidity position is strong and affords us the flexibility to continue to build our business while also de-levering the balance sheet. We are exceptionally encouraged by where we stand heading into the back half of the year."
MDC Partners Announces $0.21 per Share Quarterly Cash Dividend
MDC Partners today also announced that its Board of Directors has declared a cash dividend of $0.21 per share on all of its outstanding Class A shares and Class B shares. The quarterly dividend will be payable on or about September 1, 2015, to shareholders of record at the close of business on August 18, 2015.
Conference Call
Management will host a conference call on Thursday, August 6, 2015, at 5:00 p.m. (ET) to discuss results. Access the conference call by dialing 1-412-902-4266 or toll free 1-888-346-6216. An investor presentation has been posted on our website www.mdc-partners.com and may be referred to during the conference call.
A recording of the conference call will be available one hour after the call until 9:00 a.m. (ET), August 14, 2015, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10070129), or by visiting our website at www.mdc-partners.com.
About MDC Partners Inc.
MDC Partners is one of the fastest-growing and most influential marketing and communications networks in the world. Its 50+ advertising, public relations, branding, digital, social and event marketing agencies are responsible for some of the most memorable and engaging campaigns for the world's most respected brands. By leveraging technology, data analytics, insights, and strategic consulting solutions, MDC Partners drives measurable results and optimizes return on marketing investment for over 1,500 clients worldwide.
As "The Place Where Great Talent Lives," MDC Partners is known for its unique partnership model, empowering the most entrepreneurial and innovative talent to drive competitive advantage and business growth for clients. For more information about MDC Partners and its partner firms, visit www.mdc-partners.com and follow us on Twitter: http://www.twitter.com/mdcpartners
Non-GAAP Financial Measures
In addition to its reported results, MDC Partners has included in this earnings release certain financial results that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. These non-GAAP financial measures relate to: (1) presenting Adjusted EBITDA and EBITDA margin (as defined) for the three and six months ended June 30, 2015, and 2014; and (2) presenting Adjusted EBITDA Available for General Capital Purposes for the three and six months ended June 30, 2015, and 2014. Included in this earnings release are tables reconciling MDC Partners' reported results to arrive at these non-GAAP financial measures.
This press release contains forward-looking statements. The Company's representatives may also make forward-looking statements orally from time to time. Statements in this press release that are not historical facts, including statements about the Company's beliefs and expectations, earnings guidance, recent business and economic trends, potential acquisitions, estimates of amounts for deferred acquisition consideration and "put" option rights, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
-- risks associated with the Subpoena and ongoing SEC investigation and
related securities litigation claims;
-- risks associated with severe effects of international, national and
regional economic downturn;
-- the Company's ability to attract new clients and retain existing
clients;
-- the spending patterns and financial success of the Company's clients;
-- the Company's ability to retain and attract key employees;
-- the Company's ability to remain in compliance with its debt agreements
and the Company's ability to finance its contingent payment obligations
when due and payable, including but not limited to those relating to
"put" option right and deferred acquisition consideration;
-- the successful completion and integration of acquisitions which
complement and expand the Company's business capabilities; and
-- foreign currency fluctuations.
The Company's business strategy includes ongoing efforts to engage in acquisitions of ownership interests in entities in the marketing communications services industry. The Company intends to finance these acquisitions by using available cash from operations, from borrowings under its credit facility and through incurrence of bridge or other debt financing, any of which may increase the Company's leverage ratios, or by issuing equity, which may have a dilutive impact on existing shareholders proportionate ownership. At any given time the Company may be engaged in a number of discussions that may result in one or more acquisitions. These opportunities require confidentiality and may involve negotiations that require quick responses by the Company. Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transactions, the announcement of any such transaction may lead to increased volatility in the trading price of the Company's securities.
Investors should carefully consider these risk factors and the additional risk factors outlined in more detail in the Annual Report on Form 10-K under the caption "Risk Factors" and in the Company's other SEC filings.
SCHEDULE 1
MDC PARTNERS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ in 000s, except share and per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2015 2014 2015 2014
---- ---- ---- ----
Revenue $336,606 $299,356 $638,828 $574,210
Operating Expenses:
Cost of services sold 225,042 188,875 435,461 370,343
Office and general
expenses 53,075 71,436 127,383 142,772
Depreciation and
amortization 14,007 9,917 26,307 20,399
292,124 270,228 589,151 533,514
------- ------- ------- -------
Operating profit $44,482 29,128 49,677 40,696
Other Income (Expenses):
Other, net 4,348 7,564 (13,692) 993
Interest expense and
finance charges (13,288) (13,882) (28,384) (26,641)
Interest income 105 42 224 182
--- --- --- ---
Income from continuing operations before income taxes and
equity in non-consolidated affiliates
35,647 22,852 7,825 15,230
Income tax expense 4,679 3,376 625 3,030
----- ----- --- -----
Income from continuing
operations before equity
in non-consolidated
affiliates 30,968 19,476 7,200 12,200
Equity in earnings of
non-consolidated
affiliates 104 79 455 142
--- --- --- ---
Income from continuing
operations 31,072 19,555 7,655 12,342
Income (loss) from
discontinued operations
attributable to MDC
Partners Inc., net of
taxes 1,329 (1,336) (4,965) (1,607)
----- ------ ------ ------
Net income 32,401 18,219 2,690 10,735
Net income attributable
to the noncontrolling
interests (2,841) (1,749) (5,221) (3,111)
------ ------ ------ ------
Net income (loss)
attributable to MDC
Partners Inc. $29,560 $16,470 ($2,531) $7,624
======= ======= ======= ======
Income (loss) Per Common Share:
Basic:
Income from continuing operations attributable to MDC Partners
Inc. common shareholders
$0.57 $0.36 $0.05 $0.19
Discontinued operations attributable to MDC Partners Inc.
common shareholders
$0.03 ($0.03) ($0.10) ($0.03)
----- ------ ------ ------
Net income (loss) attributable to MDC Partners Inc. common
shareholders
$0.60 $0.33 ($0.05) $0.16
===== ===== ====== =====
Diluted:
Income from continuing operations attributable to MDC Partners
Inc. common shareholders
$0.56 $0.35 $0.05 $0.18
Discontinued operations attributable to MDC Partners Inc.
common shareholders
$0.03 ($0.03) ($0.10) ($0.03)
----- ------ ------ ------
Net Income (loss) attributable to MDC Partners Inc. common
shareholders
$0.59 $0.32 ($0.05) $0.15
===== ===== ====== =====
Weighted Average Number of Common Shares Outstanding:
Basic 49,859,300 49,546,062 49,807,419 49,442,770
Diluted 50,399,936 50,195,321 50,365,119 50,106,545
SCHEDULE 2
MDC PARTNERS INC.
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Three Months Ended June 30, 2015
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $270,091 $66,515 $ - $336,606
======== ======= ================== ========
Net income attributable to MDC Partners Inc. $29,560
Adjustments to reconcile to Operating profit (loss):
Net income attributable to the noncontrolling interests 2,841
Income from discontinued operations attributable to MDC Partners Inc., net of taxes
(1,329)
Equity in earnings of non-consolidated affiliates (104)
Income tax expense 4,679
Interest expense and finance charges, net 13,183
Other, net (4,348)
------
Operating profit (loss) $33,434 $16,259 ($5,211) $44,482
margin 12.4% 24.4% 13.2%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 6,492 5,790 1,725 14,007
Stock-based compensation 4,087 838 389 5,314
Acquisition deal costs 215 90 537 842
Deferred acquisition consideration adjustments to P&L (2,200) (10,541) - (12,741)
Profit distributions from non-consolidated affiliates - 176 112 288
Other items, net ** - - (4,718) (4,718)
--- --- ------ ------
Adjusted EBITDA * $42,028 $12,612 ($7,166) $47,474
margin 15.6% 19.0% 14.1%
* Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, profit distributions
from affiliates, and other non-recurring items.
** Other items includes both (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses ($8.6 million) and (ii) legal fees and other expenses relating to the ongoing SEC investigation ($3.9 million).
SCHEDULE 3
MDC PARTNERS INC.
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Three Months Ended June 30, 2014
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $230,117 $69,239 $ - $299,356
======== ======= ================== ========
Net income attributable to MDC Partners Inc. $16,470
Adjustments to reconcile to Operating profit (loss):
Net income attributable to the noncontrolling interests 1,749
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
1,336
Equity in earnings of non-consolidated affiliates (79)
Income tax expense 3,376
Interest expense and finance charges, net 13,840
Other, net (7,564)
------
Operating profit (loss) $35,947 $5,727 ($12,546) $29,128
margin 15.6% 8.3% 9.7%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 5,139 4,345 433 9,917
Stock-based compensation 2,112 930 1,386 4,428
Acquisition deal costs 441 202 341 984
Deferred acquisition consideration adjustments to P&L 1,121 2,950 - 4,071
Profit distributions from non-consolidated affiliates - 45 311 356
--- --- --- ---
Adjusted EBITDA * $44,760 $14,199 ($10,075) $48,884
margin 19.5% 20.5% 16.3%
*Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments and profit
distributions from affiliates.
SCHEDULE 4
MDC PARTNERS INC.
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Six Months Ended June 30, 2015
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $510,527 $128,301 $ - $638,828
======== ======== ================== ========
Net loss attributable to MDC Partners Inc. ($2,531)
Adjustments to reconcile to Operating profit (loss):
Net income attributable to the noncontrolling interests 5,221
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
4,965
Equity in earnings of non-consolidated affiliates (455)
Income tax expense 625
Interest expense and finance charges, net 28,160
Other, net 13,692
------
Operating profit (loss) $52,265 $17,068 ($19,656) 49,677
margin 10.2% 13.3% 7.8%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 12,915 11,220 2,172 26,307
Stock-based compensation 6,611 1,959 1,189 9,759
Acquisition deal costs 664 96 956 1,716
Deferred acquisition consideration adjustments to P&L (652) (9,841) - (10,493)
Profit distributions from non-consolidated affiliates 304 206 120 630
Other items, net ** - - 1,044 1,044
--- --- ----- -----
Adjusted EBITDA * $72,107 $20,708 ($14,175) 78,640
margin 14.1% 16.1% 12.3%
* Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, profit
distributions from affiliates, and other non-recurring items.
** Other items includes both (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses ($8.6 million) and (ii) legal fees and other expenses relating to the ongoing SEC investigation ($9.7
million).
SCHEDULE 5
MDC PARTNERS INC.
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Six Months Ended June 30, 2014
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $444,921 $129,289 $ - $574,210
======== ======== ================== ========
Net income attributable to MDC Partners Inc. $7,624
Adjustments to reconcile to Operating profit (loss):
Net income attributable to the noncontrolling interests 3,111
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
1,607
Equity in earnings of non-consolidated affiliates (142)
Income tax expense 3,030
Interest expense and finance charges, net 26,459
Other, net (993)
----
Operating profit (loss) $59,997 $3,722 ($23,023) $40,696
margin 13.5% 2.9% 7.1%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 10,287 9,177 935 20,399
Stock-based compensation 4,251 2,207 2,338 8,796
Acquisition deal costs 596 786 673 2,055
Deferred acquisition consideration adjustments to P&L 5,566 6,527 - 12,093
Profit distributions from non-consolidated affiliates - 283 354 637
--- --- --- ---
Adjusted EBITDA * $80,697 $22,702 ($18,723) $84,676
margin 18.1% 17.6% 14.7%
*Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments and profit
distributions from affiliates.
SCHEDULE 6
MDC PARTNERS INC.
UNAUDITED ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES
(US$ in 000s)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2015 2014 2015 2014
---- ---- ---- ----
Adjusted EBITDA (1) $47,474 $48,884 $78,640 $84,676
Net income
attributable to
noncontrolling
interests (2,841) (1,749) (5,221) (3,111)
Capital
expenditures, net
(2) (3,812) (2,604) (9,112) (5,100)
Cash taxes (175) (35) (715) (118)
Cash interest, net
& other (3) (12,893) (12,723) (25,544) (24,054)
------- ------- ------- -------
Adjusted EBITDA
Available for
General Capital
Purposes (4) $27,753 $31,773 $38,048 $52,293
======= ======= ======= =======
(1) Adjusted EBITDA is a non GAAP measure. See schedules 2 through 5 for a reconciliation of Net income (loss) to Adjusted EBITDA.
(2) Capital expenditures, net represents capital expenditures net of landlord reimbursements.
(3) Cash interest, net & other represents the quarterly accrual of cash interest under our Senior Notes.
(4) Adjusted EBITDA Available for General Capital Purposes is a non-GAAP measure, and represents funds available for repayment of debt, acquisitions, deferred acquisition
consideration, dividends, and other general corporate initiatives.
SCHEDULE 7
MDC PARTNERS INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(US$ in 000s)
June 30, December 31,
2015 2014
---- ----
Assets
Current Assets:
Cash and cash equivalents $34,851 $113,348
Cash held in trusts 206,098 6,419
Accounts receivable, net 413,964 355,295
Expenditures billable to clients 46,548 40,202
Other current assets 40,952 36,978
------ ------
Total Current Assets 742,413 552,242
Fixed assets, net 59,206 60,240
Investment in non-consolidated
affiliates 10,027 6,110
Goodwill 878,366 851,373
Other intangible assets, net 83,494 86,121
Deferred tax assets 19,893 18,758
Other assets 55,248 74,046
------ ------
Total Assets $1,848,647 $1,648,890
========== ==========
Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit
Current Liabilities:
Accounts payable $303,152 $316,285
Trust liability 206,098 6,419
Accruals and other liabilities 364,331 264,854
Advance billings 156,658 142,608
Current portion of long term debt 515 534
Current portion of deferred
acquisition consideration 106,334 90,804
------- ------
Total Current Liabilities 1,137,088 821,504
Long-term debt, less current portion 741,780 742,593
Long-term portion of deferred
acquisition consideration 114,533 114,564
Other liabilities 45,627 45,861
Deferred tax liabilities 83,402 77,997
Total Liabilities 2,122,430 1,802,519
--------- ---------
Redeemable Noncontrolling Interests 148,401 194,951
------- -------
Shareholders' Deficit
Common shares 268,850 265,818
Charges in excess of capital (278,484) (209,668)
Accumulated deficit (492,164) (489,633)
Accumulated other comprehensive loss (2,152) (7,752)
------ ------
MDC Partners Inc. Shareholders'
Deficit (503,950) (441,235)
Noncontrolling Interests 81,766 92,655
------ ------
Total Shareholders' Deficit (422,184) (348,580)
-------- --------
Total Liabilities, Redeemable
Noncontrolling
Interests and Shareholders' Deficit $1,848,647 $1,648,890
========== ==========
SCHEDULE 8
MDC PARTNERS INC.
UNAUDITED SUMMARY CASH FLOW DATA
(US$ in 000s)
Six Months Ended June
30,
2015 2014
---- ----
Cash flows provided by
continuing operating
activities $69,478 $25,255
Discontinued operations (995) 894
----
Net cash provided by
operating activities 68,483 26,149
------ ------
Cash flows used in
continuing investing
activities (36,073) (57,186)
Discontinued operations 18,070 (1,145)
------ ------
Net cash used in investing
activities (18,003) (58,331)
------- -------
Net cash used in continuing
financing activities (129,105) (3,808)
Discontinued operations (40) (40)
--- ---
Net cash used in financing
activities (129,145) (3,848)
-------- ------
Effect of exchange rate
changes on cash and cash
equivalents 168 (330)
--- ----
Net decrease in cash and
cash equivalents ($78,497) ($36,360)
======== ========
FOR: MDC Partners Inc. CONTACT: Matt Chesler, CFA
745 Fifth Avenue, 19th Floor VP, Investor Relations
New York, NY 10151 646-412-6877
mchesler@mdc-partners.com
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