MDC PARTNERS INC NEW YORK, July 24, 2014 /PRNewswire/ --
SECOND QUARTER HIGHLIGHTS:
-- Revenue increased to $317.7 million from $287.5 million, an increase of
10.5%
-- Organic revenue increased 7.0%
-- Net Income attributable to MDC Partners increased to $16.5 million from
$9.8 million, an increase of 67.8%
-- Adjusted EBITDA increased to $48.8 million from $44.6 million, an
increase of 9.5% (see Schedules 2 and 3)
-- Adjusted EBITDA margin of 15.4% versus 15.5%
-- Adjusted EBITDA Available for General Capital Purposes increased to
$31.0 million from $27.1 million, an increase of 14.6% (see Schedule 6)
-- Net New Business wins totaled a record $53.7 million
YEAR-TO-DATE HIGHLIGHTS:
-- Revenue increased to $610.3 million from $553.1 million, an increase of
10.3%
-- Organic revenue increased 7.3%
-- Net Income attributable to MDC Partners increased $41.0 million to $7.6
million from a loss of $33.3 million
-- Adjusted EBITDA increased to $85.3 million from $75.4 million, an
increase of 13.0% (see Schedules 4 and 5)
-- Adjusted EBITDA margin increased 40 basis points to 14.0% from 13.6%
-- Adjusted EBITDA Available for General Capital Purposes increased to
$51.7 million from $42.5 million, an increase of 21.6% (see Schedule 6)
-- Net New Business wins totaled $78.3 million
MDC Partners Inc. (NASDAQ: MDCA; TSX: MDZ.A) today announced financial results for the three and six months ended June 30, 2014.
Miles S. Nadal, Chairman and Chief Executive Officer of MDC Partners, said, "We delivered very strong results in the second quarter. It's clear that our business model is unique and increasing the return on marketing investment for clients, and increasing the sustainable profitable growth rate of our business. Organic revenue grew 7.0% and Adjusted EBITDA increased 9.5%, representing a 15.4% margin. Adjusted EBITDA Available for General Capital Purposes increased 14.6% to $31.0 million and net new business wins were $53.7 million during the quarter. The business pipeline is full of increasingly large and global opportunities as our agencies scale their capabilities. Our partner agencies are performing ahead of our expectations and we are executing well against a number of our growth initiatives. Our prospects for 2014 are even more encouraging than what we detailed in the first quarter and as a result, we are once again raising our 2014 guidance for Adjusted EBITDA and Adjusted EBITDA Available for General Capital Purposes."
Guidance for 2014 is revised as follows:
2014 2014 2014 Implied
2013 Initial Guidance Revised Guidance 1Q Revised Guidance 2Q Year over Year
Actuals February 20, 2014 April 24, 2014 July 24, 2014 Change
------- ----------------- -------------- ------------- ------
Revenue $1.15 billion $1.230 - $1.255 billion $1.245 - $1.270 billion $1.245 - $1.270 billion +8.4% to +10.5%
Adjusted EBITDA $159.4 million $177 - $181 million $181 - $185 million $184 - $188 million +15.4% to +17.9%
Adjusted EBITDA Margin 13.9% 14.4% 14.5% to 14.6% 14.8% +90 basis points
Adjusted EBITDA Available for $91.6 million $104 - $108 million $106 - $110 million $108 - $112 million +18.0% to +22.3%
General Capital Purposes
Consolidated revenue for the second quarter of 2014 was $317.7 million, an increase of 10.5% compared to $287.5 million in the second quarter of 2013. Adjusted EBITDA for the second quarter of 2014 was $48.8 million, an increase of 9.5% compared to $44.6 million in the second quarter of 2013. Net income attributable to MDC Partners in the second quarter was $16.5 million compared to $9.8 million in the second quarter of 2013. Diluted income per share from continuing operations attributable to MDC Partners common shareholders for the second quarter of 2014 was $0.33 compared to $0.22 per share in the same period of 2013. Adjusted EBITDA Available for General Capital Purposes was $31.0 million in the second quarter of 2014, an increase of 14.6% compared to $27.1 million in the second quarter of 2013.
For the six month period ended June 30, 2014, consolidated revenue was $610.3 million, an increase of 10.3% compared to $553.1 million in the six months ended June 30, 2013. Adjusted EBITDA for the six months ended June 30, 2014 increased 13.0% to $85.3 million compared to $75.4 million in the same period of 2013. Net income attributable to MDC Partners in the six months ended June 30, 2014 was $7.6 million compared to a loss of $33.3 million in 2013. Diluted income per share from continuing operations attributable to MDC Partners common shareholders for the six months ended June 30, 2014 was $0.16 compared to a loss of ($0.64) per share in the same period of 2013. Adjusted EBITDA Available for General Capital Purposes was $51.7 million in the six months ended June 30, 2014, an increase of 21.6% compared to $42.5 million in the same period of 2013.
David Doft, CFO of MDC Partners, said, "Given the superior performance we delivered in the first half of the year, and our growing expectations for the third and fourth quarters, we believe that it is prudent to provide updated financial targets for the year. While our revenue guidance is maintained at $1.245 to $1.270 billion, implying 8.4% to 10.5% year over year growth, we are increasing our Adjusted EBITDA guidance for the year to $184 million to $188 million, or year over year growth of 15.4% to 17.9% and Adjusted EBITDA margins of 14.8%, up 90 basis points year over year. We are also increasing guidance for Adjusted EBITDA Available for General Capital Purposes to $108 to $112 million, representing an increase of 18.0% to 22.3%, despite the incremental interest expense from our debt financings. Our increased margin forecast indicates that we are on pace to achieving our long-term target margins of 15% to 17% well ahead of schedule."
MDC Partners Announces $0.19 per Share Quarterly Cash Dividend
MDC Partners today also announced that its Board of Directors has declared a cash dividend of $0.19 per share on all of its outstanding Class A shares and Class B shares. The quarterly dividend represents an increase of 5.6% from our prior quarterly dividend of $0.18, and will be payable on or about August 19, 2014, to shareholders of record at the close of business on August 5, 2014.
Conference Call
Management will host a conference call on Thursday, July 24, 2014 at 4:30 p.m. (ET) to discuss results. The conference call will be accessible by dialing 1-412-317-0790 or toll free 1-877-870-4263. 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 8, 2014, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10049255) or by visiting our website at www.mdc-partners.com.
About MDC Partners Inc.
MDC is one of the world's largest Business Transformation Organizations that utilizes technology, marketing communications, data analytics, insights and strategic consulting solutions to drive meaningful returns on Marketing and Communications Investments for multinational clients in the United States, Canada, and worldwide.
MDC Partners' durable competitive advantage is to Empower the Most Talented Entrepreneurial Thought Leaders to Drive Business Success to new levels of Achievement, for both our Clients and our Shareholders, reinforcing MDC's reputation as "The Place Where Great Talent Lives."
MDC Partners' Class A shares are publicly traded on NASDAQ under the symbol "MDCA" and on the Toronto Stock Exchange under the symbol "MDZ.A".
Please visit us: www.mdc-partners.com
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Join us on LinkedIn: http://www.linkedin.com/company/mdc-partners
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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, 2014, and 2013; and (2) presenting Adjusted EBITDA Available for General Capital Purposes for the three and six months ended June 30, 2014, and 2013. Included in this earnings release are tables reconciling MDC's 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 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 material 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 material 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,
--------------------------- -------------------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue $317,719 $287,499 $610,288 $553,135
Operating Expenses:
Cost of services sold 200,182 189,677 391,875 367,535
Office and general expenses 78,558 60,845 156,732 128,205
Depreciation and amortization 10,730 9,488 22,025 18,967
289,470 260,010 570,632 514,707
------- ------- ------- -------
Operating profit 28,249 27,489 39,656 38,428
Other Income (Expenses):
Other, net 7,302 (2,880) 765 (191)
Interest expense and finance charges (13,882) (10,375) (26,636) (22,803)
Loss on Redemption of Notes - - - (55,588)
Interest income 1 62 110 165
--- --- --- ---
Income (Loss) from continuing operations before income taxes
and equity in non-consolidated affiliates 21,670 14,296 13,895 (39,989)
Income tax expense (benefit) 3,378 1,727 3,044 (12,523)
----- ----- ----- -------
Income (Loss) from continuing operations before equity in non-consolidated affiliates 18,292 12,569 10,851 (27,466)
Equity in earnings of non-consolidated affiliates 79 82 142 123
--- --- --- ---
Income (Loss) from continuing operations 18,371 12,651 10,993 (27,343)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes (152) (1,321) (258) (3,503)
---- ------ ---- ------
Net Income (loss) 18,219 11,330 10,735 (30,846)
Net income attributable to the noncontrolling interests (1,749) (1,514) (3,111) (2,496)
------ ------ ------ ------
Net income (loss) attributable to MDC Partners Inc. $16,470 $9,816 $7,624 ($33,342)
======= ====== ====== ========
Income (Loss) Per Common Share:
Basic
Income (Loss) from continuing operations attributable to MDC
Partners Inc. common shareholders $0.34 $0.24 $0.16 ($0.64)
Discontinued operations attributable to MDC
Partners Inc. common shareholders ($0.00) ($0.03) ($0.01) ($0.07)
------ ------ ------ ------
Net Income (Loss) attributable to MDC Partners Inc.
common shareholders $0.34 $0.21 $0.15 ($0.71)
===== ===== ===== ======
Income (loss) Per Common Share:
Diluted:
Income (loss) from continuing operations attributable to MDC
Partners Inc. common shareholders $0.33 $0.22 $0.16 ($0.64)
Discontinued operations attributable to MDC
Partners Inc. common shareholders ($0.00) ($0.03) ($0.01) ($0.07)
------ ------ ------ ------
Net Income (loss) attributable to MDC Partners Inc.
common shareholders $0.33 $0.19 $0.15 ($0.71)
===== ===== ===== ======
Weighted Average Number of Common Shares:
Basic 49,546,062 47,098,392 49,442,770 46,975,299
Diluted 50,195,321 51,174,437 50,106,545 46,975,299
SCHEDULE 2
MDC PARTNERS INC.
RECONCILIATION OF OPERATING PROFIT (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Three Months Ended June 30, 2014
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $221,017 $96,702 - $317,719
======== ======= === ========
Net income attributable to MDC Partners Inc. $16,470
Adjustments to reconcile to Operating Profit:
Net income attributable to the noncontrolling interests 1,749
Loss from discontinued operations attributable to
MDC Partners Inc., net of taxes 152
Equity in earnings of non-consolidated affiliates (79)
Income tax Expense 3,378
Interest expense and finance charges, net 13,881
Other, net (7,302)
------
Operating profit (loss) $35,497 $5,298 ($12,546) $28,249
margin 16.1% 5.5% 8.9%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 5,038 5,259 433 10,730
Stock-based compensation 2,112 930 1,386 4,428
Acquisition deal costs 441 202 341 984
Deferred acquisition consideration adjustments to P&L 1,123 2,948 - 4,071
Profit distributions from affiliates - 45 311 356
--- --- --- ---
Adjusted EBITDA * $44,211 $14,682 ($10,075) $48,818
margin 20.0% 15.2% 15.4%
* Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, and profit distributions from affiliates.
SCHEDULE 3
MDC PARTNERS INC.
RECONCILIATION OF OPERATING PROFIT (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Three Months Ended June 30, 2013
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $200,670 $86,829 - $287,499
======== ======= === ========
Net income attributable to MDC Partners Inc. $9,816
Adjustments to reconcile to Operating Profit:
Net income attributable to the noncontrolling interests 1,514
Loss from discontinued operations attributable to
MDC Partners Inc., net of taxes 1,321
Equity in earnings of non-consolidated affiliates (82)
Income tax Expense 1,727
Interest expense and finance charges, net 10,313
Other, net 2,880
-----
Operating profit (loss) $27,771 $4,742 ($5,024) $27,489
margin 13.8% 5.5% 9.6%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 5,753 3,408 327 9,488
Stock-based compensation 1,839 1,030 1,885 4,754
Acquisition deal costs 39 99 337 475
Deferred acquisition consideration adjustments to P&L 3,549 (1,162) - 2,387
Profit distributions from affiliates - - - -
--- --- --- ---
Adjusted EBITDA * $38,951 $8,117 ($2,475) $44,593
margin 19.4% 9.3% 15.5%
*Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, and profit distributions from affiliates.
SCHEDULE 4
MDC PARTNERS INC.
RECONCILIATION OF OPERATING PROFIT (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Six Months Ended June 30, 2014
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $426,965 $183,323 - $610,288
======== ======== === ========
Net income attributable to MDC Partners Inc. $7,624
Adjustments to reconcile to Operating Profit:
Net income attributable to the noncontrolling interests 3,111
Loss from discontinued operations attributable to
MDC Partners Inc., net of taxes 258
Equity in earnings of non-consolidated affiliates (142)
Income tax Expense 3,044
Interest expense and finance charges, net 26,526
Other, net (765)
----
Operating profit (loss) $59,100 $3,579 ($23,023) 39,656
margin 13.8% 2.0% 6.5%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 10,084 11,006 935 22,025
Stock-based compensation 4,251 2,207 2,338 8,796
Acquisition deal costs 596 786 673 2,055
Deferred acquisition consideration adjustments to P&L 5,554 6,539 - 12,093
Profit distributions from affiliates - 283 354 637
--- --- --- ---
Adjusted EBITDA * 79,585 24,400 (18,723) 85,262
margin 18.6% 13.3% 14.0%
* Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, and profit distributions from
affiliates.
SCHEDULE 5
MDC PARTNERS INC.
RECONCILIATION OF OPERATING PROFIT (LOSS) TO ADJUSTED EBITDA
(US$ in 000s, except percentages)
For the Six Months Ended June 30, 2013
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------- -------- --------- -----
Revenue $384,100 $169,035 - $553,135
======== ======== === ========
Net income attributable to MDC Partners Inc. ($33,342)
Adjustments to reconcile to Operating Profit:
Net income attributable to the noncontrolling interests 2,496
Loss from discontinued operations attributable to
MDC Partners Inc., net of taxes 3,503
Equity in earnings of non-consolidated affiliates (123)
Income tax Benefit (12,523)
Interest expense, finance charges, and loss on redemption of notes, net 78,226
Other, net 191
---
Operating profit (loss) $50,428 $3,534 ($15,534) $38,428
margin 13.1% 2.1% 6.9%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization 11,527 6,748 692 18,967
Stock-based compensation 2,980 1,859 4,416 9,255
Acquisition deal costs 165 194 652 1,011
Deferred acquisition consideration adjustments to P&L 4,048 635 - 4,683
Profit distributions from affiliates - - 3,096 3,096
--- --- ----- -----
Adjusted EBITDA * $69,148 $12,970 ($6,678) $75,440
margin 18.0% 7.7% 13.6%
*Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, and profit distributions from affiliates.
SCHEDULE 6
MDC PARTNERS INC.
ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES
(US$ in 000s)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
2014 2013 2014 2013
---- ---- ---- ----
Adjusted EBITDA (1) $48,818 $44,593 $85,262 $75,440
Net Income
Attributable to
Noncontrolling
Interests (1,749) (1,514) (3,111) (2,496)
Capital
Expenditures, net
(2) (3,229) (6,589) (6,245) (9,237)
Cash Taxes (35) (132) (118) (199)
Cash Interest, net &
Other (3) (12,763) (9,262) (24,126) (21,025)
------- ------ ------- -------
Adjusted EBITDA
Available for
General Capital
Purposes (4) $31,042 $27,096 $51,662 $42,483
======= ======= ======= =======
(1) Adjusted EBITDA is a non GAAP measure. See schedules 2 through 5 for a reconciliation of Net Income (loss) to Adjusted
EBITDA.
(2) Capital Expenditures, net represents capital expenditures net of landlord reimbursements.
(3) Cash Interest, net & Other represents the quarterly accrual of cash interest under our Senior Notes.
(4) Adjusted EBITDA Available for General Capital Purposes is a non-GAAP measure, and represents funds available for repayment
of debt, acquisitions, deferred acquisition consideration, dividends, and other general corporate initiatives
SCHEDULE 7
MDC PARTNERS INC.
CONSOLIDATED BALANCE SHEETS
(US$ in 000s)
June 30, December 31,
2014 2013
---- ----
Assets
Current Assets:
Cash and cash equivalents $72,339 $102,007
Accounts receivable, net 394,342 309,796
Expenditures billable to clients 91,880 63,246
Other current assets 31,733 25,458
------ ------
Total Current Assets 590,294 500,507
Fixed assets, net 50,709 52,071
Investment in non-consolidated
affiliates 412 275
Goodwill 882,667 744,333
Other intangible assets, net 68,817 56,262
Deferred tax assets 21,363 21,131
Other assets 70,756 50,648
------ ------
Total Assets $1,685,018 $1,425,227
========== ==========
Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit
Current Liabilities:
Accounts payable $289,505 $246,694
Accruals and other liabilities 267,048 240,580
Advance billings 192,906 149,540
Current portion of long term debt 617 467
Current portion of deferred
acquisition consideration 69,138 53,041
------ ------
Total Current Liabilities 819,214 690,322
Long-term debt 743,599 664,661
Long-term portion of deferred
acquisition consideration 111,668 100,872
Other liabilities 32,635 34,430
Deferred tax liabilities 65,413 63,020
Total Liabilities 1,772,529 1,553,305
--------- ---------
Redeemable Noncontrolling Interests 164,508 148,534
------- -------
Shareholders' Deficit
Common shares 265,615 262,656
Shares to be issued - 424
Charges in excess of capital (170,068) (126,352)
Accumulated deficit (457,952) (465,576)
Stock subscription receivable (55) (55)
Accumulated other comprehensive loss (1,143) (797)
------ ----
MDC Partners Inc. Shareholders'
Deficit (363,603) (329,700)
Noncontrolling Interests 111,584 53,088
------- ------
Total Shareholders' Deficit (252,019) (276,612)
-------- --------
Total Liabilities, Redeemable
Noncontrolling
Interests and Shareholders' Deficit $1,685,018 $1,425,227
========== ==========
SCHEDULE 8
MDC PARTNERS INC.
SUMMARY CASH FLOW DATA
(US$ in 000s)
Six Months Ended
June 30,
2014 2013
---- ----
Cash flows provided by
continuing operating
activities $33,099 $55,773
Discontinued operations (258) (1,702)
----
Net cash provided by
operating activities 32,841 54,071
------ ------
Cash flows used in continuing
investing activities (58,331) (9,028)
Discontinued operations - (11)
--- ---
Net cash used in investing
activities (58,331) (9,039)
Net cash used in continuing
financing activities (3,848) (28,408)
Effect of exchange rate
changes on cash and cash
equivalents (330) 382
---- ---
Net increase (decrease) in
cash and cash equivalents ($29,668) $17,006
======== =======
CONTACT:
Matt Chesler, CFA
VP, Investor Relations
646-412-6877
mchesler@mdc-partners.com
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SOURCE MDC Partners Inc.
