MDC Partners Inc. Reports Results For The Three And Twelve Months Ended December 31, 2015

Feb 18, 2016, 16:01 ET from MDC Partners Inc.

FULL YEAR 2015 ORGANIC REVENUE GROWTH OF 7.1%, ADJUSTED EBITDA GROWTH OF 10.2%, AND ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES GROWTH OF 14.8%

QUARTERLY DIVIDEND OF $0.21 PER SHARE DECLARED

NEW YORK, Feb. 18, 2016 /PRNewswire/ --

FOURTH QUARTER HIGHLIGHTS:

  • Revenue increased to $359.0 million from $339.9 million, an increase of 5.6%
  • Net loss attributable to MDC Partners of ($26.2) million versus ($26.8) million in the same period last year
  • Organic revenue increased 7.2%, after a roughly 230 basis points reduction from significantly lower billable pass-through costs
  • Adjusted EBITDA increased to $65.6 million from $51.8 million, an increase of 26.6% (see Schedules 2 and 3)
  • Adjusted EBITDA margin of 18.3% versus 15.2% in the same period last year (see Schedules 2 and 3)
  • Adjusted EBITDA Available for General Capital Purposes increased to $44.5 million from $31.1 million, an increase of 42.9% (see Schedule 6)
  • Net New Business wins totaled $27.4 million
  • Declared cash dividend of $0.21 per share

FULL YEAR HIGHLIGHTS:

  • Revenue increased to $1.33 billion from $1.22 billion, an increase of 8.4%
  • Net loss attributable to MDC Partners of ($37.4) million versus ($24.1) million in the same period last year
  • Organic revenue increased 7.1%, after a roughly 190 basis points reduction from significantly lower billable pass-through costs
  • Adjusted EBITDA increased to $197.7 million versus $179.4 million, an increase of 10.2% (see Schedules 4 and 5)
  • Adjusted EBITDA margin of 14.9% versus 14.7% in the same period last year (see Schedules 4 and 5)
  • Adjusted EBITDA Available for General Capital Purposes increased to $113.4 million from $98.8 million, an increase of 14.8% (see Schedule 6)
  • Net New Business wins totaled $116.7 million

(NASDAQ: MDCA) – MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and twelve months ended December 31, 2015.

Scott Kauffman, Chairman and Chief Executive Officer of MDC Partners, said, "Thanks to the dedication and hard work of our team, 2015 was a very strong year for our company. We posted 7.1% organic revenue growth, 10.2% Adjusted EBITDA growth, 14.9% Adjusted EBITDA margins and robust cash generation.  Our results are proof that our business model continues to be unique in the market, and that our partners are delivering some of the most inventive and effective work for their clients.  Our outlook for the year ahead is bullish.  We have an active pipeline of new business and we are executing well on our plans to extend our international reach, to build our differentiated and modern media buying and planning platform, and to augment our capabilities through deliberate and strategic M&A.  The future of MDC Partners has never been brighter."

Guidance for 2016 is established as follows:                    

Implied

2015

2016

Year over Year

Actuals

Guidance

Change

Revenue

 $1.326 billion 

 $1.410 - $1.440 billion 

 +6.3% to +8.6% 

Adjusted EBITDA

 $197.7 million 

 $225 - $235 million 

 +13.8% to +18.9% 

Implied Adjusted EBITDA Margin

14.9%

15.8% to 16.4%

+90 to +150 basis points

Adjusted EBITDA Available for

 $113.4 million 

 $135 - $145 million 

 +19.0% to +27.9% 

General Capital Purposes

For the twelve month period ended December 31, 2015, consolidated revenue was $1.33 billion, an increase of 8.4% compared to $1.22 billion in the twelve months ended December 31, 2014.  Adjusted EBITDA for the twelve months ended December 31, 2015 was $197.7 million, an increase of 10.2% compared to $179.4 million in the same period of 2014.  Net loss attributable to MDC Partners in the twelve months ended December 31, 2015 was ($37.4) million compared to ($24.1) million in the same period of 2014.  Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the twelve months ended December 31, 2015 was ($0.62) compared to ($0.06) in the same period of 2014.  Adjusted EBITDA Available for General Capital Purposes was $113.4 million in the twelve months ended December 31, 2015, an increase of 14.8% compared to $98.8 million in the same period of 2014.

Consolidated revenue for the fourth quarter of 2015 was $359.0 million, an increase of 5.6%, compared to $339.9 million in the fourth quarter of 2014.  Adjusted EBITDA for the fourth quarter of 2015 was $65.6 million, an increase of 26.6% compared to $51.8 million in the fourth quarter of 2014.  Net loss attributable to MDC Partners in the fourth quarter was ($26.2) million compared to ($26.8) million in the fourth quarter of 2014.  Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the fourth quarter of 2015 was ($0.52) compared to ($0.17) per share in the fourth quarter of 2014.  Adjusted EBITDA Available for General Capital Purposes was $44.5 million in the fourth quarter of 2015, an increase of 42.9% compared to $31.1 million in the fourth quarter of 2014.

David Doft, CFO of MDC Partners, said, "We are pleased with our performance in 2015 and are in a position to post robust financial and operating results going forward. In 2015, organic revenue grew 7.1% despite a 190 basis reduction from significantly lower billable pass-through cost.  Importantly, new business activity is solid, giving us good visibility into future prospects. More specifically, for 2016 we expect revenue to increase 6.3% to 8.6% and Adjusted EBITDA to increase 13.8% to 18.9%, which implies well over 100 basis points of margin expansion. In addition, the strong cash generation that we saw in the fourth quarter provides a solid foundation as we focus on strengthening the balance sheet and achieving our leverage target goal of 2.5 times or below."

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 March 18, 2016, to shareholders of record at the close of business on March 04, 2016.

Conference Call

Management will host a conference call on Thursday, February 18, 2016, at 4:30 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 12:00 a.m. (ET), February 26, 2016, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10080858), 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.  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.  By leveraging technology, data analytics, insights, and strategic consulting solutions, MDC Partners drives measurable results and optimizes return on marketing investment for over 1,700 clients worldwide.  For more information about MDC Partners and its partner firms, visit our website at www.mdc-partners.com and follow us on Twitter at 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 twelve months ended December 31, 2015, and 2014; and (2) presenting Adjusted EBITDA Available for General Capital Purposes (as defined) for the three and twelve months ended December 31, 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, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, 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 SEC's ongoing investigation and the related class action 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 redeemable noncontrolling interests 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 December 31,

Twelve Months Ended December 31, 

2015

2014

2015

2014

Revenue

$                    359,013

$                    339,911

$                 1,326,256

$                 1,223,512

Operating Expenses:

Cost of services sold

231,330

222,626

879,716

798,518

Office and general expenses

116,038

76,486

322,207

290,073

Depreciation and amortization

12,830

15,089

52,223

47,172

360,198

314,201

1,254,146

1,135,763

Operating profit (loss)

(1,185)

25,710

72,110

87,749

Other Income (Expense):

Other, net

(2,775)

(9,145)

(32,090)

(17,793)

Interest expense and finance charges

(14,881)

(14,602)

(57,903)

(55,265)

Interest income

129

131

467

418

Income (loss) from continuing operations before income taxes

  and equity in earnings of non-consolidated affiliates

(18,712)

2,094

(17,416)

15,109

Income tax expense

6,230

9,658

5,664

12,422

Income (loss) from continuing operations before equity in

  earnings of non-consolidated affiliates

(24,942)

(7,564)

(23,080)

2,687

Equity in earnings of non-consolidated affiliates

431

1,183

1,058

1,406

Income (loss) from continuing operations

(24,511)

(6,381)

(22,022)

4,093

Loss from discontinued operations attributable to

  MDC Partners Inc., net of taxes

-

(18,284)

(6,281)

(21,260)

Net loss

(24,511)

(24,665)

(28,303)

(17,167)

Net income attributable to the noncontrolling interests

(1,711)

(2,094)

(9,054)

(6,890)

Net loss attributable to MDC Partners Inc.

$                    (26,222)

$                    (26,759)

$                    (37,357)

$                    (24,057)

Loss Per Common Share:

Basic and Diluted:

Loss from continuing operations attributable to MDC

   Partners Inc. common shareholders

$                       (0.52)

$                       (0.17)

$                       (0.62)

$                       (0.06)

Discontinued operations attributable to MDC

   Partners Inc. common shareholders

-

(0.37)

(0.13)

(0.43)

Net loss attributable to MDC Partners Inc.

   common shareholders

$                       (0.52)

$                       (0.54)

$                       (0.75)

$                       (0.49)

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted

49,968,165

49,683,864

49,875,282

49,545,350

 

 

SCHEDULE 2

MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)

For the Three Months Ended December 31, 2015

Advertising and

Communications

Corporate

Total

Revenue

$                  359,013

$                           -

$                  359,013

Net loss attributable to MDC Partners Inc.

$                  (26,222)

Adjustments to reconcile to Operating profit (loss):

   Net income attributable to the noncontrolling interests

1,711

   Equity in earnings of non-consolidated affiliates

(431)

   Income tax expense

6,230

   Interest expense and finance charges, net

14,752

   Other, net

2,775

Operating profit (loss)

$                    13,478

$                  (14,663)

$                    (1,185)

margin

3.8%

-0.3%

Additional adjustments to reconcile to Adjusted EBITDA:

Depreciation and amortization

12,292

538

12,830

Stock-based compensation

4,033

738

4,771

Acquisition deal costs

58

411

469

Deferred acquisition consideration adjustments

41,913

-

41,913

Distributions from non-consolidated affiliates ***

102

7,122

7,224

Other items, net **

-

(468)

(468)

Adjusted EBITDA *

$                    71,876

$                    (6,322)

$                    65,554

margin

20.0%

18.3%

* 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, distributions from non-consolidated affiliates, and other items.

** Other items includes (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses ($0.8 million), and

      (ii) legal fees and related expenses, net of insurance proceeds, relating to the ongoing SEC investigation ($0.3 million).

*** Distributions from non-consolidated affiliates includes cash received for profit distributions as well as proceeds from the sale of non-consolidated affiliates.

 

 

SCHEDULE 3

MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)

For the Three Months Ended December 31, 2014

Advertising and

Communications

Corporate

Total

Revenue

$                  339,911

$                           -

$                  339,911

Net loss attributable to MDC Partners Inc.

$                  (26,759)

Adjustments to reconcile to Operating profit (loss):

   Net income attributable to the noncontrolling interests

2,094

   Loss from discontinued operations attributable to 

MDC Partners Inc., net of taxes

18,284

   Equity in earnings of non-consolidated affiliates

(1,183)

   Income tax expense

9,658

   Interest expense and finance charges, net

14,471

   Other, net

9,145

Operating profit (loss)

$                    44,119

$                  (18,409)

$                    25,710

margin

13.0%

7.6%

Additional adjustments to reconcile to Adjusted EBITDA:

Depreciation and amortization

14,659

430

15,089

Stock-based compensation

4,096

1,367

5,463

Acquisition deal costs

1,096

1,325

2,421

Deferred acquisition consideration adjustments

1,751

-

1,751

Distributions from non-consolidated affiliates **

616

720

1,336

Adjusted EBITDA *

$                    66,337

$                  (14,567)

$                    51,770

margin

19.5%

15.2%

*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 distributions from non-consolidated affiliates.

** Distributions from non-consolidated affiliates includes cash received for profit distributions.

 

 

SCHEDULE 4

MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)

For the Twelve Months Ended December 31, 2015

Advertising and

Communications

Corporate

Total

Revenue

$               1,326,256

$                           -

$               1,326,256

Net loss attributable to MDC Partners Inc.

$                  (37,357)

Adjustments to reconcile to Operating profit (loss):

   Net income attributable to the noncontrolling interests

9,054

   Loss from discontinued operations attributable to 

MDC Partners Inc., net of taxes

6,281

   Equity in earnings of non-consolidated affiliates

(1,058)

   Income tax expense

5,664

   Interest expense and finance charges, net

57,436

   Other, net

32,090

Operating profit (loss)

$                  137,282

$                  (65,172)

$                    72,110

margin

10.4%

5.4%

Additional adjustments to reconcile to Adjusted EBITDA:

Depreciation and amortization

50,449

1,774

52,223

Stock-based compensation

15,056

2,740

17,796

Acquisition deal costs

704

2,208

2,912

Deferred acquisition consideration adjustments

36,347

-

36,347

Distributions from non-consolidated affiliates ***

679

7,272

7,951

Other items, net **

-

8,327

8,327

Adjusted EBITDA *

$                  240,517

$                  (42,851)

$                  197,666

margin

18.1%

14.9%

* 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, distributions from non-consolidated affiliates, and other items.

** Other items includes (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses ($11.3 million),

      (ii) legal fees and related expenses, net of insurance proceeds, relating to the ongoing SEC investigation ($12.7 million), (iii) one-time charge for the balance

       of prior cash bonus award amounts paid to the former CEO and CAO that will not be recovered ($5.8 million); and, (iv) write-off of certain assets related to

       the CEO and CAO termination ($1.1 million).

*** Distributions from non-consolidated affiliates includes cash received for profit distributions as well as proceeds from the sale of non-consolidated affiliates.

 

 

SCHEDULE 5

MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)

For the Twelve Months Ended December 31, 2014

Advertising and

Communications

Corporate

Total

Revenue

$               1,223,512

$                           -

$               1,223,512

Net loss attributable to MDC Partners Inc.

$                  (24,057)

Adjustments to reconcile to Operating profit (loss):

   Net income attributable to the noncontrolling interests

6,890

   Loss from discontinued operations attributable to 

MDC Partners Inc., net of taxes

21,260

   Equity in earnings of non-consolidated affiliates

(1,406)

   Income tax expense

12,422

   Interest expense and finance charges, net

54,847

   Other, net

17,793

Operating profit (loss)

$                  155,826

$                  (68,077)

$                    87,749

margin

12.7%

7.2%

Additional adjustments to reconcile to Adjusted EBITDA:

Depreciation and amortization

45,387

1,785

47,172

Stock-based compensation

12,033

5,663

17,696

Acquisition deal costs

3,502

2,632

6,134

Deferred acquisition consideration adjustments

16,467

-

16,467

Distributions from non-consolidated affiliates **

937

3,201

4,138

Adjusted EBITDA *

$                  234,152

$                  (54,796)

$                  179,356

margin

19.1%

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 distributions from non-consolidated affiliates.

** Distributions from non-consolidated affiliates includes cash received for profit distributions.

 

SCHEDULE 6

MDC PARTNERS INC.

UNAUDITED ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES

(US$ in 000s)

Three Months Ended December 31,

Twelve Months Ended December 31, 

2015

2014

2015

2014

Adjusted EBITDA (1)

$                     65,554

$                     51,770

$                    197,666

$                    179,356

Net income attributable to noncontrolling interests

(1,711)

(2,094)

(9,054)

(6,890)

Capital expenditures, net (2)

(5,105)

(4,999)

(21,119)

(23,078)

Cash taxes

(487)

(72)

(1,887)

(431)

Cash interest, net & other (3)

(13,776)

(13,485)

(52,199)

(50,128)

Adjusted EBITDA Available for General Capital Purposes (4)

$                     44,475

$                     31,120

$                    113,407

$                     98,829

(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)

December 31,

December 31,

2015

2014

Assets

Current Assets:

Cash and cash equivalents

$           61,458

$         113,348

Cash held in trusts

5,122

6,419

Accounts receivable, net

361,044

355,295

Expenditures billable to clients

44,012

40,202

Other current assets

37,109

36,978

Total Current Assets

508,745

552,242

Fixed assets, net

63,557

60,240

Investment in non-consolidated affiliates

6,263

6,110

Goodwill

870,301

851,373

Other intangible assets, net

72,382

86,121

Deferred tax assets

15,367

18,758

Other assets

53,635

74,046

Total Assets

$       1,590,250

$       1,648,890

Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit

Current Liabilities:

Accounts payable

$         359,568

$         316,285

Trust liability

5,122

6,419

Accruals and other liabilities

297,964

264,854

Advance billings

119,100

142,608

Current portion of long-term debt

470

534

Current portion of deferred acquisition consideration

130,400

90,804

Total Current Liabilities

912,624

821,504

Long-term debt, less current portion

741,038

742,593

Long-term portion of deferred acquisition consideration

216,704

114,564

Other liabilities

44,905

45,861

Deferred tax liabilities

92,581

77,997

Total Liabilities

2,007,852

1,802,519

Redeemable Noncontrolling Interests

69,471

194,951

Shareholders' Deficit

Common shares

269,842

265,818

Charges in excess of capital

(315,261)

(209,668)

Accumulated deficit

(526,990)

(489,633)

Accumulated other comprehensive income (loss)

6,257

(7,752)

MDC Partners Inc. Shareholders' Deficit

(566,152)

(441,235)

Noncontrolling Interests

79,079

92,655

Total Shareholders' Deficit

(487,073)

(348,580)

Total Liabilities, Redeemable Noncontrolling 

   Interests and Shareholders' Deficit

$       1,590,250

$       1,648,890

 

SCHEDULE 8

MDC PARTNERS INC.

UNAUDITED SUMMARY CASH FLOW DATA

(US$ in 000s)

Twelve Months Ended December 31, 

2015

2014

Cash flows provided by continuing operating activities

$                  164,147

$                  129,350

Discontinued operations

(1,342)

(1,827)

Net cash provided by operating activities

162,805

127,523

Cash flows used in continuing investing activities

(46,994)

(97,578)

Discontinued operations

17,101

(2,108)

Net cash used in investing activities

(29,893)

(99,686)

Cash flows used in continuing financing activities

(189,980)

(15,388)

  Discontinued operations

(40)

(40)

Net cash used in financing activities

(190,020)

(15,428)

Effect of exchange rate changes on cash and cash equivalents

5,218

(1,068)

Net increase (decrease) in cash and cash equivalents

$                  (51,890)

$                    11,341

 

CONTACT:      Matt Chesler, CFA  VP, Investor Relations  646-412-6877  mchesler@mdc-partners.com

 

Logo - http://photos.prnewswire.com/prnh/20120221/NY57031LOGO

SOURCE MDC Partners Inc.



RELATED LINKS

http://www.mdc-partners.com