Attached files
| file | filename |
|---|---|
| 8-K - Stagwell Inc | v183349_8k.htm |
| EX-99.2 - Stagwell Inc | v183349_ex99-2.htm |
PRESS
RELEASE
FOR IMMEDIATE
RELEASE
|
FOR:
|
MDC
Partners Inc.
|
CONTACT:
|
David
Doft
|
|
950
Third Avenue, 5th Floor
|
Chief
Financial Officer
|
||
|
New
York, NY 10022
|
646-429-1818
|
||
|
ddoft@mdc-partners.com
|
MDC
PARTNERS INC. REPORTS STRONG RESULTS FOR THE
THREE
MONTHS ENDED MARCH 31, 2010
FIRST QUARTER
HIGHLIGHTS:
|
·
|
Revenue
increased to $136.2 million versus $126.7 million in Q1 2009, an increase
of 7.5%
|
|
·
|
Organic
revenue flat for Q1 2010 and trending to solid growth for the
year
|
|
·
|
MDC
EBITDA decreased to $7.8 million versus $11.2 million in the first quarter
of 2009 due to timing of client wins and losses and investment in key
talent
|
|
·
|
Net
new business wins of $6.6 million for Q1
2010
|
|
·
|
Digital
revenue reached 40.5% of total revenues in Q1
2010
|
|
·
|
Acquired
majority stakes in TEAM Enterprises, a leading national experiential
marketing platform; Sloane & Company, a strategic corporate public
relations firm; and Allison & Partners, an award winning national
public relations firm
|
|
·
|
Raising
fiscal 2010 guidance due to improving trends and completion of accretive
acquisitions
|
|
·
|
2010
revenue guidance raised to $620-635 million, an estimated increase of
13.6% to 16.3%
|
|
·
|
2010
MDC EBITDA guidance raised to $78-80 million, an estimated increase of
20.4% to 23.5%
|
NEW YORK, NY (May 4, 2010) –
MDC Partners Inc. (“MDC Partners” or the “Company”) today announced financial
results for the three months ended March 31, 2010.
"We are
very pleased with our first quarter results, particularly the market share gains
we continue to achieve and our success in investing in great talent and in new
partner firms, all of which further enhances our ability to generate free cash
flow and earnings growth,” said Miles S Nadal, Chairman and Chief Executive
Officer of MDC Partners. “Our new business pipeline is strong; our
financial discipline is paying off; we continue to make strategic, accretive
acquisitions; and we have a set of assets already in place that are well
situated to take advantage of the numerous market opportunities in front of
us. As such, we are significantly raising our fiscal 2010 financial
guidance.”
Guidance
for 2010 is adjusted as follows:
|
Initial
|
Revised
|
Implied
|
Pro Forma
|
Implied
|
|
|
2010
|
2010
|
Year over
Year
|
2010
|
Year over
Year
|
|
|
Guidance
|
Guidance
|
Change
|
Estimate
|
Change
|
|
|
Revenue
|
$573 - $584 million
|
$620
- $635 million
|
+13.6% to
+16.3%
|
$645 - $660
million
|
+18.1% to
+20.9%
|
|
MDC EBITDA
|
$69 - $71
million
|
$78 - $80
million
|
+20.4% to
+23.5%
|
$86 - $88
million
|
+32.7% to
+35.8%
|
|
Free Cash
Flow
|
$35 - $37
million
|
$41 - $43
million
|
+0.2% to
+5.1%
|
$47 - $49
million
|
+14.9% to
+19.8%
|
|
+ Change in
Working Capital and Other
|
+$5 million
|
+$12
million
|
+$12
million
|
||
|
Total Free Cash
Flow
|
$40 - $42
million
|
$53 - $55
million
|
$59 - $61
million
|
Note: The
“Pro Forma 2010 Estimate” section of the above table accounts for recent
acquisitions as if financial contributions to MDC occur for the entirety of
2010.
Consolidated
revenue for the first quarter of 2010 was $136.2 million, an increase of 7.5%
compared to $126.7 million in the first quarter of 2009. MDC EBITDA
(as defined) for the first quarter of 2010 was $7.8 million, a decrease of 30.3%
compared to $11.2 million in the first quarter of 2009 driven by the timing of
client wins and losses and our planned investment in talent. Net
income (loss) attributable to MDC Partners Inc. in the first quarter was a loss
of ($10.2) million compared to nominal income in the first quarter of
2009. Diluted earnings (loss) per share from continuing operations
attributable to MDC Partners Inc. common shareholders for the first quarter of
2010 was a loss of ($0.38) compared with $0.01 per share in the same period of
2009. Free cash flow (as defined) was an outflow of $1.9 million in
the first quarter of 2010, compared with an inflow of $7.8 million in the first
quarter of 2009.
“We
continue to execute on our disciplined financial plan which we believe will lead
to another year of industry leading growth, continued margin expansion, and
increased free cash flow generation,” said David Doft, Chief Financial
Officer. “Our focus remains on optimizing our organic growth
opportunities and supplementing them with highly accretive strategic
acquisitions. We believe that the combination of organic growth and
the responsible deployment of capital will set us apart from other industry
participants and will drive continued significant improvements in shareholder
value creation.”
Conference
Call
Management will host a conference call
on May 5, 2010 at 8:00 a.m. (EST) to discuss our results. The conference
call will be accessible by dialing 1-647-427-7450 or toll free
1-888-231-8191. An investor presentation has been posted on our website
www.mdc-partners.com and
will be referred to during the conference call.
A recording of the conference call will
be available until Wednesday, May 19, 2010 by dialing 1-416-849-0833 or toll
free 1-800-642-1687 (passcode 69738546#) or by visiting our
website.
About
MDC Partners Inc.
MDC
Partners is a progressive Marketing and Communications Network, championing the
most innovative entrepreneurial talent. MDC Partners provides strategic
solutions and services to multinational clients in North America, Europe and
Latin America. Our philosophy emphasizes the utilization of Strategy and High
Value Creativity to drive growth and measurable impact for our clients. “MDC
Partners is The Place Where Great Talent Lives.” The company’s Class A shares
are publicly traded on the NASDAQ under the symbol “MDCA” and on the Toronto
Stock Exchange under the symbol “MDZ.A”.
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 MDC EBITDA and EBITDA margin (as
defined) for the three months ended March 31, 2010 and 2009; and (2) presenting
Free Cash Flow and Free Cash Flow per Share (as defined) for the three months
ended March 31, 2010 and 2009. 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, 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 national and regional economic
downturn;
|
|
|
·
|
the Company’s ability to
attract new clients and retain existing
clients;
|
|
|
·
|
the 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.
|
In
addition to improving organic growth for its existing operations, 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 and through incurrence of bridge or other debt
financing, either 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.
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
(US$ in 000s, except share and per
share amounts)
|
|
Three Months Ended March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Revenue
|
$ | 136,182 | $ | 126,738 | ||||
|
Operating
Expenses:
|
||||||||
|
Cost of services
sold
|
96,969 | 85,879 | ||||||
|
Office and general
expenses
|
34,625 | 31,152 | ||||||
|
Depreciation and
amortization
|
5,833 | 7,593 | ||||||
| 137,427 | 124,624 | |||||||
|
Operating profit
(loss)
|
(1,245 | ) | 2,114 | |||||
|
Other Income
(Expenses):
|
||||||||
|
Other income
(expense)
|
(613 | ) | 2,629 | |||||
|
Interest expense and finance
charges
|
(7,028 | ) | (3,761 | ) | ||||
|
Interest
income
|
21 | 203 | ||||||
|
Income (loss) from continuing
operations before income taxes
|
||||||||
|
and equity in
affiliates
|
(8,865 | ) | 1,185 | |||||
|
Income tax
expense
|
249 | 615 | ||||||
|
Income (loss) from continuing
operations before equity in affiliates
|
(9,114 | ) | 570 | |||||
|
Equity in earnings (loss) of
non-consolidated affiliates
|
(104 | ) | 93 | |||||
|
Income (loss) from continuing
operations
|
(9,218 | ) | 663 | |||||
|
Loss from discontinued operations,
net of taxes
|
- | (252 | ) | |||||
|
Net income
(loss)
|
(9,218 | ) | 411 | |||||
|
Net income attributable to the
noncontrolling interests
|
(968 | ) | (382 | ) | ||||
|
Net income (loss) attributable to
MDC Partners Inc.
|
$ | (10,186 | ) | $ | 29 | |||
|
Income (Loss) Per Common
Share:
|
||||||||
|
Basic:
|
||||||||
|
Income (loss) from continuing
operations attributable to MDC
|
||||||||
|
Partners Inc. common
shareholders
|
$ | (0.38 | ) | $ | 0.01 | |||
|
Discontinued
operations
|
- | $ | (0.01 | ) | ||||
|
Net income (loss) attributable to
MDC Partners Inc.
|
||||||||
|
common
shareholders
|
$ | (0.38 | ) | $ | 0.00 | |||
|
Income (Loss) Per Common
Share:
|
||||||||
|
Diluted:
|
||||||||
|
Income (loss) from continuing
operations attributable to MDC
|
||||||||
|
Partners Inc. common
shareholders
|
$ | (0.38 | ) | $ | 0.01 | |||
|
Discontinued
operations
|
- | $ | (0.01 | ) | ||||
|
Net income (loss) attributable to
MDC Partners Inc.
|
||||||||
|
common
shareholders
|
$ | (0.38 | ) | $ | 0.00 | |||
|
Weighted Average Number of Common
Shares:
|
||||||||
|
Basic
|
27,631,903 | 27,115,751 | ||||||
|
Diluted
|
27,631,903 | 27,115,751 | ||||||
|
SCHEDULE
2
|
|
MDC PARTNERS
INC.
|
|
RECONCILIATION OF OPERATING INCOME
(LOSS) TO EBITDA
|
|
(US$ in 000s, except
percentages)
|
|
For the Three Months Ended March
31, 2010
|
|
Strategic
|
Performance
|
|||||||||||||||
|
Marketing
|
Marketing
|
|||||||||||||||
|
Services
|
Services
|
Corporate
|
Total
|
|||||||||||||
|
Revenue
|
$ | 91,525 | $ | 44,657 | - | $ | 136,182 | |||||||||
|
Operating income (loss) as
reported
|
$ | 6,283 | $ | (2,652 | ) | $ | (4,876 | ) | $ | (1,245 | ) | |||||
|
Add:
|
||||||||||||||||
|
Depreciation and
amortization
|
3,301 | 2,439 | 93 | 5,833 | ||||||||||||
|
Stock-based
compensation
|
1,753 | 366 | 1,349 | 3,468 | ||||||||||||
|
Acquisition deal
costs
|
- | 399 | - | 399 | ||||||||||||
|
Deferred acquisition consideration
adjustments to P&L
|
196 | 138 | - | 334 | ||||||||||||
|
EBITDA *
|
11,533 | 690 | (3,434 | ) | 8,789 | |||||||||||
|
margin
|
12.6 | % | 1.5 | % | 6.5 | % | ||||||||||
|
Less income attributable to
noncontrolling interests
|
(927 | ) | (41 | ) | - | (968 | ) | |||||||||
|
MDC's Share of
EBITDA**
|
$ | 10,606 | $ | 649 | $ | (3,434 | ) | $ | 7,821 | |||||||
|
*
|
EBITDA is
a non-GAAP measure, but as shown above it represents operating income
(loss) plus depreciation and amortization, stock-based
compensation, acquisition deal costs and deferred acquisition
consideration
adjustments.
|
|
**
|
MDC's
Share of EBITDA is a non-GAAP measure, but as shown above it represents
operating income (loss) plus depreciation and
amortization, stock-based compensation, acquisition deal costs and
deferred acquisition consideration adjustments less net
income attributable to noncontrolling
interests.
|
|
MDC PARTNERS
INC.
|
|
RECONCILIATION OF OPERATING INCOME
(LOSS) TO EBITDA
|
|
(US$ in 000s, except
percentages)
|
|
For the Three Months Ended March
31, 2009
|
|
Strategic
|
Performance
|
|||||||||||||||
|
Marketing
|
Marketing
|
|||||||||||||||
|
Services
|
Services
|
Corporate
|
Total
|
|||||||||||||
|
Revenue
|
$ | 84,463 | $ | 42,275 | - | $ | 126,738 | |||||||||
|
Operating income (loss) as
reported
|
$ | 6,799 | $ | (679 | ) | $ | (4,006 | ) | $ | 2,114 | ||||||
|
Add:
|
||||||||||||||||
|
Depreciation and
amortization
|
5,372 | 2,127 | 94 | 7,593 | ||||||||||||
|
Stock-based
compensation
|
433 | 190 | 1,274 | 1,897 | ||||||||||||
|
EBITDA*
|
12,604 | 1,638 | (2,638 | ) | 11,604 | |||||||||||
|
margin
|
14.9 | % | 3.9 | % | 9.2 | % | ||||||||||
|
Less income attributable to
noncontrolling interests
|
(676 | ) | 294 | - | (382 | ) | ||||||||||
|
MDC's Share of
EBITDA**
|
$ | 11,928 | $ | 1,932 | $ | (2,638 | ) | $ | 11,222 | |||||||
|
*
|
EBITDA is
a non-GAAP measure, but as shown above it represents operating income
(loss) plus depreciation and amortization, stock-based
compensation, acquisition deal costs and deferred acquisition
consideration
adjustments.
|
|
**
|
MDC's
Share of EBITDA is a non-GAAP measure, but as shown above it represents
operating income (loss) plus depreciation and
amortization, stock-based compensation, acquisition deal costs and
deferred acquisition consideration adjustments less net
income attributable to noncontrolling
interests.
|
|
SCHEDULE
3
|
|
MDC PARTNERS
INC.
|
|
FREE CASH
FLOW
|
|
(US$ in 000s, except share and per
share amounts)
|
|
Three Months Ended March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
MDC EBITDA
|
$ | 7,821 | $ | 11,222 | ||||
|
Capital
Expenditures
|
(2,762 | ) | (830 | ) | ||||
|
Cash Taxes
|
(645 | ) | 66 | |||||
|
Cash Interest, net &
Other
|
(6,287 | ) | (2,640 | ) | ||||
|
Free Cash Flow
*
|
$ | (1,873 | ) | $ | 7,818 | |||
|
Diluted Common Shares
Outstanding
|
27,631,903 | 27,115,751 | ||||||
|
Free Cash Flow per
Share
|
$ | (0.07 | ) | $ | 0.29 | |||
|
* As defined by MDC
Partners
|
||||||||
|
SCHEDULE
4
|
|
MDC PARTNERS
INC.
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
(US$ in
000s)
|
|
March 31,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash and cash
equivalents
|
$ | 21,247 | $ | 51,926 | ||||
|
Accounts receivable,
net
|
131,944 | 118,211 | ||||||
|
Expenditures billable to
clients
|
23,226 | 24,003 | ||||||
|
Other current
assets
|
10,706 | 8,105 | ||||||
|
Total Current
Assets
|
187,123 | 202,245 | ||||||
|
Fixed assets,
net
|
36,327 | 35,375 | ||||||
|
Investment in
affiliates
|
1,473 | 1,547 | ||||||
|
Goodwill
|
338,142 | 301,632 | ||||||
|
Other intangible assets,
net
|
39,765 | 34,715 | ||||||
|
Deferred tax
assets
|
12,625 | 12,542 | ||||||
|
Other
assets
|
17,611 | 16,463 | ||||||
|
Total
Assets
|
$ | 633,066 | $ | 604,519 | ||||
|
Liabilities and Shareholders'
Equity
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$ | 69,967 | $ | 77,450 | ||||
|
Accrued and other
liabilities
|
65,694 | 66,967 | ||||||
|
Advance
billings
|
80,907 | 65,879 | ||||||
|
Current portion of long term
debt
|
1,308 | 1,456 | ||||||
|
Current portion of deferred
acquisition consideration
|
21,258 | 30,645 | ||||||
|
Total Current
Liabilities
|
239,134 | 242,397 | ||||||
|
Revolving credit
facility
|
10,278 | - | ||||||
|
Long-term
debt
|
216,928 | 216,490 | ||||||
|
Long-term portion of deferred
acquisition consideration
|
16,690 | - | ||||||
|
Other
liabilities
|
8,617 | 8,707 | ||||||
|
Deferred tax
liabilities
|
9,005 | 9,051 | ||||||
|
Total
Liabilities
|
500,652 | 476,645 | ||||||
|
Redeemable Noncontrolling
Interests
|
29,868 | 33,728 | ||||||
|
Shareholders'
Equity:
|
||||||||
|
Common
shares
|
219,993 | 218,533 | ||||||
|
Additional paid in
capital
|
7,668 | 9,174 | ||||||
|
Accumulated
deficit
|
(141,348 | ) | (131,160 | ) | ||||
|
Stock subscription
receivable
|
(217 | ) | (341 | ) | ||||
|
Accumulated other comprehensive
loss
|
(4,462 | ) | (5,880 | ) | ||||
|
MDC Partners Inc. Shareholders'
Equity
|
81,634 | 90,326 | ||||||
|
Noncontrolling
Interests
|
20,912 | 3,820 | ||||||
|
Total
Equity
|
102,546 | 94,146 | ||||||
|
Total Liabilities, Redeemable
Noncontrolling
|
||||||||
|
Interests and
Equity
|
$ | 633,066 | $ | 604,519 | ||||
|
SCHEDULE
5
|
|
MDC PARTNERS
INC.
|
|
SUMMARY CASH FLOW
DATA
|
|
(US$ in
000s)
|
|
Three Months Ended March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash flows provided by continuing
operating activities
|
$ | (11,218 | ) | $ | 928 | |||
|
Discontinued
operations
|
- | (368 | ) | |||||
|
Net cash provided by (used in)
operating activities
|
(11,218 | ) | 560 | |||||
|
Net cash used in investing
activities
|
(26,143 | ) | (4,121 | ) | ||||
|
Net cash provided by continuing
financing activities
|
6,788 | 8,924 | ||||||
|
Effect of exchange rate changes on
cash and cash equivalents
|
(106 | ) | (447 | ) | ||||
|
Net increase (decrease) in cash
and cash equivalents
|
$ | (30,679 | ) | $ | 4,916 | |||