Company Demonstrates Prudent Financial Management
as it Executes on Strategic Plan
NEW YORK, Nov. 5, 2019 /CNW/ --
THIRD QUARTER & YTD HIGHLIGHTS:
- Revenue of $342.9 million in
the third quarter versus $375.8
million in the prior period, a decline of 8.8% and
$1.03 billion YTD versus $1.08 billion in the prior year period, a decline
of 4.5%.
- Organic revenue declined 7.5% in the third quarter and 3.7%
YTD.
- Net loss attributable to MDC Partners common shareholders was
$5.1 million in the third quarter of
2019 versus $18.2 million a year
ago.
- Net loss attributable to MDC Partners common shareholders was
$6.5 million in the nine months ended
September 30, 2019 versus
$48.3 million a year ago.
- Net loss attributable to MDC Partners common shareholders for
the last twelve months (LTM) of $90.5
million (inclusive of a $57
million goodwill impairment and a $49
million income tax valuation allowance in the fourth quarter
of 2018) as of September 30, 2019
versus $103.7 million as of
June 30, 2019.
- Adjusted EBITDA of $49.2 million
versus $59.8 million a year ago, a
decrease of 17.8%. Adjusted EBITDA Margin of 14.3%, compared with
15.9% in the prior year quarter.
- Adjusted EBITDA of $117.1 million
versus $110.6 million a year ago, an
increase of 5.9%. Adjusted EBITDA Margin of 11.3%, compared with
10.2% in the prior year quarter.
- Covenant EBITDA (LTM) of $178.9
million versus $187.9 million
for the second quarter of 2019, a decline of 4.8%. (Refer to
Schedule 7)
- Net New Business wins totaled a positive $30.5 million in the third quarter.
(NASDAQ: MDCA) – MDC Partners Inc. ("MDC Partners" or the
"Company") today announced financial results for the three and nine
months ended September 30, 2019.
"We are seeing the results of prudent financial management while
we cycle through revenue softness in select areas of the portfolio
and actively execute against our strategic plan," said Mark Penn, Chairman and CEO of MDC
Partners. "We've delivered year-to-date growth in adjusted EBITDA,
up $6.5 million, and margin up 110
basis points. Net new business also remained strong this quarter at
$30 million and we continued this
momentum into the fourth quarter. We delivered over $21 million in cash flow from operations and
lowered our revolver balance to $8
million. As we continue to move decisively on our plan, we
have confidence in our ability to return to revenue growth and
continue to deliver improving profit margins."
Frank Lanuto, Chief Financial
Officer, added, "Execution of cost-savings initiatives and ongoing
disciplined management of expenses helped to offset softer revenues
during the period. Based on our performance in the quarter, we
reiterate our 2019 Covenant EBITDA guidance but have revised our
organic revenue guidance lower to reflect YTD topline softness in
select areas."
Third Quarter and Year-to-Date 2019 Financial Results
Revenue for the third quarter of 2019 was $342.9 million versus $375.8 million for the third quarter of 2018, a
decline of 8.8%. The effect on revenue of foreign exchange due to
the strong US Dollar was negative 0.6%, the impact of non-GAAP
acquisitions (dispositions), net was negative 0.6%, and organic
revenue declined 7.5%. Organic revenue was favorably impacted by
101 basis points from increased billable pass-through costs
incurred on clients' behalf from certain of our partner firms
acting as principal.
Net New Business wins in the third quarter of 2019 totaled
$30.5 million.
Net loss attributable to MDC Partners common shareholders for
the third quarter of 2019 was $5.1
million versus a net loss of $18.2 million for the third quarter of 2018.
This improvement was primarily due to a decline in expenses
principally driven by a reduction in staff costs, and a lower
impairment charge and a foreign exchange gain in the third quarter
of 2019 versus a loss in the prior year third quarter, partially
offset by a decline in revenues. Diluted loss per share
attributable to MDC Partners common shareholders for the third
quarter of 2019 was $0.07 versus
diluted loss per share of $0.32 for
the third quarter of 2018.
Adjusted EBITDA for the third quarter of 2019 was $49.2 million versus $59.8
million for the third quarter of 2018, a decrease of 17.8%.
The decline was primarily driven by lower revenue, partially offset
by a reduction in staff costs. This led to a 160 basis point
decline in Adjusted EBITDA margin in the third quarter of 2019 to
14.3% from 15.9% in the third quarter of 2018.
Net loss attributable to MDC Partners common shareholders for
the last twelve months (LTM) was $90.5
million as of September 30,
2019 versus a $103.7 million
loss as of June 30, 2019.
Covenant EBITDA for the last twelve months (LTM) was
$178.9 million at September 30, 2019 versus $187.9 million at June 30,
2019, a decrease of 4.8%. The change was primarily driven by
the decline in Adjusted EBITDA.
Revenue for the first nine months of 2019 was $1.03 billion versus $1.08
billion for the first nine months of 2018, a
decrease of 4.5%. The effect on revenue of foreign exchange due to
the strong US Dollar was negative 1.1%, the impact of non-GAAP
acquisitions (dispositions), net was positive 0.3%, and organic
revenue decline was 3.7%. Organic revenue was favorably impacted by
179 basis points from increased billable pass-through costs
incurred on clients' behalf from certain of our partner firms
acting as principal.
Net New Business wins for the first nine months of 2019 totaled
$56.4 million, including a
$5 million reduction for our Q2 2019
Net New Business.
Net loss attributable to MDC Partners common shareholders for
the first nine months of 2019 was $6.5
million, an improvement versus a net loss of $48.3 million for the first nine months of 2018.
This change was principally due to a decline in expenses primarily
driven by a reduction in staff and administrative costs, a lower
impairment charge and a foreign exchange gain for the first nine
months of 2019 versus a loss for the first nine months of 2018,
partially offset by a decline in revenues. Diluted loss per share
attributable to MDC Partners common shareholders for the nine
months of 2019 was $0.10 versus a
diluted loss per share of $0.85 for
the first nine months of 2018.
Adjusted EBITDA for the first nine months of 2019 was
$117.1 million versus $110.6 million for the first nine months of 2018,
an increase of 5.9%. The improvement was primarily driven by lower
staff and administrative costs at Partner agencies and at
corporate, partially offset by a decline in revenues. This led to a
110 basis point improvement in Adjusted EBITDA margin in the first
nine months of 2019 to 11.3% from 10.2% in the first nine months of
2018.
Financial Outlook
2019 financial guidance is updated as follows:
|
|
2019 Outlook
Commentary *
|
|
|
|
|
|
|
Organic Revenue
Growth
|
We expect an
approximate 3 to 5% decline in organic revenue.
|
|
|
|
|
|
|
|
|
|
Foreign Exchange
Impact, net
|
Assuming prevailing
currency rates, the net impact of foreign exchange is expected to
decrease revenue by approximately 1%.
|
|
|
|
|
|
|
|
|
|
Impact of Non-GAAP
Acquisitions (Dispositions), net
|
Our current
expectations are that the impact of acquisitions, net of
disposition activity, will decrease revenue by approximately 90
basis points.
|
|
|
|
|
|
|
|
|
|
Covenant EBITDA
and Adjustments
|
The Company expects
to complete fiscal year 2019 with approximately $175 million to
$185 million of Covenant EBITDA. The Company has applied
certain pro forma and other adjustments, as expressly provided
under the credit facility to derive its 2019E Covenant EBITDA
forecast.
|
|
|
|
|
|
|
|
|
|
|
|
|
* The Company has
excluded a quantitative reconciliation with respect to the
Company's 2019 guidance under the "unreasonable efforts" exception
in Item 10(e)(1)(i)(B) of Regulation S-K See "Non-GAAP Financial
Measures" below for additional information
|
|
Conference Call
Management will host a conference call on Tuesday, November 5, 2019, at 4:30 p.m. (ET) to discuss its results. The
conference call will be accessible by dialing 1-412-902-4266 or
toll free 1-888-346-6216. An investor presentation has been
posted on our website at 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),
November 12, 2019, by dialing
1-412-317-0088 or toll free 1-877-344-7529 (passcode 10136141), or
by visiting our website at www.mdc-partners.com.
About MDC Partners Inc.
MDC Partners is one of the most influential marketing and
communications networks in the world. As "The Place Where Great
Talent Lives," MDC Partners is celebrated for its innovative
advertising, public relations, branding, digital, social and event
marketing agency partners, which are responsible for some of the
most memorable and effective campaigns for the world's most
respected brands. By leveraging technology, data analytics,
insights and strategic consulting solutions, MDC Partners drives
creative excellence, business growth and measurable 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.
Such non-GAAP financial measures include the following:
(1) Organic Revenue: "Organic revenue growth" and "organic
revenue decline" refer to the positive or negative results,
respectively, of subtracting both the foreign exchange and
acquisition (disposition) components from total revenue growth. The
acquisition (disposition) component is calculated by aggregating
prior period revenue for any acquired businesses, less the prior
period revenue of any businesses that were disposed of during the
current period. The organic revenue growth (decline) component
reflects the constant currency impact of (a) the change in revenue
of the partner firms which the Company has held throughout each of
the comparable periods presented, and (b) "non-GAAP acquisitions
(dispositions), net". Non-GAAP acquisitions (dispositions), net
consists of (i) for acquisitions during the current year, the
revenue effect from such acquisition as if the acquisition had been
owned during the equivalent period in the prior year and (ii) for
acquisitions during the previous year, the revenue effect from such
acquisitions as if they had been owned during that entire year (or
same period as the current reportable period), taking into account
their respective pre-acquisition revenues for the applicable
periods, and (iii) for dispositions, the revenue effect from such
disposition as if they had been disposed of during the equivalent
period in the prior year.
(2) Net New Business: Estimate of annualized revenue for new
wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: Adjusted EBITDA is a non-GAAP measure that
represents operating profit plus depreciation and amortization,
stock-based compensation, deferred acquisition consideration
adjustments, distributions from non-consolidated affiliates, and
other items.
(4) Covenant EBITDA: Covenant EBITDA is a measure that includes
pro forma adjustments for acquisitions, one-time charges, and other
items, as defined in the Credit Agreement. We believe that the
presentation of Covenant EBITDA is appropriate as it eliminates the
effect of certain non-cash and other items not necessarily
indicative of a company's underlying operating performance. In
addition, the presentation of Covenant EBITDA provides additional
information to investors about the calculation of, and compliance
with, certain financial covenants in the Credit Agreement.
Included in this earnings release are tables reconciling MDC
Partners' reported results to arrive at certain of these non-GAAP
financial measures. We are unable to reconcile our projected 2019
Organic Revenue Growth to the corresponding GAAP measure because we
are unable to predict the 2019 impact of foreign exchange due to
the unpredictability of future changes in foreign exchange rates
and because we are unable to predict the occurrence or impact of
any acquisitions, dispositions, or other potential changes. We are
unable to reconcile our projected 2019 Covenant EBITDA to the
corresponding GAAP measure because the amount and timing of many
future charges that impact these measures (such as amortization of
future acquired intangible assets, foreign exchange transaction
gains or losses, impairment charges, provision or benefit for
income taxes, and certain assumptions used in the calculation of
deferred acquisition consideration) are variable, uncertain, or out
of our control and therefore cannot be reasonably predicted without
unreasonable effort, if at all. As a result, we are unable to
provide reconciliations of these measures. In addition, we
believe such reconciliations could imply a degree of precision that
might be confusing or misleading to investors. For the same
reasons, we are unable to address the probable significance of the
unavailable information, which could have a potentially
unpredictable, and potentially significant, impact on future GAAP
financial results.
This press release contains forward-looking statements.
Statements in this press release that are not historical facts,
including without limitation the information under the heading
"Financial Outlook" and 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. Words such as
"estimates", "expects", "contemplates", "will", "anticipates",
"projects", "plans", "intends", "believes", "forecasts", "may",
"should", and variations of such words or similar expressions are
intended to identify 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 conditions;
- 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
Investors should carefully consider these risk factors and
the additional risk factors outlined in more detail in the
Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission 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 per Share Amounts)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
|
Services
|
$
|
342,907
|
|
|
$
|
375,830
|
|
|
$
|
1,033,828
|
|
|
$
|
1,082,541
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Cost of services
sold
|
222,448
|
|
|
238,690
|
|
|
700,351
|
|
|
735,110
|
|
Office and general
expenses
|
79,726
|
|
|
102,380
|
|
|
234,120
|
|
|
270,137
|
|
Depreciation and
amortization
|
9,368
|
|
|
11,134
|
|
|
28,869
|
|
|
35,212
|
|
Goodwill and other
asset impairment
|
1,944
|
|
|
21,008
|
|
|
1,944
|
|
|
23,325
|
|
|
313,486
|
|
|
373,212
|
|
|
965,284
|
|
|
1,063,784
|
|
Operating
income
|
29,421
|
|
|
2,618
|
|
|
68,544
|
|
|
18,757
|
|
Other Income
(Expenses):
|
|
|
|
|
|
|
|
Interest expense and
finance charges, net
|
(16,110)
|
|
|
(17,063)
|
|
|
(49,284)
|
|
|
(50,005)
|
|
Foreign exchange gain
(loss)
|
(3,973)
|
|
|
3,275
|
|
|
4,401
|
|
|
(9,934)
|
|
Other, net
|
(431)
|
|
|
189
|
|
|
(4,559)
|
|
|
1,222
|
|
|
(20,514)
|
|
|
(13,599)
|
|
|
(49,442)
|
|
|
(58,717)
|
|
Income (loss) before
income taxes and equity in earnings of non-consolidated
affiliates
|
8,907
|
|
|
(10,981)
|
|
|
19,102
|
|
|
(39,960)
|
|
Income tax expense
(benefit)
|
3,457
|
|
|
2,986
|
|
|
6,292
|
|
|
(3,367)
|
|
Income (loss) before
equity in earnings of non-consolidated affiliates
|
5,450
|
|
|
(13,967)
|
|
|
12,810
|
|
|
(36,593)
|
|
Equity in earnings of
non-consolidated affiliates
|
63
|
|
|
300
|
|
|
352
|
|
|
358
|
|
Net income
(loss)
|
5,513
|
|
|
(13,667)
|
|
|
13,162
|
|
|
(36,235)
|
|
Net income
attributable to the noncontrolling interest
|
(7,265)
|
|
|
(2,458)
|
|
|
(10,737)
|
|
|
(5,900)
|
|
Net income (loss)
attributable to MDC Partners Inc.
|
(1,752)
|
|
|
(16,125)
|
|
|
2,425
|
|
|
(42,135)
|
|
Accretion on and net
income allocated to convertible preference shares
|
(3,306)
|
|
|
(2,109)
|
|
|
(8,931)
|
|
|
(6,204)
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
$
|
(5,058)
|
|
|
$
|
(18,234)
|
|
|
$
|
(6,506)
|
|
|
$
|
(48,339)
|
|
Loss Per Common
Share:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
$
|
(0.07)
|
|
|
$
|
(0.32)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.85)
|
|
Diluted
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
$
|
(0.07)
|
|
|
$
|
(0.32)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.85)
|
|
Weighted Average
Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
72,044,480
|
|
|
57,498,661
|
|
|
68,154,306
|
|
|
57,117,797
|
|
Diluted
|
72,044,480
|
|
|
57,498,661
|
|
|
68,154,306
|
|
|
57,117,797
|
|
SCHEDULE
2 MDC PARTNERS INC. UNAUDITED REVENUE
RECONCILIATION (US$ in 000s, except
percentages)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Revenue
$
|
|
%
Change
|
|
Revenue
$
|
|
%
Change
|
|
|
|
|
|
|
|
|
September 30,
2018
|
$
375,830
|
|
|
|
$
1,082,541
|
|
|
|
|
|
|
|
|
|
|
Organic revenue
growth (decline)(1)
|
(28,127)
|
|
(7.5)%
|
|
(40,237)
|
|
(3.7)%
|
Non-GAAP acquisitions
(dispositions), net
|
(2,438)
|
|
(0.6)%
|
|
3,197
|
|
0.3%
|
Foreign exchange
impact
|
(2,358)
|
|
(0.6)%
|
|
(11,673)
|
|
(1.1)%
|
Total
change
|
(32,923)
|
|
(8.8)%
|
|
(48,713)
|
|
(4.5)%
|
September 30,
2019
|
$
342,907
|
|
|
|
$
1,033,828
|
|
|
|
(1)"Organic revenue growth" and "organic
revenue decline" refer to the positive or negative results,
respectively, of subtracting both the foreign exchange and
acquisition (disposition) components from total revenue growth. The
acquisition (disposition) component is calculated by aggregating
prior period revenue for any acquired businesses, less the prior
period revenue of any businesses that were disposed of during the
current period. The organic revenue growth (decline) component
reflects the constant currency impact of (a) the change in revenue
of the partner firms which the Company has held throughout each of
the comparable periods presented, and (b) "non-GAAP acquisitions
(dispositions), net". Non-GAAP acquisitions (dispositions), net
consists of (i) for acquisitions during the current year, the
revenue effect from such acquisition as if the acquisition had been
owned during the equivalent period in the prior year and (ii) for
acquisitions during the previous year, the revenue effect from such
acquisitions as if they had been owned during that entire year (or
same period as the current reportable period), taking into account
their respective pre-acquisition revenues for the applicable
periods, and (iii) for dispositions, the revenue effect from such
disposition as if they had been disposed of during the equivalent
period in the prior year.
|
|
Note: Actuals may not
foot due to rounding
|
SCHEDULE
3
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
Advertising and
Communications
|
|
Global Integrated
Agencies
|
|
Domestic Creative
Agencies
|
|
Specialist
Communications
|
|
Media
Services
|
|
All
Other
|
|
Corporate
|
|
Total
|
Revenue
|
$342,907
|
|
$145,890
|
|
$57,593
|
|
$42,101
|
|
$21,222
|
|
$76,101
|
|
—
|
|
$342,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC
Partners Inc. common
shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,058)
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion on
convertible preference shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,306
|
Net income
attributable to the noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,265
|
Equity in losses of
non-consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(63)
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,457
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,110
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,973
|
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
431
|
Operating income
(loss)
|
$38,532
|
|
$21,036
|
|
$7,216
|
|
$5,129
|
|
$(1,677)
|
|
$6,828
|
|
$(9,111)
|
|
$29,421
|
margin
|
11.2%
|
|
14.4%
|
|
12.5%
|
|
12.2%
|
|
(7.9)%
|
|
9.0%
|
|
|
|
8.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
9,176
|
|
4,009
|
|
1,213
|
|
644
|
|
755
|
|
2,555
|
|
192
|
|
9,368
|
Other asset
impairment
|
1,944
|
|
1,944
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,944
|
Stock-based
compensation
|
5,193
|
|
4,673
|
|
352
|
|
45
|
|
5
|
|
118
|
|
833
|
|
6,026
|
Deferred acquisition
consideration adjustments
|
1,943
|
|
(473)
|
|
678
|
|
1,467
|
|
2
|
|
269
|
|
—
|
|
1,943
|
Distributions from
non- consolidated affiliates (2)
|
(250)
|
|
—
|
|
(250)
|
|
—
|
|
—
|
|
—
|
|
48
|
|
(202)
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
705
|
|
705
|
Adjusted EBITDA
(1)
|
$56,538
|
|
$31,189
|
|
$9,209
|
|
$7,285
|
|
$(915)
|
|
$9,770
|
|
$(7,333)
|
|
$49,205
|
margin
|
16.5%
|
|
21.4%
|
|
16.0%
|
|
17.3%
|
|
(4.3)%
|
|
12.8%
|
|
|
|
14.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, stock-based compensation, deferred acquisition
consideration adjustments, distributions from non-consolidated
affiliates, and other items.
(2)
Distributions from non-consolidated affiliates includes (i) cash
received for profit distributions from non-consolidated affiliates,
and (ii) consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
(3) Other items, net includes items
such as severance expense and other restructuring expenses. See
Schedule 10 for a reconciliation of amounts.
Note: Due to changes
in the composition of certain business and the Company's internal
management and reporting structure during 2019, reportable segment
results for the 2018 periods presented have been recast to reflect
the reclassification of certain businesses between segments.The
changes were as follows: 1) Doner, previously within the Global
Integrated Agencies category is now aggregated into the Domestic
Creative Agencies reportable segment, 2) Yes and Co, previously
within the Media Services category, was included within the
Domestic Creative Agencies reportable segment, 3) HL Design and
Redscout, previously within Specialist Communications and All Other
category, respectively are included in Yes & Company, and
4)Varick Media, previously within the Yes & Company operating
segment is included within MDC Media Partners.
|
SCHEDULE
4
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
For the Nine
Months Ended September 30, 2019
|
|
|
Advertising and
Communications
|
|
Global Integrated
Agencies
|
|
Domestic Creative
Agencies
|
|
Specialist
Communications
|
|
Media
Services
|
|
All
Other
|
|
Corporate
|
|
Total
|
Revenue
|
$1,033,828
|
|
$429,977
|
|
$176,711
|
|
$128,224
|
|
$75,815
|
|
$223,101
|
|
—
|
|
$1,033,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,506)
|
Adjustments to
reconcile to
operating profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion on
convertible preference shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,931
|
Net income
attributable to
the noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,737
|
Equity in earning of
non-consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(352)
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,292
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,284
|
Foreign exchange
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,401)
|
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,559
|
Operating income
(loss)
|
$99,109
|
|
$45,527
|
|
$22,533
|
|
$18,889
|
|
$(3,630)
|
|
$15,790
|
|
$(30,565)
|
|
$68,544
|
margin
|
9.6%
|
|
10.6%
|
|
12.8%
|
|
14.7%
|
|
(4.8)%
|
|
7.1%
|
|
|
|
6.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
28,239
|
|
12,511
|
|
3,708
|
|
1,909
|
|
2,531
|
|
7,580
|
|
630
|
|
28,869
|
Other asset
impairment
|
1,944
|
|
1,944
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,944
|
Stock-based
compensation
|
12,180
|
|
9,672
|
|
1,338
|
|
123
|
|
(11)
|
|
1,058
|
|
452
|
|
12,632
|
Deferred acquisition
consideration adjustments
|
(3,627)
|
|
(3,627)
|
|
(91)
|
|
418
|
|
75
|
|
(402)
|
|
—
|
|
(3,627)
|
Distributions from
non- consolidated affiliates (2)
|
(250)
|
|
—
|
|
(250)
|
|
—
|
|
—
|
|
—
|
|
79
|
|
(171)
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,926
|
|
8,926
|
Adjusted EBITDA
(1)
|
$137,595
|
|
$66,027
|
|
$27,238
|
|
$21,339
|
|
$(1,035)
|
|
$24,026
|
|
$(20,478)
|
|
$117,117
|
margin
|
13.3%
|
|
15.4%
|
|
15.4%
|
|
16.6%
|
|
(1.4)%
|
|
10.8%
|
|
|
|
11.3%
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, stock-based compensation, deferred acquisition
consideration adjustments, distributions from non-consolidated
affiliates, and other items.
(2)
Distributions from non-consolidated affiliates includes (i) cash
received for profit distributions from non-consolidated affiliates,
and (ii) consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
(3) Other items, net includes items
such as severance expense and other restructuring expenses. See
Schedule 10 for a reconciliation of amounts.
Note: Due to changes
in the composition of certain business and the Company's internal
management and reporting structure during 2019, reportable segment
results for the 2018 periods presented have been recast to reflect
the reclassification of certain businesses between segments.The
changes were as follows: 1) Doner, previously within the Global
Integrated Agencies category is now aggregated into the Domestic
Creative Agencies reportable segment, 2) Yes and Co, previously
within the Media Services category, was included within the
Domestic Creative Agencies reportable segment, 3) HL Design and
Redscout, previously within Specialist Communications and All Other
category, respectively are included in Yes & Company, and
4)Varick Media, previously within the Yes & Company operating
segment is included within MDC Media Partners.
|
SCHEDULE
5
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
For the Three
Months Ended September 30, 2018
|
|
Advertising and
Communications
|
|
Global Integrated
Agencies
|
|
Domestic Creative
Agencies
|
|
Specialist
Communications
|
|
Media
Services
|
|
All
Other
|
|
Corporate
|
|
Total
|
Revenue
|
$375,830
|
|
$157,308
|
|
$59,151
|
|
$38,838
|
|
$29,593
|
|
$90,940
|
|
—
|
|
$375,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC
Partners Inc. common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,234)
|
Adjustments to
reconcile to
operating profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion on
convertible preference shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,109
|
Net income
attributable to the noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,458
|
Equity in earnings of
non-consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(300)
|
Income tax
expence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,986
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,063
|
Foreign exchange
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,275)
|
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(189)
|
Operating income
(loss)
|
$20,642
|
|
$23,486
|
|
$(14,031)
|
|
$3,703
|
|
$850
|
|
$6,634
|
|
$(18,024)
|
|
$2,618
|
margin
|
5.5%
|
|
14.9%
|
|
(23.7)%
|
|
9.5%
|
|
2.9%
|
|
7.3%
|
|
|
|
0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
10,935
|
|
4,553
|
|
1,266
|
|
1,100
|
|
675
|
|
3,341
|
199
|
|
11,134
|
Goodwill and other
asset impairment
|
21,008
|
|
3,180
|
|
17,828
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21,008
|
Stock-based
compensation
|
4,622
|
|
3,241
|
|
550
|
|
52
|
|
102
|
|
677
|
|
1,620
|
|
6,242
|
Deferred acquisition
consideration adjustments
|
11,003
|
|
3,953
|
|
(923)
|
|
1,452
|
|
(27)
|
|
6,548
|
|
—
|
|
11,003
|
Distributions from
non- consolidated affiliates (2)
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
478
|
|
478
|
Other items, net
(3)
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
7,346
|
|
7,346
|
Adjusted EBITDA
(1)
|
$68,210
|
|
$38,413
|
|
$4,690
|
|
$6,307
|
|
$1,600
|
|
$17,200
|
|
$(8,381)
|
|
$59,829
|
margin
|
18.1%
|
|
24.4%
|
|
7.9%
|
|
16.2%
|
|
5.4%
|
|
18.9
|
|
|
|
15.9%
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, stock-based compensation, deferred acquisition
consideration adjustments, distributions from non-consolidated
affiliates, and other items.
(2) Distributions from
non-consolidated affiliates includes (i) cash received for profit
distributions from non-consolidated affiliates, and (ii)
consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
(3) Other items, net includes items
such as severance expense and other restructuring expenses. See
Schedule 10 for a reconciliation of amounts.
Note: Due to changes
in the composition of certain business and the Company's internal
management and reporting structure during 2019, reportable segment
results for the 2018 periods presented have been recast to reflect
the reclassification of certain businesses between segments.The
changes were as follows: 1) Doner, previously within the Global
Integrated Agencies category is now aggregated into the Domestic
Creative Agencies reportable segment, 2) Yes and Co, previously
within the Media Services category, was included within the
Domestic Creative Agencies reportable segment, 3) HL Design and
Redscout, previously within Specialist Communications and All Other
category, respectively are included in Yes & Company, and
4)Varick Media, previously within the Yes & Company operating
segment is included within MDC Media Partners.
|
SCHEDULE
6
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
For the Nine
Months Ended September 30, 2018
|
|
Advertising and
Communications
|
|
Global Integrated
Agencies
|
|
Domestic Creative
Agencies
|
|
Specialist
Communications
|
|
Media
Services
|
|
All
Other
|
|
Corporate
|
|
Total
|
Revenue
|
$1,082,541
|
|
$444,995
|
|
$183,504
|
|
$117,966
|
|
$90,948
|
|
$245,128
|
|
—
|
|
|
$1,082,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to
MDC Partners Inc.
common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,339)
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion on
convertible
preference shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,204
|
Net income
attributable to
the noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,900
|
Equity in earning of
non-consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(358)
|
Income tax
benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,367
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,005
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,934
|
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,222)
|
Operating income
(loss)
|
$63,993
|
|
$28,247
|
|
$(6,887)
|
|
$13,646
|
|
$(78)
|
|
$29,065
|
|
$(45,236)
|
|
$18,757
|
margin
|
5.9%
|
|
6.3%
|
|
(3.8)%
|
|
11.6%
|
|
(0.1)%
|
|
11.9%
|
|
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
34,629
|
|
16,705
|
|
3,793
|
|
3,059
|
|
1,995
|
|
9,077
|
|
583
|
|
35,212
|
Goodwill and other
asset impairment
|
21,008
|
|
3,180
|
|
17,828
|
|
—
|
|
—
|
|
—
|
|
2,317
|
|
23,325
|
Stock-based
compensation
|
12,793
|
|
8,176
|
|
2,056
|
|
291
|
|
251
|
|
2,019
|
|
4,089
|
|
16,882
|
Deferred acquisition
consideration adjustments
|
8,522
|
|
2,779
|
|
539
|
|
2,216
|
|
144
|
|
2,844
|
|
—
|
|
8,522
|
Distributions from
non- consolidated affiliates (2)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
509
|
|
509
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,400
|
|
7,400
|
Adjusted EBITDA
(1)
|
$140,945
|
|
$59,087
|
|
$17,329
|
|
$19,212
|
|
$2,312
|
|
$43,005
|
|
$(30,338)
|
|
$110,607
|
margin
|
13.0%
|
|
13.3%
|
|
9.4%
|
|
16.3%
|
|
2.5%
|
|
17.5%
|
|
|
|
10.2%
|
(1) Adjusted EBITDA
is a non-GAAP measure, but as shown above it represents operating
profit (loss) plus depreciation and amortization, other asset
impairment, stock-based compensation, deferred acquisition
consideration adjustments, distributions from non-consolidated
affiliates, and other items.
(2) Distributions
from non-consolidated affiliates includes (i) cash received for
profit distributions from non-consolidated affiliates, and (ii)
consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
(3) Other
items, net includes items such as severance expense and other
restructuring expenses. See Schedule 10 for a reconciliation of
amounts.
Note: Due to changes
in the composition of certain business and the Company's internal
management and reporting structure during 2019, reportable segment
results for the 2018 periods presented have been recast to reflect
the reclassification of certain businesses between segments.The
changes were as follows: 1) Doner, previously within the Global
Integrated Agencies category is now aggregated into the Domestic
Creative Agencies reportable segment, 2) Yes and Co, previously
within the Media Services category, was included within the
Domestic Creative Agencies reportable segment, 3) HL Design and
Redscout, previously within Specialist Communications and All Other
category, respectively are included in Yes & Company, and
4)Varick Media, previously within the Yes & Company operating
segment is included within MDC Media Partners.
|
SCHEDULE
7
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO COVENANT
EBITDA
(US$ in
000s)
|
|
2018
|
|
2019
|
|
Covenant
EBITDA (LTM) (1)
|
|
Q3
|
|
Q4
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q2-2019 -
LTM
|
|
Q3-2019 -
LTM
|
Net income (loss)
attributable to MDC Partners Inc. common shareholders
|
$
|
(18,234)
|
|
|
$
|
(83,749)
|
|
|
$
|
(2,496)
|
|
|
$
|
775
|
|
|
$
|
(5,058)
|
|
|
$
|
(103,704)
|
|
|
$
|
(90,528)
|
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion on and net
income allocated to convertible preference shares
|
2,109
|
|
|
2,151
|
|
|
2,383
|
|
|
3,515
|
|
|
3,306
|
|
|
10,158
|
|
|
11,355
|
|
Net income
attributable to the noncontrolling interests
|
2,458
|
|
|
5,885
|
|
|
429
|
|
|
3,043
|
|
|
7,265
|
|
|
11,815
|
|
|
16,622
|
|
Equity in earnings
(losses) of non-consolidated affiliates
|
(300)
|
|
|
296
|
|
|
(83)
|
|
|
(206)
|
|
|
(63)
|
|
|
(293)
|
|
|
(56)
|
|
Income tax
expense
|
2,986
|
|
|
34,970
|
|
|
748
|
|
|
2,088
|
|
|
3,457
|
|
|
40,792
|
|
|
41,263
|
|
Interest expense and
finance charges, net
|
17,063
|
|
|
17,070
|
|
|
16,760
|
|
|
16,413
|
|
|
16,110
|
|
|
67,306
|
|
|
66,353
|
|
Foreign exchange loss
(gain)
|
(3,275)
|
|
|
13,324
|
|
|
(5,442)
|
|
|
(2,932)
|
|
|
3,973
|
|
|
1,675
|
|
|
8,923
|
|
Other, net
|
(189)
|
|
|
992
|
|
|
3,383
|
|
|
746
|
|
|
431
|
|
|
4,932
|
|
|
5,552
|
|
Operating income
(loss)
|
2,618
|
|
|
(9,061)
|
|
|
15,682
|
|
|
23,442
|
|
|
29,421
|
|
|
32,681
|
|
|
59,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
11,134
|
|
|
10,984
|
|
|
8,838
|
|
|
10,663
|
|
|
9,368
|
|
|
41,619
|
|
|
39,853
|
|
Goodwill and other
asset impairment
|
21,008
|
|
|
56,732
|
|
|
—
|
|
|
—
|
|
|
1,944
|
|
|
77,740
|
|
|
58,676
|
|
Stock-based
compensation
|
6,242
|
|
|
1,534
|
|
|
2,972
|
|
|
3,634
|
|
|
6,026
|
|
|
14,382
|
|
|
14,166
|
|
Deferred acquisition
consideration adjustments
|
11,003
|
|
|
(8,979)
|
|
|
(7,643)
|
|
|
2,073
|
|
|
1,943
|
|
|
(3,546)
|
|
|
(12,606)
|
|
Distributions from
non- consolidated affiliates
|
478
|
|
|
270
|
|
|
—
|
|
|
31
|
|
|
(202)
|
|
|
779
|
|
|
99
|
|
Other items, net
(2)
|
7,346
|
|
|
479
|
|
|
1,626
|
|
|
6,594
|
|
|
705
|
|
|
16,045
|
|
|
9,404
|
|
Adjusted
EBITDA
|
59,829
|
|
|
51,959
|
|
|
21,475
|
|
|
46,437
|
|
|
49,205
|
|
|
179,700
|
|
|
169,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile to Covenant EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
acquisitions/dispositions
|
(1,195)
|
|
|
(2,148)
|
|
|
(1,965)
|
|
|
—
|
|
|
—
|
|
|
(5,308)
|
|
|
(4,113)
|
|
Severance due to
eliminated positions
|
1,155
|
|
|
3,615
|
|
|
1,534
|
|
|
2,346
|
|
|
1,956
|
|
|
8,650
|
|
|
9,451
|
|
Other adjustments,
net (3)
|
600
|
|
|
1,877
|
|
|
1,412
|
|
|
989
|
|
|
228
|
|
|
4,878
|
|
|
4,506
|
|
|
$
|
60,389
|
|
|
$
|
55,303
|
|
|
$
|
22,456
|
|
|
$
|
49,772
|
|
|
$
|
51,389
|
|
|
$
|
187,920
|
|
|
$
|
178,920
|
|
(1) Covenant EBITDA
is a measure that includes pro forma adjustments for acquisitions,
one-time charges, and other adjustments, as defined in the Credit
Agreement. Covenant EBITDA is calculated as the aggregate of
operating results for the rolling last twelve months (LTM). Each
quarter is presented to provide the information utilized to
calculate Covenant EBITDA. Historical Covenant EBITDA may be
recasted in the current period for any proforma adjustments related
to acquisitions and/or dispositions in the current
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Other items, net
includes items such as severance expense and other restructuring
expenses and costs associated with the company's strategic review
process.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Other
adjustments, net primarily includes one time professional fees and
costs associated with real estate consolidation.
Note: Actuals may not foot due to rounding.
|
SCHEDULE
8
MDC PARTNERS
INC.
UNAUDITED
CONSOLIDATED BALANCE SHEETS
(US$ in
000s)
|
|
September 30,
2019
|
|
December 31,
2018
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
27,280
|
|
|
$
|
30,873
|
|
Accounts receivable,
less allowance for doubtful accounts of $2,728 and
$1,879
|
411,805
|
|
|
395,200
|
|
Expenditures billable
to clients
|
38,652
|
|
|
42,369
|
|
Assets held for
sale
|
—
|
|
|
78,913
|
|
Other current
assets
|
35,939
|
|
|
42,499
|
|
Total Current
Assets
|
513,676
|
|
|
589,854
|
|
Fixed assets, at
cost, less accumulated depreciation of $147,342 and
$128,546
|
82,946
|
|
|
88,189
|
|
Right-of-use assets -
operating leases
|
234,137
|
|
|
—
|
|
Investments in
non-consolidated affiliates
|
6,824
|
|
|
6,556
|
|
Goodwill
|
740,955
|
|
|
740,955
|
|
Other intangible
assets, net of accumulated amortization of $171,941 and
$161,868
|
56,734
|
|
|
67,765
|
|
Deferred tax
assets
|
92,439
|
|
|
92,741
|
|
Other
assets
|
24,018
|
|
|
25,513
|
|
Total
Assets
|
$
|
1,751,729
|
|
|
$
|
1,611,573
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS'
DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
178,946
|
|
|
$
|
221,995
|
|
Accruals and other
liabilities
|
280,783
|
|
|
313,141
|
|
Liabilities held for
sale
|
—
|
|
|
35,967
|
|
Advance
billings
|
169,857
|
|
|
138,505
|
|
Current portion of
lease liabilities - operating leases
|
47,722
|
|
|
—
|
|
Current portion of
deferred acquisition consideration
|
31,579
|
|
|
32,928
|
|
Total Current
Liabilities
|
708,887
|
|
|
742,536
|
|
Long-term
debt
|
895,379
|
|
|
954,107
|
|
Long-term portion of
deferred acquisition consideration
|
24,611
|
|
|
50,767
|
|
Long-term lease
liabilities - operating leases
|
230,209
|
|
|
—
|
|
Other
liabilities
|
17,933
|
|
|
54,255
|
|
Deferred tax
liabilities
|
7,486
|
|
|
5,329
|
|
Total
Liabilities
|
1,884,505
|
|
|
1,806,994
|
|
Redeemable
Noncontrolling Interests
|
41,519
|
|
|
51,546
|
|
Commitments,
Contingencies, and Guarantees
|
|
|
|
Shareholders'
Deficit:
|
|
|
|
Convertible
preference shares, 145,000 authorized, issued and outstanding at
September 30, 2019
and 95,000 at December 31, 2018
|
152,746
|
|
|
90,123
|
|
Common stock and
other paid-in capital
|
98,364
|
|
|
58,579
|
|
Accumulated
deficit
|
(462,483)
|
|
|
(464,903)
|
|
Accumulated other
comprehensive (loss) income
|
(2,878)
|
|
|
4,720
|
|
MDC Partners Inc.
Shareholders' Deficit
|
(214,251)
|
|
|
(311,481)
|
|
Noncontrolling
interests
|
39,956
|
|
|
64,514
|
|
Total Shareholders'
Deficit
|
(174,295)
|
|
|
(246,967)
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Shareholders'
Deficit
|
$
|
1,751,729
|
|
|
$
|
1,611,573
|
|
SCHEDULE
9
MDC PARTNERS
INC.
UNAUDITED SUMMARY
CASH FLOW DATA
(US$ in
000s)
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
Net cash used in
operating activities
|
$
|
(5,840)
|
|
|
$
|
(31,729)
|
|
Net cash provided by
(used in) investing activities
|
3,307
|
|
|
(48,355)
|
|
Net cash provided by
(used in) financing activities
|
(2,202)
|
|
|
59,122
|
|
Effect of exchange
rate changes on cash, cash equivalents, and cash held in
trusts
|
8
|
|
|
|
(161)
|
|
Net decrease in cash,
cash equivalents, and cash held in trusts including cash classified
within assets held for sale
|
$
|
(4,727)
|
|
|
|
$
|
(21,123)
|
|
Change in cash and
cash equivalents held in trusts classified within held for
sale
|
(3,307)
|
|
|
—
|
|
Change in cash and
cash equivalents classified within assets held for sale
|
4,441
|
|
|
—
|
|
Net decrease in cash
and cash equivalents
|
$
|
(3,593)
|
|
|
$
|
(21,123)
|
|
SCHEDULE
10
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF COMPONENTS OF NON- GAAP MEASURES
(US$ in
000s)
|
|
2018
|
|
2019
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
YTD
|
NON-GAAP
ACQUISITIONS (DISPOSITIONS), NET
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue from
current year acquisitions
|
$
|
—
|
|
$
|
11,066
|
|
$
|
12,734
|
|
$
|
12,317
|
|
$
|
36,117
|
|
|
$
|
—
|
|
$
|
698
|
|
$
|
1,347
|
|
$
|
2,045
|
|
GAAP revenue from
prior year acquisitions (1)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
15,685
|
|
1,519
|
|
1,109
|
|
18,313
|
|
Impact of adoption of
ASC 606 exclusion
|
—
|
|
450
|
|
(1,122)
|
|
504
|
|
(168)
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Foreign exchange
impact
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
470
|
|
470
|
|
Contribution to
organic revenue (growth) decline (2)
|
—
|
|
(3,417)
|
|
(945)
|
|
(3,243)
|
|
(7,605)
|
|
|
(4,008)
|
|
(440)
|
|
(2,185)
|
|
(6,633)
|
|
Prior year revenue
from dispositions (3)
|
(5,261)
|
|
(5,592)
|
|
(3,847)
|
|
—
|
|
(14,700)
|
|
|
(1,825)
|
|
(5,995)
|
|
(3,178)
|
|
(10,998)
|
|
Non-GAAP acquisitions
(dispositions), net
|
$
|
(5,261)
|
|
$
|
2,507
|
|
$
|
6,820
|
|
$
|
9,578
|
|
$
|
13,644
|
|
|
$
|
9,852
|
|
$
|
(4,218)
|
|
$
|
(2,437)
|
|
$
|
3,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2019
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
YTD
|
OTHER ITEMS,
NET
|
|
|
|
|
|
|
|
|
|
|
SEC investigation and
class action litigation expenses
|
122
|
|
235
|
|
(88)
|
|
131
|
|
400
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
D&O insurance
proceeds
|
—
|
|
(303)
|
|
(231)
|
|
(24)
|
|
(558)
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Severance and other
restructuring expenses
|
—
|
|
—
|
|
7,665
|
|
372
|
|
8,037
|
|
|
—
|
|
6,703
|
|
705
|
|
7,408
|
|
Strategic review
process costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1,626
|
|
(109)
|
|
—
|
|
1,517
|
|
Total other items,
net
|
$
|
122
|
|
$
|
(68)
|
|
$
|
7,346
|
|
$
|
479
|
|
$
|
7,879
|
|
|
$
|
1,626
|
|
$
|
6,594
|
|
$
|
705
|
|
$
|
8,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2019
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
YTD
|
CASH INTEREST, NET
& OTHER
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
(649)
|
|
(30,765)
|
|
(1,597)
|
|
(31,001)
|
|
(64,012)
|
|
|
(1,629)
|
|
(30,014)
|
|
(882)
|
|
(32,525)
|
|
Bond interest accrual
adjustment
|
(14,625)
|
|
14,625
|
|
(14,625)
|
|
14,625
|
|
—
|
|
|
(14,625)
|
|
14,625
|
|
(14,625)
|
|
(14,625)
|
|
Adjusted cash
interest paid
|
(15,274)
|
|
(16,140)
|
|
(16,222)
|
|
(16,376)
|
|
(64,012)
|
|
|
(16,254)
|
|
(15,389)
|
|
(15,507)
|
|
(47,150)
|
|
Interest
income
|
148
|
|
159
|
|
91
|
|
227
|
|
625
|
|
|
149
|
|
138
|
|
165
|
|
452
|
|
Total cash interest,
net & other
|
$
|
(15,126)
|
|
$
|
(15,981)
|
|
$
|
(16,131)
|
|
$
|
(16,149)
|
|
$
|
(63,387)
|
|
|
$
|
(16,105)
|
|
$
|
(15,251)
|
|
$
|
(15,342)
|
|
$
|
(46,698)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2019
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
YTD
|
CAPITAL
EXPENDITURES, NET
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(3,799)
|
|
(5,890)
|
|
(5,543)
|
|
(5,032)
|
|
(20,264)
|
|
|
(3,606)
|
|
(4,317)
|
|
(5,863)
|
|
(13,786)
|
|
Landlord
reimbursements
|
219
|
|
851
|
|
291
|
|
442
|
|
1,803
|
|
|
1
|
|
—
|
|
—
|
|
1
|
|
Total capital
expenditures, net
|
$
|
(3,580)
|
|
$
|
(5,039)
|
|
$
|
(5,252)
|
|
$
|
(4,590)
|
|
$
|
(18,461)
|
|
|
$
|
(3,605)
|
|
$
|
(4,317)
|
|
$
|
(5,863)
|
|
$
|
(13,785)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2019
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
YTD
|
MISCELLANEOUS
OTHER DISCLOSURES
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to the noncontrolling interests
|
897
|
|
2,545
|
|
2,458
|
|
5,885
|
|
11,785
|
|
|
429
|
|
3,043
|
|
7,265
|
|
10,737
|
|
Cash taxes
|
$
|
1,333
|
|
$
|
1,293
|
|
$
|
2,196
|
|
$
|
(986)
|
|
$
|
3,836
|
|
|
$
|
1,677
|
|
$
|
1,817
|
|
$
|
137
|
|
$
|
3,631
|
|
(1)
GAAP revenue from prior year acquisitions for 2019 and 2018
relates to acquisitions which occurred in 2018 and 2017,
respectively.
(2)
Contributions to organic revenue growth (decline) represents the
change in revenue, measured on a constant currency basis, relative
to the comparable pre-acquisition period for acquired businesses
that is included in the Company's organic revenue growth (decline)
calculation.
(3) Prior year revenue from
dispositions reflects the incremental impact on revenue for the
comparable period after the Company's disposition of such disposed
business, plus revenue from each business disposed of by the
Company in the previous year through the twelve month anniversary
of the disposition.
Note: Actuals may not
foot due to rounding.
|
CONTACT:
|
Erica
Bartsch
|
|
Sloane &
Company
|
|
212-446-1875
|
|
IR@mdc-partners.com
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/mdc-partners-inc-reports-results-for-the-three-and-nine-months-ended-september-30-2019-300952181.html
SOURCE MDC Partners Inc.