Company's Strategic Plan Delivering Significant
Performance Improvements on Key Metrics
NEW YORK, April 29, 2020 /PRNewswire/ --
FIRST QUARTER HIGHLIGHTS:
- Revenue of $327.7 million in the
first quarter versus $328.8 million
in the prior period, a decline of 0.3%.
- Organic revenue increased 2.0% in the first quarter from the
first quarter of 2019.
- Net loss attributable to MDC Partners common shareholders was
$2.4 million in the first quarter of
2020 versus $2.5 million a year
ago.
- Net loss attributable to MDC Partners common shareholders for
the last twelve months (LTM) of $17.2
million as of March 31, 2020
versus $17.3 million as of
December 31, 2019.
- Adjusted EBITDA of $39.6 million
versus $21.5 million a year ago, an
increase of 84.3%. Adjusted EBITDA Margin of 12.1%, compared with
6.5% a year ago.
- Excluding Kingsdale and Sloane, Adjusted EBITDA increased
110.1% in the first quarter of 2020 compared with the prior year
period.
- Covenant EBITDA (LTM) of $200.7
million versus $180.5 million
at year end 2019, an increase of 11.2%.
- Net New Business wins totaled a positive $8.4 million in the first quarter.
(NASDAQ: MDCA) – MDC Partners Inc. ("MDC Partners" or the
"Company") today announced financial results for the three months
ended March 31, 2020.
"MDC delivered significant improvements in the first quarter of
2020, returning to organic growth of 2%, nearly doubling Adjusted
EBITDA, and boosting margins 560 basis points," said Mark Penn, Chairman and Chief Executive Officer
of MDC Partners. "These results were game-changing for us in terms
of implementing our New World Strategy, putting us in a much
stronger position to manage through the pandemic that has enveloped
the economy and the world. Many of the changes we made last
year are reflected in our results over the last two quarters as our
plans have been realized."
"We are operating on the basis of safety first and business
second as we act to safeguard our people and advance our business
in a radically new environment. Our agencies have adapted well to
the new work from home policies and delivered significant new
campaigns for clients as we help them navigate through these
uncertain times with the best in cloud-based production tools and
data-based creativity."
"Our efforts to reform and reshape MDC in the last year at all
levels and to create a more cohesive, collaborative and efficient
organization position us well to navigate this crisis now and
prepare us for eventual recovery," Mr. Penn added.
Frank Lanuto, Chief Financial
Officer, added, "Our new network structure and our cost-savings
initiatives paid off in the first quarter, with significant
improvements over the prior year period across our income statement
and balance sheet. We ended the first quarter with a solid cash
balance and reduced leverage from year end, down to 4.3x. We remain
deeply committed to addressing all our clients' needs going forward
and continuing to reduce costs in response to current market
conditions."
First Quarter and Year-to-Date 2019 Financial Results
Revenue for the first quarter of 2020 was $327.7 million versus $328.8 million for the first quarter of 2019, a
decline of 0.3%. The effect on revenue of foreign exchange due to
the strong US Dollar was negative 0.5%, the impact of non-GAAP
acquisitions (dispositions), net was negative 1.7%, and organic
revenue was positive 2.0%. Organic revenue was unfavorably impacted
by 7 basis points from higher billable pass-through costs incurred
on clients' behalf from certain of our partner firms acting as
principal.
Net New Business wins in the first quarter of 2020 totaled
$8.4 million.
Net loss attributable to MDC Partners common shareholders for
the first quarter of 2020 was $2.4
million versus a net loss of $2.5 million for the first quarter of 2019.
This improvement was primarily due to a decline in expenses
principally driven by a reduction in staff costs, offset by the
change in foreign exchange gain and losses. Diluted loss per share
attributable to MDC Partners common shareholders for the first
quarter of 2020 was $0.03 versus
diluted loss per share of $0.04 for
the first quarter of 2019.
Adjusted EBITDA for the first quarter of 2020 was $39.6 million versus $21.5
million for the first quarter of 2019, an increase of 84.3%.
The increase was primarily driven by a reduction in staff costs,
partially offset by a decline in revenues. This led to a 560 basis
point increase in Adjusted EBITDA margin in the first quarter of
2020 to 12.1% from 6.5% in the first quarter of 2019. Excluding the
impact of the Kingsdale and Sloane divestitures, Adjusted EBITDA
increased 110.1% in the first quarter of 2020 compared with the
prior year period.
Net loss attributable to MDC Partners common shareholders for
the last twelve months (LTM) was $17.2
million as of March 31, 2020
versus a $17.3 million loss as of
December 31, 2019.
Covenant EBITDA for the last twelve months (LTM) was
$200.7 million at March 31, 2020 versus $180.5 million at December
31, 2019, an increase of 11.2%. The change was primarily
driven by the increase in Adjusted EBITDA.
Financial Outlook
Given the uncertainties in the global business environment
arising from the COVID-19 pandemic, the Company is not providing a
2020 outlook for Revenue and Covenant EBITDA at this time.
Conference Call
Management will host a conference call on Wednesday, April 29, 2020, at 8:30 a.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),
May 6, 2020, 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 (SEC) 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 that 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, permitted
dispositions and other items, as defined in the Company's Credit
Agreement. Pro forma adjustments for our real estate consolidation
to our new headquarters at 1 World Trade Center ("1WTC") are
calculated to include the lease expense recognized as of the first
period required by US GAAP for 1WTC and excluding the future costs
of all leases that will either be terminated or sublet as permitted
dispositions in connection with the relocation. We believe that the
presentation of Covenant EBITDA is useful to investors 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
Company's Credit Agreement.
Included in this earnings release are tables reconciling MDC
Partners' reported results to arrive at certain of these non-GAAP
financial measures.
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 (loss) 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 international, national and regional
economic conditions that could affect the Company or its clients,
including as a result of the recent COVID-19 outbreak;
- the effects of the outbreak of COVID-19, including the
measures to reduce its spread, and the impact on the economy and
demand for our services, which may precipitate or exacerbate other
risks and uncertainties;
- the Company's ability to attract new clients and retain
existing clients;
- reduction in client spending and changes in client
advertising, marketing and corporate communications
requirements;
- financial failure of the Company's clients;
- the Company's ability to retain and attract key
employees;
- the Company's ability to achieve the full amount of its
stated cost saving initiatives;
- the Company's implementation of strategic
initiatives;
- 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 Annual Report on Form 10-K 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
March 31,
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
Services
|
$
|
327,742
|
|
|
$
|
328,791
|
|
Operating
Expenses:
|
|
|
|
Cost of services
sold
|
222,693
|
|
|
237,153
|
|
Office and general
expenses
|
66,353
|
|
|
67,118
|
|
Depreciation and
amortization
|
9,206
|
|
|
8,838
|
|
Other asset
impairment
|
161
|
|
|
—
|
|
|
298,413
|
|
|
313,109
|
|
Operating
income
|
29,329
|
|
|
15,682
|
|
Other Income
(Expenses):
|
|
|
|
Interest expense and
finance charges, net
|
(15,612)
|
|
|
(16,760)
|
|
Foreign exchange gain
(loss)
|
(14,757)
|
|
|
5,442
|
|
Other, net
|
16,334
|
|
|
(3,383)
|
|
|
(14,035)
|
|
|
(14,701)
|
|
Income before income
taxes and equity in earnings of non-consolidated
affiliates
|
15,294
|
|
|
981
|
|
Income tax
expense
|
13,500
|
|
|
748
|
|
Income before equity
in earnings of non-consolidated affiliates
|
1,794
|
|
|
233
|
|
Equity in earnings of
non-consolidated affiliates
|
—
|
|
|
83
|
|
Net income
|
1,794
|
|
|
316
|
|
Net income
attributable to the noncontrolling interest
|
(791)
|
|
|
(429)
|
|
Net income (loss)
attributable to MDC Partners Inc.
|
1,003
|
|
|
(113)
|
|
Accretion on and net
income allocated to convertible preference shares
|
(3,440)
|
|
|
(2,383)
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
$
|
(2,437)
|
|
|
$
|
(2,496)
|
|
Loss Per Common
Share:
|
|
|
|
Basic
|
|
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
$
|
(0.03)
|
|
|
$
|
(0.04)
|
|
Diluted
|
|
|
|
Net loss attributable
to MDC Partners Inc. common shareholders
|
$
|
(0.03)
|
|
|
$
|
(0.04)
|
|
Weighted Average
Number of Common Shares Outstanding:
|
|
|
|
Basic
|
72,397,661
|
|
|
60,258,102
|
|
Diluted
|
72,397,661
|
|
|
60,258,102
|
|
SCHEDULE
2 MDC PARTNERS INC. UNAUDITED REVENUE
RECONCILIATION (US$ in 000s, except
percentages)
|
|
|
Three Months
Ended
|
|
Revenue
$
|
|
%
Change
|
March 31,
2019
|
$
|
328,791
|
|
|
|
Organic revenue
(1)
|
6,434
|
|
|
2.0
|
%
|
Non-GAAP acquisitions
(dispositions), net
|
(5,683)
|
|
|
(1.7)
|
%
|
Foreign exchange
impact
|
(1,800)
|
|
|
(0.5)
|
%
|
Total
change
|
(1,049)
|
|
|
(0.3)
|
%
|
March 31,
2020
|
$
|
327,742
|
|
|
|
|
(1) "Organic revenue refers to the
positive results 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 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. See "Non-GAAP Measures" herein.
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 March 31, 2020
|
|
|
Integrated
Agencies
Network
|
|
Media &
Data
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Revenue
|
$208,328
|
|
$41,058
|
|
$78,356
|
|
—
|
|
$327,742
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common
shareholders
|
|
|
|
|
|
|
|
|
(2,437)
|
Adjustments to
reconcile to operating income (loss):
|
|
|
|
|
|
|
|
|
|
Accretion on
convertible preference shares
|
|
|
|
|
|
|
|
|
3,440
|
Net income
attributable to the noncontrolling
interests
|
|
|
|
|
|
|
|
|
791
|
Income tax
expense
|
|
|
|
|
|
|
|
|
13,500
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
|
15,612
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
14,757
|
Other, net
|
|
|
|
|
|
|
|
|
(16,334)
|
Operating income
(loss)
|
$29,193
|
|
$617
|
|
$7,857
|
|
$(8,338)
|
|
$29,329
|
margin
|
14.0
|
%
|
|
1.5
|
%
|
|
10.0
|
%
|
|
|
|
8.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
6,267
|
|
808
|
|
1,899
|
|
232
|
|
9,206
|
Other asset
impairment
|
161
|
|
—
|
|
—
|
|
—
|
|
161
|
Stock-based
compensation
|
2,861
|
|
(13)
|
|
80
|
|
142
|
|
3,070
|
Deferred acquisition
consideration adjustments
|
(5,044)
|
|
375
|
|
69
|
|
—
|
|
(4,600)
|
Distributions from
non-consolidated affiliates (2)
|
—
|
|
—
|
|
—
|
|
(14)
|
|
(14)
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
2,416
|
|
2,416
|
Adjusted EBITDA
(1)
|
$33,438
|
|
$1,787
|
|
$9,905
|
|
$(5,562)
|
|
$39,568
|
Adjusted EBITDA
margin
|
16.1
|
%
|
|
4.4
|
%
|
|
12.6
|
%
|
|
|
|
12.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted EBITDA is a non-GAAP measure, and as shown above it
represents operating income (loss) plus depreciation and
amortization, stock-based
compensation, deferred acquisition consideration adjustments,
distributions from non-consolidated affiliates, impairment and
other items. See "Non-GAAP
Measures" herein.
(2)
Distributions from non-consolidated affiliates includes (i) cash
received for profit distributions from non-consolidated affiliates,
and (ii) consideration from
the sale of ownership interests in non-consolidated affiliates less
contributions to date plus undistributed earnings
(losses).
(3) Other items, net includes items
such as severance expense and other restructuring expenses. See
Schedule 8 for a reconciliation of amounts.
Note: Effective in
the first quarter of 2020, the Company reorganized its management
structure resulting in the aggregation of certain Partner Firms
into
integrated groups ("Networks"). In connection with the
reorganization, we reassessed our reportable segments to align our
external reporting with how we
operate the Networks under our new organizational structure. Prior
periods presented have been recast to reflect the change in
reportable segments.
Note: Actuals may not
foot due to rounding.
|
|
SCHEDULE
4 MDC PARTNERS INC. UNAUDITED RECONCILIATION OF
NET INCOME (LOSS) TO ADJUSTED EBITDA (US$ in 000s, except
percentages)
|
For the Three
Months Ended March 31, 2019
|
|
Integrated
Agencies
Network
|
|
Media &
Data
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Revenue
|
$206,910
|
|
$43,232
|
|
$78,649
|
|
—
|
|
|
$328,791
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common
shareholders
|
|
|
|
|
|
|
|
|
(2,496)
|
Adjustments to
reconcile to operating income (loss):
|
|
|
|
|
|
|
|
|
|
Accretion on
convertible preference shares
|
|
|
|
|
|
|
|
|
2,383
|
Net income
attributable to the noncontrolling
interests
|
|
|
|
|
|
|
|
|
429
|
Equity in earnings of
non-consolidated affiliates
|
|
|
|
|
|
|
|
|
(83)
|
Income tax
expense
|
|
|
|
|
|
|
|
|
748
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
|
16,760
|
Foreign exchange
income
|
|
|
|
|
|
|
|
|
(5,442)
|
Other, net
|
|
|
|
|
|
|
|
|
3,383
|
Operating income
(loss)
|
$15,512
|
|
$(1,649)
|
|
$6,641
|
|
$(4,822)
|
|
$15,682
|
margin
|
7.5
|
%
|
|
(3.8)
|
%
|
|
8.4
|
%
|
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
5,715
|
|
993
|
|
1,913
|
|
217
|
|
8,838
|
Other asset
impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Stock-based
compensation
|
4,459
|
|
—
|
|
86
|
|
(1,573)
|
|
2,972
|
Deferred acquisition
consideration adjustments
|
(6,491)
|
|
687
|
|
(1,839)
|
|
—
|
|
(7,643)
|
Distributions from
non-consolidated affiliates (2)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
1,626
|
|
1,626
|
Adjusted EBITDA
(1)
|
$19,195
|
|
$31
|
|
$6,801
|
|
$(4,552)
|
|
$21,475
|
Adjusted EBITDA
margin
|
9.3
|
%
|
|
0.1
|
%
|
|
8.6
|
%
|
|
|
|
6.5
|
%
|
|
(1)
Adjusted EBITDA is a non-GAAP measure, and as shown above it
represents operating income (loss) plus depreciation and
amortization, stock-based
compensation, deferred acquisition consideration adjustments,
distributions from non-consolidated affiliates, impairment and
other items. See "Non-GAAP
Measures" herein.
(2) Distributions from non-consolidated affiliates
includes (i) cash received for profit distributions from
non-consolidated affiliates, and (ii) consideration from
the sale of ownership interests in non-consolidated affiliates less
contributions to date plus undistributed earnings (losses).
(3) Other items, net includes items such as
restructuring expenses. See Schedule 8 for a reconciliation of
amounts.
Note: Effective in the first quarter of 2020, the Company
reorganized its management structure resulting in the aggregation
of certain Partner Firms into
integrated groups ("Networks"). In connection with the
reorganization, we reassessed our reportable segments to align our
external reporting with how we
operate the Networks under our new organizational structure. Prior
periods presented have been recast to reflect the change in
reportable segments.
Note: Actuals may not foot due to rounding.
|
SCHEDULE
5 MDC PARTNERS INC. UNAUDITED RECONCILIATION OF
NET INCOME (LOSS) TO COVENANT EBITDA (US$ in
000s)
|
|
|
2019
|
|
2020
|
|
Covenant
EBITDA
(LTM) (1)
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
|
Q4-2019 -
LTM
|
|
Q1-2020 - L
TM
|
Net income (loss)
attributable to MDC Partners
Inc. common shareholders
|
$
|
(2,497)
|
|
|
$
|
776
|
|
|
$
|
(5,058)
|
|
|
$
|
(10,488)
|
|
|
$
|
(2,437)
|
|
|
$
|
(17,267)
|
|
|
$
|
(17,207)
|
|
Adjustments to
reconcile to operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion on and net
income allocated to
convertible preference shares
|
2,383
|
|
|
3,515
|
|
|
3,306
|
|
|
3,373
|
|
|
3,440
|
|
|
12,577
|
|
|
13,634
|
|
Net income
attributable to the noncontrolling
interests
|
429
|
|
|
3,043
|
|
|
7,265
|
|
|
5,419
|
|
|
791
|
|
|
16,156
|
|
|
16,518
|
|
Equity in losses of
non-consolidated affiliates
|
(83)
|
|
|
(206)
|
|
|
(63)
|
|
|
—
|
|
|
—
|
|
|
(352)
|
|
|
(269)
|
|
Income tax
expense
|
746
|
|
|
2,088
|
|
|
3,457
|
|
|
4,241
|
|
|
13,500
|
|
|
10,532
|
|
|
23,286
|
|
Interest expense and
finance charges, net
|
16,761
|
|
|
16,413
|
|
|
16,110
|
|
|
15,658
|
|
|
15,612
|
|
|
64,942
|
|
|
63,793
|
|
Foreign exchange loss
(gain)
|
(5,442)
|
|
|
(2,932)
|
|
|
3,973
|
|
|
(4,349)
|
|
|
14,757
|
|
|
(8,750)
|
|
|
11,449
|
|
Other, net
|
3,384
|
|
|
745
|
|
|
431
|
|
|
(2,158)
|
|
|
(16,334)
|
|
|
2,402
|
|
|
(17,316)
|
|
Operating
income
|
15,681
|
|
|
23,442
|
|
|
29,421
|
|
|
11,696
|
|
|
29,329
|
|
|
80,240
|
|
|
93,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
8,838
|
|
|
10,663
|
|
|
9,368
|
|
|
9,460
|
|
|
9,206
|
|
|
38,329
|
|
|
38,697
|
|
Goodwill and other
asset impairment
|
—
|
|
|
—
|
|
|
1,944
|
|
|
5,875
|
|
|
161
|
|
|
7,819
|
|
|
7,980
|
|
Stock-based
compensation
|
2,972
|
|
|
3,634
|
|
|
6,026
|
|
|
18,408
|
|
|
3,070
|
|
|
31,040
|
|
|
31,138
|
|
Deferred acquisition
consideration adjustments
|
(7,643)
|
|
|
2,073
|
|
|
1,943
|
|
|
9,030
|
|
|
(4,600)
|
|
|
5,403
|
|
|
8,446
|
|
Distributions from
non-consolidated affiliates
|
—
|
|
|
31
|
|
|
(202)
|
|
|
2,219
|
|
|
(14)
|
|
|
2,048
|
|
|
2,034
|
|
Other items, net
(2)
|
1,626
|
|
|
6,594
|
|
|
705
|
|
|
349
|
|
|
2,416
|
|
|
9,274
|
|
|
10,064
|
|
Adjusted
EBITDA
|
21,474
|
|
|
46,437
|
|
|
49,205
|
|
|
57,037
|
|
|
39,568
|
|
|
174,153
|
|
|
192,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile to Covenant EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma dispositions
(3)
|
(2,701)
|
|
|
(729)
|
|
|
(996)
|
|
|
(1,294)
|
|
|
(124)
|
|
|
(5,720)
|
|
|
(3,143)
|
|
Severance due to
eliminated positions
|
1,534
|
|
|
2,346
|
|
|
1,956
|
|
|
3,221
|
|
|
2,133
|
|
|
9,057
|
|
|
9,656
|
|
Other adjustments,
net (4)
|
1,412
|
|
|
989
|
|
|
228
|
|
|
368
|
|
|
357
|
|
|
2,997
|
|
|
1,942
|
|
Covenant adjusted
EBITDA
|
$
|
21,719
|
|
|
$
|
49,043
|
|
|
$
|
50,393
|
|
|
$
|
59,332
|
|
|
$
|
41,934
|
|
|
$
|
180,487
|
|
|
$
|
200,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Covenant EBITDA is a measure that includes pro forma adjustments
for acquisitions, one-time charges, permitted dispositions and
other adjustments, as defined
in the Company's 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 re-casted in the current
period for any proforma
adjustments related to acquisitions and/or dispositions in the
current period. See "Non-GAAP Measures" herein.
(2) Other items, net includes items such as severance
expense, other restructuring expenses and costs associated with the
Company's strategic review process.
(3) Represents Kingsdale and Sloane EBITDA for the
respective period.
(4) 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 6
MDC PARTNERS INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(US$ in 000s)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
221,102
|
|
|
$
|
106,933
|
|
Accounts receivable,
less allowance for doubtful accounts of $2,118 and
$3,304
|
407,311
|
|
|
450,403
|
|
Expenditures billable
to clients
|
22,763
|
|
|
30,133
|
|
Other current
assets
|
44,689
|
|
|
35,613
|
|
Total Current
Assets
|
695,865
|
|
|
623,082
|
|
Fixed assets, at
cost, less accumulated depreciation of $132,174 and
$129,579
|
75,767
|
|
|
81,054
|
|
Right-of-use assets -
operating leases
|
216,194
|
|
|
223,622
|
|
Goodwill
|
725,390
|
|
|
740,674
|
|
Other intangible
assets, net
|
50,640
|
|
|
54,893
|
|
Deferred tax
assets
|
77,378
|
|
|
85,988
|
|
Other
assets
|
29,622
|
|
|
30,179
|
|
Total
Assets
|
$
|
1,870,856
|
|
|
$
|
1,839,492
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING
INTERESTS, AND SHAREHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
153,491
|
|
|
$
|
200,148
|
|
Accruals and other
liabilities
|
325,826
|
|
|
353,575
|
|
Advance
billings
|
146,803
|
|
|
171,742
|
|
Current portion of
lease liabilities - operating leases
|
48,022
|
|
|
48,659
|
|
Current portion of
deferred acquisition consideration
|
46,337
|
|
|
45,521
|
|
Total Current
Liabilities
|
720,479
|
|
|
819,645
|
|
Long-term
debt
|
1,014,260
|
|
|
887,630
|
|
Long-term portion of
deferred acquisition consideration
|
26,399
|
|
|
29,699
|
|
Long-term lease
liabilities - operating leases
|
211,254
|
|
|
219,163
|
|
Other
liabilities
|
35,523
|
|
|
25,771
|
|
Total
Liabilities
|
2,007,915
|
|
|
1,981,908
|
|
Redeemable
Noncontrolling Interests
|
35,698
|
|
|
36,973
|
|
Commitments,
Contingencies, and Guarantees
|
|
|
|
Shareholders'
Deficit:
|
|
|
|
Convertible
preference shares, 145,000 authorized, issued
and outstanding at March 31, 2020 and December 31, 2019
|
152,746
|
|
|
152,746
|
|
Common stock and
other paid-in capital
|
99,587
|
|
|
101,469
|
|
Accumulated
deficit
|
(468,508)
|
|
|
(469,593)
|
|
Accumulated other
comprehensive (loss) income
|
3,669
|
|
|
(4,269)
|
|
MDC Partners Inc.
Shareholders' Deficit
|
(212,506)
|
|
|
(219,647)
|
|
Noncontrolling
interests
|
39,749
|
|
|
40,258
|
|
Total Shareholders'
Deficit
|
(172,757)
|
|
|
(179,389)
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and
Shareholders' Deficit
|
$
|
1,870,856
|
|
|
$
|
1,839,492
|
|
SCHEDULE
7 MDC PARTNERS INC. UNAUDITED SUMMARY CASH FLOW
DATA (US$ in 000s)
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Net cash used in
operating activities
|
$
|
(19,954)
|
|
|
$
|
(81,200)
|
|
Net cash provided by
investing activities
|
16,645
|
|
|
18,101
|
|
Net cash provided by
financing activities
|
119,642
|
|
|
60,753
|
|
Effect of exchange
rate changes on cash, cash equivalents, and
cash held in trusts
|
(2,164)
|
|
|
(576)
|
|
Net increase
(decrease) in cash, cash equivalents, and cash held
in trusts including cash classified within assets held for
sale
|
$
|
114,169
|
|
|
$
|
(2,922)
|
|
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
|
—
|
|
|
1,728
|
|
Net increase
(decrease) in cash and cash equivalents
|
$
|
114,169
|
|
|
$
|
(4,501)
|
|
Note: Actuals may not
foot due to rounding.
|
SCHEDULE
8 MDC PARTNERS INC. UNAUDITED RECONCILIATION OF
COMPONENTS OF NON-GAAP MEASURES (US$ in
000s)
|
|
|
2019
|
|
2020
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
Q1
|
NON-GAAP
ACQUISITIONS (DISPOSITIONS), NET
|
|
|
|
|
|
|
|
GAAP revenue from
current year acquisitions
|
$
|
—
|
|
$
|
698
|
|
$
|
1,347
|
|
$
|
1,396
|
|
$
|
3,441
|
|
|
$
|
—
|
|
GAAP revenue from
prior year acquisitions (1)
|
15,685
|
|
1,519
|
|
1,109
|
|
291
|
|
18,604
|
|
|
—
|
|
Foreign exchange
impact
|
—
|
|
—
|
|
470
|
|
(246)
|
|
224
|
|
|
(248)
|
|
Contribution to
organic revenue (growth) decline (2)
|
(4,008)
|
|
(440)
|
|
(2,185)
|
|
(1,694)
|
|
(8,327)
|
|
|
(411)
|
|
Prior year revenue
from dispositions (3)
|
(1,825)
|
|
(5,995)
|
|
(3,178)
|
|
(4,505)
|
|
(15,503)
|
|
|
(5,024)
|
|
Non-GAAP acquisitions
(dispositions), net
|
$
|
9,852
|
|
$
|
(4,218)
|
|
$
|
(2,437)
|
|
$
|
(4,758)
|
|
$
|
(1,561)
|
|
|
$
|
(5,683)
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2020
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
Q1
|
OTHER ITEMS,
NET
|
|
|
|
|
|
|
|
Severance and other
restructuring expenses
|
—
|
|
6,703
|
|
705
|
|
—
|
|
7,408
|
|
|
1,334
|
|
Strategic review
process costs
|
1,626
|
|
(109)
|
|
—
|
|
349
|
|
1,866
|
|
|
1,082
|
|
Total other items,
net
|
$
|
1,626
|
|
$
|
6,594
|
|
$
|
705
|
|
$
|
349
|
|
$
|
9,274
|
|
|
$
|
2,416
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2020
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
Q1
|
CASH INTEREST, NET
& OTHER
|
|
|
|
|
|
|
|
Cash interest
paid
|
(1,629)
|
|
(30,014)
|
|
(882)
|
|
(29,698)
|
|
(62,223)
|
|
|
145
|
|
Bond interest accrual
adjustment
|
(14,625)
|
|
14,625
|
|
(14,625)
|
|
14,625
|
|
—
|
|
|
(14,625)
|
|
Adjusted cash
interest paid
|
(16,254)
|
|
(15,389)
|
|
(15,507)
|
|
(15,073)
|
|
(62,223)
|
|
|
(14,480)
|
|
Interest
income
|
149
|
|
138
|
|
165
|
|
162
|
|
614
|
|
|
(114)
|
|
Total cash interest,
net & other
|
$
|
(16,105)
|
|
$
|
(15,251)
|
|
$
|
(15,342)
|
|
$
|
(14,911)
|
|
$
|
(61,609)
|
|
|
$
|
(14,594)
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2020
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
Q1
|
CAPITAL
EXPENDITURES, NET
|
|
|
|
|
|
|
|
Capital
expenditures
|
(3,606)
|
|
(4,317)
|
|
(5,863)
|
|
(4,810)
|
|
(18,596)
|
|
|
(1,546)
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2020
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
Q1
|
MISCELLANEOUS
OTHER DISCLOSURES
|
|
|
|
|
|
|
|
Net income
attributable to the noncontrolling interests
|
429
|
|
3,043
|
|
7,265
|
|
5,419
|
|
16,156
|
|
|
791
|
|
Cash taxes
|
$
|
1,677
|
|
$
|
1,817
|
|
$
|
137
|
|
$
|
(1,335)
|
|
$
|
2,296
|
|
|
$
|
849
|
|
|
(1)
GAAP revenue from prior year acquisitions for 2020 and 2019
relates to acquisitions which occurred in 2019 and 2018,
respectively.
(2) Contribution to organic revenue represents the
change in revenue, measured on a constant currency basis, relative
to the comparable pre-acquisition
period for acquired businesses that are 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
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SOURCE MDC Partners Inc.