MDC Partners Inc. Reports Results For The Three And Nine Months Ended September 30, 2016

NEW YORK, Nov. 3, 2016 /CNW/ --

THIRD QUARTER HIGHLIGHTS:

  • Reported revenue increased 6.3% to $349.3 million; Organic revenue growth of 2.7%, 30 basis points favorable impact from increased billable pass-through costs
  • Net loss attributable to MDC Partners of ($33.5) million vs ($8.6) million, including a non-cash impairment charge of $29.6 million predominantly related to our experiential business
  • Adjusted EBITDA decreased 13.5% to $46.3 million, with margins of 13.2% (See Schedules 2 and 3)
  • 2016 guidance revised to reflect lowered full year expectations and cost of restructuring efforts
  • Quarterly dividend suspended to allocate resources to accelerated de-leveraging and strategic growth initiatives
  • Advisor hired to assist in evaluating the Company's financial and capital structure strategy

YEAR-TO-DATE HIGHLIGHTS:

  • Reported revenue increased 2.9% to $995.3 million; Organic revenue growth of 1.7%, 70 basis point negative impact from decreased billable pass-through costs
  • Net loss attributable to MDC Partners of ($55.7) million vs ($11.1) million, including a non-cash impairment charge of $29.6 million predominantly related to our experiential business
  • Adjusted EBITDA decreased 8.4% to $121.0 million, with margins of 12.2% (See Schedules 4 and 5)
  • Net New Business wins totaled $1.3 million in Q3 and $58.0 million year-to-date

(NASDAQ: MDCA) – MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and nine months ended September 30, 2016.

Scott Kauffman, Chairman and Chief Executive Officer of MDC Partners, said, "The third quarter was impacted by the many actions we are taking to position our business for long-term profitable growth and balance sheet strength.  We are reducing expenses, optimizing our partner portfolio, and re-prioritizing how we allocate capital, all while investing in our partners to ensure that they have the right resources to continue to drive outstanding performance for our clients. While some of these efforts carry near-term costs, which is contributing to our lower full year financial projections, we expect to reap the benefits in 2017. In addition, the suspension of our dividend will free up over $11 million in cash per quarter, which we plan to allocate toward enhanced liquidity, accelerated de-leveraging and investment in growth initiatives. We are confident that the moves we are making, alongside our active pipeline of new business opportunities, will lead to a reacceleration of the business beginning in 2017."

David Doft, CFO of MDC Partners, said, "Our lowered 2016 outlook reflects a diminished revenue recovery in the second half of the year as well as the upfront costs associated with our expense containment and restructuring initiatives. While we won't see the payback this year, these actions will enable us to permanently remove approximately $30 million of costs on a run-rate basis. We will rebuild off this leaner cost base into next year, manage to more optimal profit ratios and return to building the long-term value of our business."

Third Quarter and Year-to-Date Financial Results

Revenue for the third quarter of 2016 was $349.3 million, an increase of 6.3%, compared to $328.4 million in the third quarter of 2015.  The effect of foreign currency translation was negative 0.6%, the impact of net acquisitions was positive 4.3%, and the resulting organic revenue growth was 2.7%. Organic revenue growth for the period was favorably impacted by 30 basis points from increased billable pass-through costs incurred on client's behalf from certain of our partner firms acting as principal.

Net loss attributable to MDC Partners in the third quarter of 2016 was ($33.5) million compared to ($8.6) million in the third quarter of 2015, partially attributable to a non-cash charge on impairment of $29.6 million predominantly related to our experiential business.  Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the third quarter of 2016 was ($0.64) compared to ($0.15) per share in the third quarter of 2015.  Adjusted EBITDA for the third quarter of 2016 was $46.3 million, a decrease of 13.5% compared to $53.5 million in the third quarter of 2015.  Adjusted EBITDA Available for General Capital Purposes was $21.7 million in the third quarter of 2016, a decrease of 29.7%, compared to $30.9 million in the third quarter of 2015.

Revenue for the first nine months of 2016 was $995.3 million, an increase of 2.9%, compared to $967.2 million in the first nine months of 2015.  The effect of foreign currency translation was negative 0.8%, the impact of net acquisitions was positive 2.0%, and the resulting organic revenue growth was 1.7%. Organic revenue growth for the period was negatively impacted by 70 basis points from decreased billable pass-through costs incurred on client's behalf from certain of our partner firms acting as principal.

Net loss attributable to MDC Partners in the first nine months of 2016 was ($55.7) million compared to ($11.1) million in the first nine months of 2015, partially attributable to a non-cash charge on impairment of $29.6 million predominantly related to our experiential business.  Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the first nine months of 2016 was ($1.09) compared to ($0.10) per share in the first nine months of 2015.  Adjusted EBITDA for the first nine months of 2016 was $121.0 million, a decrease of 8.4%, compared to $132.1 million in the first nine months of 2015.  Adjusted EBITDA Available for General Capital Purposes was $50.7 million in the first nine months of 2016, a decrease of 26.4%, compared to $68.9 million in the first nine months of 2015.

Financial Guidance

Guidance for 2016 is revised as follows:

 





Prior


Revised


Implied



2015

Actuals


2016

Guidance


2016

Guidance


Year over Year

Change










Revenue


 $1.326 billion 


 $1.390 - $1.420 billion 


 $1.365 - $1.375 billion 


 +2.9% to +3.7% 










Adjusted EBITDA


 $197.7 million 


 $205 - $215 million 


 $170 - $180 million 


 -14.0% to -8.9% 

Implied Adjusted EBITDA Margin


14.9%


14.7% to 15.1%


12.4% to 13.2%


-250 to -170 basis points










Adjusted EBITDA Available for

General Capital Purposes


 $113.4 million 


 $110 - $120 million 


 $75 - $85 million 


 -33.9% to -25.0% 



















 

Advisor hired to assist in evaluating the Company's financial and capital structure strategy

The Company also announced today that it engaged LionTree Advisors to assist in evaluating the Company's financial and capital structure strategy. The Company's leadership team and Board of Directors reiterate their commitment to solidifying the balance sheet and capital structure in its continued efforts to enhance shareholder value.

Conference Call

Management will host a conference call on Thursday, November 3, 2016, at 4:30 p.m. (ET) to discuss 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 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 10, 2016, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10095565), or by visiting our website at www.mdc-partners.com.

About MDC Partners Inc.

MDC Partners is one of the fastest-growing and most influential marketing and communications networks in the world.  Its 50+ advertising, public relations, branding, digital, social and event marketing agencies are responsible for some of the most memorable and engaging campaigns for the world's most respected brands.  As "The Place Where Great Talent Lives," MDC Partners is known for its unique partnership model, empowering the most entrepreneurial and innovative talent to drive competitive advantage and business growth for clients.  By leveraging technology, data analytics, insights, and strategic consulting solutions, MDC Partners drives measurable results and optimizes return on marketing investment for over 1,700 clients worldwide.  For more information about MDC Partners and its partner firms, visit our website at www.mdc-partners.com and follow us on Twitter at http://www.twitter.com/mdcpartners.

Non-GAAP Financial Measures

In addition to its reported results, MDC Partners has included in this earnings release certain financial results that the Securities and Exchange Commission defines as "non-GAAP financial measures."  Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures for the three and nine months ended September 30, 2016, and 2015, include the following:

(1) Organic Revenue: "Organic revenue growth" and "organic revenue decline" refer to the positive or negative results, respectively, of the following calculation: (i) the change in revenue during the relevant time period, less (ii) for each business acquired in the current year, the incremental impact on revenue for the comparable period prior to the Company's ownership of such acquired business, less revenue from each business acquired by the Company in the previous year through the twelve month anniversary of the Company's ownership, plus (iii) for each business disposed of in the current year, 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 Company's disposition, less (iv) foreign exchange impacts.

(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, acquisition deal costs, deferred acquisition consideration adjustments, distributions from non-consolidated affiliates, and other items.

(4) Adjusted EBITDA Available for General Capital Purposes: Adjusted EBITDA Available for General Capital Purposes is a non-GAAP measure that represents Adjusted EBITDA less net income attributable to the noncontrolling interests, capital expenditures net of landlord reimbursements, cash taxes, and cash interest, net & other.

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. The Company's representatives may also make forward-looking statements orally from time to time. Statements in this press release that are not historical facts, including statements about the Company's beliefs and expectations, earnings guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements.  These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Forward-looking statements involve inherent risks and uncertainties.  A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:

  • risks associated with the SEC's ongoing investigation and the related class action litigation claims;
  • risks associated with severe effects of international, national and regional economic downturn;
  • the Company's ability to attract new clients and retain existing clients;
  • the spending patterns and financial success of the Company's clients;
  • the Company's ability to retain and attract key employees;
  • the Company's ability to remain in compliance with its debt agreements and the Company's ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
  • the successful completion and integration of acquisitions which complement and expand the Company's business capabilities; and
  • foreign currency fluctuations.

The Company's business strategy includes ongoing efforts to engage in acquisitions of ownership interests in entities in the marketing communications services industry.  The Company intends to finance these acquisitions by using available cash from operations, from borrowings under its credit facility and through incurrence of bridge or other debt financing, any of which may increase the Company's leverage ratios, or by issuing equity, which may have a dilutive impact on existing shareholders proportionate ownership.  At any given time the Company may be engaged in a number of discussions that may result in one or more acquisitions.  These opportunities require confidentiality and may involve negotiations that require quick responses by the Company.  Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transactions, the announcement of any such transaction may lead to increased volatility in the trading price of the Company's securities. 

Investors should carefully consider these risk factors and the additional risk factors outlined in more detail in the Annual Report on Form 10-K under the caption "Risk Factors" and in the Company's other SEC filings.

 

SCHEDULE 1








MDC PARTNERS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(US$ in 000s, except share and per share amounts)










Three Months Ended September 30,


Nine Months Ended September 30, 



2016

2015


2016

2015















Revenue


$                    349,254

$                    328,415


$                    995,343

$                    967,243








Operating Expenses:







Cost of services sold


235,659

212,925


675,940

648,386

Office and general expenses


83,303

78,786


233,840

206,169

Depreciation and amortization


11,412

13,086


34,068

39,393

Goodwill impairment


29,631

-


29,631

-



360,005

304,797


973,479

893,948








Operating profit (loss)


(10,751)

23,618


21,864

73,295








Other Income (Expense):







Other, net


(6,008)

(15,623)


9,530

(29,315)

Interest expense and finance charges


(16,540)

(14,638)


(49,289)

(43,022)

Loss on redemption of notes


-

-


(33,298)

-

Interest income


218

114


599

338








Income (loss) from continuing operations before income taxes






  and equity in earnings of non-consolidated affiliates


(33,081)

(6,529)


(50,594)

1,296








Income tax expense (benefit)


(540)

(1,191)


1,893

(566)








Income (loss) from continuing operations before equity in







  earnings of non-consolidated affiliates


(32,541)

(5,338)


(52,487)

1,862

Equity in earnings of non-consolidated affiliates


70

172


9

627








Income (loss) from continuing operations


(32,471)

(5,166)


(52,478)

2,489

Loss from discontinued operations attributable to







  MDC Partners Inc., net of taxes


-

(1,316)


-

(6,281)

Net loss


(32,471)

(6,482)


(52,478)

(3,792)

Net income attributable to the noncontrolling interests


(1,059)

(2,122)


(3,172)

(7,343)

Net loss attributable to MDC Partners Inc.


$                    (33,530)

$                      (8,604)


$                    (55,650)

$                    (11,135)








Loss Per Common Share:







Basic and Diluted:







Loss from continuing operations attributable to







   MDC Partners Inc. common shareholders


$                       (0.64)

$                       (0.15)


$                       (1.09)

$                       (0.10)

Discontinued operations attributable to MDC







   Partners Inc. common shareholders


-

(0.02)


-

(0.12)

Net loss attributable to MDC Partners Inc.







   common shareholders


$                       (0.64)

$                       (0.17)


$                       (1.09)

$                       (0.22)








Weighted Average Number of Common Shares Outstanding:







Basic and Diluted


52,244,819

49,915,807


50,861,890

49,843,980

 

 

SCHEDULE 2


MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)












For the Three Months Ended September 30, 2016



































Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total













































Revenue


$              349,254


$              289,988


$                59,266


$                        -


$              349,254


































Net loss attributable to MDC Partners Inc.










$               (33,530)

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling interests










1,059

   Equity in earnings of non-consolidated affiliates










(70)

   Income tax benefit










(540)

   Interest expense and finance charges, net










16,322

   Other, net










6,008

Operating profit (loss)


$                 (3,700)


$                20,834


$               (24,534)


$                 (7,051)


$               (10,751)

margin


-1.1%


7.2%


-41.4%




-3.1%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


11,053


10,070


983


359


11,412

Goodwill impairment


29,631


-


29,631


-


29,631

Stock-based compensation


4,623


3,337


1,286


605


5,228

Acquisition deal costs


639


639


-


167


806

Deferred acquisition consideration adjustments


11,152


9,918


1,234


-


11,152

Distributions from non-consolidated affiliates **


-


-


-


1,247


1,247

Other items, net ***


-


-


-


(2,463)


(2,463)












Adjusted EBITDA *


$                53,398


$                44,798


$                  8,600


$                 (7,136)


$                46,262

margin


15.3%


15.4%


14.5%




13.2%







































*

Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred
acquisition consideration adjustments, distributions from non-consolidated affiliates, and other items.

**

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).

***

Other items, net includes (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses, (ii) legal fees and related expenses, net of insurance proceeds, relating to the ongoing SEC investigation and related class action litigation claims, (iii) one-time charge for the balance of prior cash bonus award amounts paid to the former CEO and CAO that will not be recovered, and (iv) write-off of certain assets related to the CEO and CAO termination.  See Schedule 9 for reconciliation of amounts.

 

 

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, 2015































Advertising and


Reportable








Communications


Segment


All Other


Corporate


Total









































Revenue

$              328,415


$              271,882


$                56,533


$                        -


$              328,415































Net loss attributable to MDC Partners Inc.









$                 (8,604)

Adjustments to reconcile to Operating profit (loss):










   Net income attributable to the noncontrolling interests









2,122

   Loss from discontinued operations attributable to 










MDC Partners Inc., net of taxes









1,316

   Equity in earnings of non-consolidated affiliates









(172)

   Income tax benefit









(1,191)

   Interest expense and finance charges, net









14,524

   Other, net









15,623

Operating profit (loss)

$                43,419


$                39,418


$                  4,001


$               (19,801)


$                23,618

margin

13.2%


14.5%


7.1%




7.2%











Additional adjustments to reconcile to Adjusted EBITDA:










Depreciation and amortization

12,749


8,095


4,654


337


13,086

Stock-based compensation

2,660


1,857


803


606


3,266

Acquisition deal costs

108


87


21


620


728

Deferred acquisition consideration adjustments

4,927


3,669


1,258


-


4,927

Distributions from non-consolidated affiliates **

67


30


37


30


97

Other items, net ***

-


-


-


7,751


7,751











Adjusted EBITDA *

$                63,930


$                53,156


$                10,774


$               (10,457)


$                53,473

margin

19.5%


19.6%


19.1%




16.3%






































*

Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, distributions from non-consolidated affiliates, and other items.

**

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).

***

Other items, net includes (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses, (ii) legal fees and related expenses, net of insurance proceeds, relating to the ongoing SEC investigation and related class action litigation claims, (iii) one-time charge for the balance of prior cash bonus award amounts paid to the former CEO and CAO that will not be recovered, and (iv) write-off of certain assets related to the CEO and CAO termination. See Schedule 9 for reconciliation of amounts.

 

 

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, 2016



































Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total













































Revenue


$              995,343


$              822,762


$              172,581


$                        -


$              995,343


































Net loss attributable to MDC Partners Inc.










$               (55,650)

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling interests










3,172

   Equity in earnings of non-consolidated affiliates










(9)

   Income tax expense










1,893

   Interest expense and finance charges, net










48,690

   Loss on redemption of notes










33,298

   Other, net










(9,530)

Operating profit (loss)


$                54,846


$                68,136


$               (13,290)


$               (32,982)


$                21,864

margin


5.5%


8.3%


-7.7%




2.2%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


32,802


24,462


8,340


1,266


34,068

Goodwill impairment


29,631


-


29,631


-


29,631

Stock-based compensation


13,384


11,067


2,317


2,059


15,443

Acquisition deal costs


1,106


1,106


-


1,160


2,266

Deferred acquisition consideration adjustments


17,180


15,453


1,727


-


17,180

Distributions from non-consolidated affiliates **


-


-


-


1,247


1,247

Other items, net ***


-


-


-


(725)


(725)












Adjusted EBITDA *


$              148,949


$              120,224


$                28,725


$               (27,975)


$              120,974

margin


15.0%


14.6%


16.6%




12.2%







































*

Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, distributions from non-consolidated affiliates, and other items.

**

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). 

***

Other items, net includes (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses, (ii) legal fees and related expenses, net of insurance proceeds,
relating to the ongoing SEC investigation and related class action litigation claims, (iii) one-time charge for the balance of prior cash bonus award amounts paid to the former CEO and
CAO that will not be recovered, and (iv) write-off of certain assets related to the CEO and CAO termination. See Schedule 9 for reconciliation of amounts.

 

 

SCHEDULE 5












MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)












For the Nine Months Ended September 30, 2015



































Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total













































Revenue


$              967,243


$              804,399


$              162,844


$                        -


$              967,243


































Net loss attributable to MDC Partners Inc.










$               (11,135)

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling 

   interests










7,343

   Loss from discontinued operations attributable to 
   MDC Partners Inc., net of taxes










6,281

   Equity in earnings of non-consolidated affiliates










(627)

   Income tax benefit










(566)

   Interest expense and finance charges, net










42,684

   Other, net










29,315

Operating profit (loss)


$              123,804


$              107,232


$                16,572


$               (50,509)


$                73,295

margin


12.8%


13.3%


10.2%




7.6%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


38,157


24,486


13,671


1,236


39,393

Stock-based compensation


11,023


7,763


3,260


2,002


13,025

Acquisition deal costs


647


587


60


1,797


2,444

Deferred acquisition consideration adjustments


(5,566)


(2,290)


(3,276)


-


(5,566)

Distributions from non-consolidated affiliates **


577


334


243


150


727

Other items, net ***


-


-


-


8,795


8,795












Adjusted EBITDA *


$              168,642


$              138,112


$                30,530


$               (36,529)


$              132,113

margin


17.4%


17.2%


18.7%




13.7%













*

Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, distributions from non-consolidated affiliates, and other items.

**

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).

***

Other items, net includes (i) one-time gains related to the former CEO's repayment to the Company for certain perquisites and expenses, (ii) legal fees and related expenses, net of insurance proceeds, relating to the ongoing SEC investigation and related class action litigation claims, (iii) one-time charge for the balance of prior cash bonus award amounts paid to the former CEO and CAO that will not be recovered, and (iv) write-off of certain assets related to the CEO and CAO termination.  See Schedule 9 for reconciliation of amounts.

 

 

SCHEDULE 6







MDC PARTNERS INC.

UNAUDITED ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES

(US$ in 000s)














Three Months Ended September 30,


Nine Months Ended September 30, 


2016

2015


2016

2015

Adjusted EBITDA (1)

$                     46,262

$                     53,473


$                    120,974

$                    132,113

Net income attributable to the noncontrolling interests

(1,059)

(2,122)


(3,172)

(7,343)

Capital expenditures, net (2)

(6,027)

(6,902)


(18,604)

(16,014)

Cash taxes

(1,991)

(685)


(2,798)

(1,400)

Cash interest, net & other (3)

(15,470)

(12,879)


(45,689)

(38,423)







Adjusted EBITDA Available for General Capital Purposes (4)

$                     21,715

$                     30,885


$                     50,711

$                     68,933

























(1) Adjusted EBITDA is a non GAAP measure.  See schedules 2 through 5 for a reconciliation of Net income (loss) to Adjusted EBITDA.  

(2) Capital expenditures, net represents capital expenditures net of landlord reimbursements.  See Schedule 9 for reconciliation of amounts.

(3) Cash interest, net & other represents the cash interest paid for our borrowings, less interest income, adjusted for the quarterly accrual of cash interest under our Senior Notes.  See Schedule 9 for reconciliation of amounts.

(4) Adjusted EBITDA Available for General Capital Purposes is a non-GAAP measure, and represents funds available for repayment of debt, acquisitions, deferred acquisition consideration, dividends, and other general corporate initiatives.

 

 

SCHEDULE 7






MDC PARTNERS INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(US$ in 000s)













September 30,


December 31,



2016


2015











Assets





Current Assets:





Cash and cash equivalents


$           21,735


$           61,458

Cash held in trusts


5,268


5,122

Accounts receivable, net


419,355


361,044

Expenditures billable to clients


40,615


44,012

Other current assets


53,872


37,109

Total Current Assets


540,845


508,745






Fixed assets, net


73,868


63,557

Investment in non-consolidated affiliates


5,159


6,263

Goodwill


868,483


870,301

Other intangible assets, net


92,975


72,382

Deferred tax assets


21,774


15,367

Other assets


39,208


41,010

Total Assets


$       1,642,312


$       1,577,625











Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit





Current Liabilities:





Accounts payable


$         331,330


$         359,568

Trust liability


5,268


5,122

Accruals and other liabilities


255,282


297,964

Advance billings


148,352


119,100

Current portion of long-term debt


260


470

Current portion of deferred acquisition consideration


119,506


130,400

Total Current Liabilities


859,998


912,624






Long-term debt, less current portion


951,187


728,413

Long-term portion of deferred acquisition consideration


123,591


216,704

Other liabilities


52,293


44,905

Deferred tax liabilities


106,950


92,581

Total Liabilities


2,094,019


1,995,227






Redeemable Noncontrolling Interests


60,174


69,471






Shareholders' Deficit





Common shares


315,369


269,842

Shares to be issued


2,360


-

Charges in excess of capital


(310,273)


(315,261)

Accumulated deficit


(582,640)


(526,990)

Accumulated other comprehensive income (loss)


(3,406)


6,257

MDC Partners Inc. Shareholders' Deficit


(578,590)


(566,152)

Noncontrolling Interests


66,709


79,079

Total Shareholders' Deficit


(511,881)


(487,073)






Total Liabilities, Redeemable Noncontrolling 





   Interests and Shareholders' Deficit


$       1,642,312


$       1,577,625

 

 

SCHEDULE 8





MDC PARTNERS INC.

UNAUDITED SUMMARY CASH FLOW DATA

(US$ in 000s)











Nine Months Ended September 30, 



2016

2015





Cash flows used in continuing operating activities


$                  (58,919)

$                    (9,147)

Discontinued operations


-

(1,342)

Net cash used in operating activities


(58,919)

(10,489)





Cash flows used in continuing investing activities


(14,663)

(42,723)

Discontinued operations


-

17,101

Net cash used in investing activities


(14,663)

(25,622)





Cash flows provided by (used in) continuing financing activities


32,663

(63,633)

  Discontinued operations


-

(40)

Net cash provided by (used in) financing activities


32,663

(63,673)





Effect of exchange rate changes on cash and cash equivalents


1,196

2,194





Net decrease in cash and cash equivalents


$                  (39,723)

$                  (97,590)

 

 


SCHEDULE 9












MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF COMPONENTS OF NON-GAAP MEASURES

(US$ in 000s)
























2015


2016


Q1

Q2

Q3

Q4

FY


Q1

Q2

Q3

YTD

OTHER ITEMS, NET











SEC investigation and class action litigation expenses

$     5,762

$     3,882

$     2,722

$     1,340

$       13,706


$     1,486

$     1,359

$        767

$     3,612

D&O insurance proceeds

-

-

-

(1,000)

(1,000)


-

(1,107)

(3,230)

(4,337)

CEO repayment for certain perquisites and expenses

-

(8,600)

(1,877)

(808)

(11,285)


-

-

-

-

CEO and CAO termination related expenses

-

-

6,906

-

6,906


-

-

-

-

Total other items, net

$     5,762

$    (4,718)

$     7,751

$       (468)

$         8,327


$     1,486

$        252

$    (2,463)

$       (725)
























2015


2016


Q1

Q2

Q3

Q4

FY


Q1

Q2

Q3

YTD

CAPITAL EXPENDITURES, NET











Capital expenditures

$    (5,656)

$    (3,848)

$    (8,161)

$    (5,910)

$      (23,575)


$    (5,539)

$    (7,909)

$    (6,275)

$  (19,723)

Landlord reimbursements

356

36

1,259

805

2,456


-

871

248

1,119

Total capital expenditures, net

$    (5,300)

$    (3,812)

$    (6,902)

$    (5,105)

$      (21,119)


$    (5,539)

$    (7,038)

$    (6,027)

$  (18,604)
























2015


2016


Q1

Q2

Q3

Q4

FY


Q1

Q2

Q3

YTD

CASH INTEREST, NET & OTHER











Cash interest paid

$       (367)

$  (25,401)

$       (590)

$  (26,308)

$      (52,666)


$  (25,703)

$    (1,212)

$    (1,063)

$  (27,978)

Bond interest accrual adjustment

(12,403)

12,403

(12,403)

12,403

-


11,995

(15,680)

(14,625)

(18,310)

Adjusted cash interest paid

(12,770)

(12,998)

(12,993)

(13,905)

(52,666)


(13,708)

(16,892)

(15,688)

(46,288)

Interest income

119

105

114

129

467


178

203

218

599

Other

-

-

-

-

-


-

-

-

-

Total cash interest, net & other

$  (12,651)

$  (12,893)

$  (12,879)

$  (13,776)

$      (52,199)


$  (13,530)

$  (16,689)

$  (15,470)

$  (45,689)

 

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

 

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

 

SOURCE MDC Partners Inc.


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