MDC Partners Inc. Reports Results for the Three and Twelve Months Ended December 31, 2016

NEW YORK, Feb. 27, 2017 /CNW/ --

FOURTH QUARTER HIGHLIGHTS:

  • Reported revenue increased 8.8% to $390.4 million
  • Organic revenue growth of 3.8%
  • Net income attributable to MDC Partners of $7.7 million vs a loss of ($26.2) million last year, including a non-cash impairment charge of $18.9 million related to one of the strategic communications businesses
  • Adjusted EBITDA decreased 15.0% to $55.7 million, with margins of 14.3% (See Schedules 2 and 3)
  • Net New Business wins totaled $33.2 million in the fourth quarter

FULL YEAR HIGHLIGHTS:

  • Reported revenue increased 4.5% to $1.39 billion
  • Organic revenue growth of 2.3%
  • Net loss attributable to MDC Partners of ($47.9) million vs ($37.4) million last year, including a non-cash impairment charge of $48.5 million, predominantly related to one of the experiential businesses and one of the strategic communications businesses
  • Adjusted EBITDA decreased 10.6% to $176.7 million, with margins of 12.8% (See Schedules 4 and 5)
  • Net New Business wins totaled $91.2 million for the full year

(NASDAQ: MDCA) – MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and twelve months ended December 31, 2016.

Scott Kauffman, Chairman and Chief Executive Officer of MDC Partners, said, "Although 2016 was challenging in many respects, we finished the year on solid footing and with improved top line momentum across our portfolio of world-class agencies.  The recently-announced Goldman Sachs equity investment is exactly the right transaction for us, ensuring that we have the financial flexibility required for our disciplined approach to growth. Combined with the operational initiatives we implemented last year, we are well positioned for 2017 and beyond."

David Doft, Chief Financial Officer of MDC Partners, said, "I am pleased with our fourth quarter results and the better operating trends are reflected in our 2017 financial guidance, which calls for approximately 4% organic revenue growth and Adjusted EBITDA margin expansion of approximately 100 basis points. This is driven by renewed overall success in new business activity including $33 million of net wins in the fourth quarter, strong existing client relationships, and a leaner cost structure, which should enable better operating leverage as the business accelerates. In regard to our strengthened balance sheet, we are confident that the Goldman Sachs financing will create the foundation to build long-term value for all of our stakeholders."

Fourth Quarter and Full Year 2016 Financial Results

Revenue for the fourth quarter of 2016 was $390.4 million, an increase of 8.8%, compared to $359.0 million in the fourth quarter of 2015. The effect of foreign exchange was negative 1.2%, the impact of Non-GAAP acquisitions (dispositions), net was positive 6.2%, and the resulting organic revenue growth was 3.8%. Organic revenue growth for the period was favorably impacted by 75 basis points from increased billable pass-through costs incurred on client's behalf from certain of our partner firms acting as principal.

Net income attributable to MDC Partners in the fourth quarter of 2016 was $7.7 million compared to a loss of ($26.2) million in the fourth quarter of 2015, partially attributable to a non-cash charge on impairment of $18.9 million related to one of the strategic communications businesses. Diluted income per share from continuing operations attributable to MDC Partners common shareholders for the fourth quarter of 2016 was $0.15 compared to a loss of ($0.52) per share in the fourth quarter of 2015. Adjusted EBITDA for the fourth quarter of 2016 was $55.7 million, a decrease of 15.0% compared to $65.6 million in the fourth quarter of 2015. Adjusted EBITDA Available for General Capital Purposes was $31.9 million in the fourth quarter of 2016, a decrease of 28.4%, compared to $44.5 million in the fourth quarter of 2015.

Revenue for the full year 2016 was $1.39 billion, an increase of 4.5%, compared to $1.33 billion for the full year 2015. The effect of foreign exchange was negative 0.9%, the impact of Non-GAAP acquisitions (dispositions), net was positive 3.2%, and the resulting organic revenue growth was 2.3%. Organic revenue growth for the period was negatively impacted by approximately 30 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 for the year was ($47.9) million compared to ($37.4) million in 2015, partially attributable to a non-cash charge on impairment of $48.5 million predominantly related to one of our experiential businesses and one of the strategic communications businesses. Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the year was ($0.93) compared to ($0.62) per share in 2015.  Adjusted EBITDA for the year was $176.7 million, a decrease of 10.6%, compared to $197.7 million in 2015.  Adjusted EBITDA Available for General Capital Purposes was $82.6 million for the year, a decrease of 27.2%, compared to $113.4 million in in 2015.

Financial Outlook

Guidance for 2017 is established as follows:


2017 Guidance

Organic Revenue

 approximately 4% growth 

Adjusted EBITDA Margin

 approximately 100 basis points increase 

* The Company has excluded a quantitative reconciliation with respect to the Company's 2017 guidance under the "unreasonable efforts" exception in item 10(e)(1)(i)(B) of Regulation S-K.

Conference Call

Management will host a conference call on Monday, February 27, 2017, at 8:30 a.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), March 6, 2017, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10101321), 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 twelve months ended December 31, 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 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, (b) 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, (c) 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 (d) 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, 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 (a) net income attributable to the noncontrolling interests, (b) capital expenditures net of landlord reimbursements, (c) cash taxes, and (d) 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:

  • successful completion of the convertible preference financing with Goldman Sachs on the anticipated terms and conditions;
  • risks associated with the one Canadian securities class action litigation claim;
  • 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.

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

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

SCHEDULE 1












MDC PARTNERS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

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















Three Months Ended December 31,



Twelve Months Ended December 31, 




2016


2015



2016


2015























Revenue


$

390,442

$

359,013


$

1,385,785

$

1,326,256












Operating Expenses:











Cost of services sold



260,193


231,330



936,133


879,716

Office and general expenses



72,411


116,038



306,251


322,207

Depreciation and amortization



12,378


12,830



46,446


52,223

Goodwill impairment



18,893


-



48,524


-




363,875


360,198



1,337,354


1,254,146












Operating profit (loss)



26,567


(1,185)



48,431


72,110












Other Income (Expense):











Other, net



(9,329)


(2,775)



201


(32,090)

Interest expense and finance charges



(16,569)


(14,881)



(65,858)


(57,903)

Loss on redemption of notes



-


-



(33,298)


-

Interest income



209


129



808


467












Income (loss) from continuing operations before income taxes










  and equity in earnings of non-consolidated affiliates



878


(18,712)



(49,716)


(17,416)












Income tax (benefit) expense



(9,194)


6,230



(7,301)


5,664












Income (loss) from continuing operations before equity in











  earnings of non-consolidated affiliates



10,072


(24,942)



(42,415)


(23,080)

Equity in earnings (losses) of non-consolidated affiliates



(318)


431



(309)


1,058












Income (loss) from continuing operations



9,754


(24,511)



(42,724)


(22,022)

Loss from discontinued operations attributable to











  MDC Partners Inc., net of taxes



-


-



-


(6,281)

Net income (loss)



9,754


(24,511)



(42,724)


(28,303)

Net income attributable to the noncontrolling interests



(2,046)


(1,711)



(5,218)


(9,054)

Net income (loss) attributable to MDC Partners Inc.


$

7,708

$

(26,222)


$

(47,942)


$(37,357)












Income (Loss) Per Common Share:











Basic:











Income (loss) from continuing operations attributable to











   MDC Partners Inc. common shareholders


$

0.15

$

(0.52)


$

(0.93)


$(0.62)

Discontinued operations attributable to MDC











   Partners Inc. common shareholders



-


-



-


(0.13)

Net income (loss) attributable to MDC Partners Inc.











   common shareholders


$

0.15

$

(0.52)


$

(0.93)

$

(0.75)























Diluted:











Income (loss) from continuing operations attributable to











   MDC Partners Inc. common shareholders


$

0.15

$

(0.52)



(0.93)

$

(0.62)

Discontinued operations attributable to MDC











   Partners Inc. common shareholders



-


-



-


(0.13)

Net income (loss) attributable to MDC Partners Inc.











common shareholders


$

0.15

$

(0.52)


$

(0.93)

$

(0.75)












Weighted Average Number of Common Shares Outstanding:











Basic



52,772,305


49,968,165



51,345,807


49,875,282

Diluted



52,849,553


49,968,165



51,345,807


49,875,282























 

 

SCHEDULE 2












MDC PARTNERS INC.

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)












For the Three Months Ended December 31, 2016



































Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total

Revenue

$

390,442

$

324,411

$

66,031

$

-

$

390,442












Net income attributable to MDC Partners Inc.









$

7,708

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling interests










2,046

   Equity in losses of non-consolidated affiliates










318

   Income tax benefit










(9,194)

   Interest expense and finance charges, net










16,360

   Other, net










9,329

Operating profit (loss)

$

37,703

$

46,237

$

(8,534)

$

(11,136)

$

26,567

margin


9.7%


14.3%


-12.9%




6.8%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


12,059


9,386


2,673


319


12,378

Goodwill impairment


18,893


-


18,893


-


18,893

Stock-based compensation


5,094


3,076


2,018


466


5,560

Acquisition deal costs


31


31


-


343


374

Deferred acquisition consideration adjustments


(9,211)


(8,240)


(971)


-


(9,211)

Distributions from non-consolidated affiliates **


-


-


-


802


802

Other items, net ***


-


-


-


371


371












Adjusted EBITDA *

$

64,569

$

50,490

$

14,079

$

(8,835)

$

55,734

margin


16.5%


15.6%


21.3%




14.3%
























* 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 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, (iv) write-off of certain assets related to the CEO and CAO termination, and (v) a one-time penalty relating to the final settlement of the SEC investigation.  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 December 31, 2015



































Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total












Revenue

$

359,013

$

297,276

$

61,737

$

-

$

359,013












Net loss attributable to MDC Partners Inc.









$

(26,222)

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling interests










1,711

   Loss from discontinued operations attributable to 











MDC Partners Inc., net of taxes










-

   Equity in earnings of non-consolidated affiliates










(431)

   Income tax expense










6,230

   Interest expense and finance charges, net










14,752

   Other, net










2,775

Operating profit (loss)

$

13,478

$

28,356

$

(14,878)

$

(14,663)

$

(1,185)

margin


3.8%


9.5%


-24.1%




-0.3%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


12,292


8,015


4,277


538


12,830

Stock-based compensation


4,033


2,468


1,565


738


4,771

Acquisition deal costs


58


14


44


411


469

Deferred acquisition consideration adjustments


41,913


20,265


21,648


-


41,913

Distributions from non-consolidated affiliates **


102


68


34


7,122


7,224

Other items, net ***


-


-


-


(468)


(468)












Adjusted EBITDA *

$

71,876

$

59,186

$

12,690

$

(6,322)

$

65,554

margin


20.0%


19.9%


20.6%




18.3%


































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

** 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 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, (iv) write-off of certain assets related to the CEO and CAO termination, and (v) a one-time penalty relating to the final settlement of the SEC investigation.  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 Twelve Months Ended December 31, 2016
























Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total

Revenue

$

1,385,785

$

1,147,173

$

238,612

$

-

$

1,385,785












Net loss attributable to MDC Partners Inc.









$

(47,942)

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling interests










5,218

   Equity in losses of non-consolidated affiliates










309

   Income tax benefit










(7,301)

   Interest expense and finance charges, net










65,050

   Loss on redemption of notes










33,298

   Other, net










(201)

Operating profit (loss)

$

92,549

$

114,373

$

(21,824)

$

(44,118)

$

48,431

margin


6.7%


10.0%


-9.1%




3.5%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


44,861


33,848


11,013


1,585


46,446

Goodwill impairment


48,524


-


48,524


-


48,524

Stock-based compensation


18,478


14,143


4,335


2,525


21,003

Acquisition deal costs


1,137


1,137


-


1,503


2,640

Deferred acquisition consideration adjustments


7,969


7,213


756


-


7,969

Distributions from non-consolidated affiliates **


-


-


-


2,049


2,049

Other items, net ***


-


-


-


(354)


(354)












Adjusted EBITDA *

$

213,518

$

170,714

$

42,804

$

(36,810)

$

176,708

margin


15.4%


14.9%


17.9%




12.8%












* 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 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, (iv) write-off of certain assets related to the CEO and CAO termination, and (v) a one-time penalty relating to the final settlement of the SEC investigation.  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 Twelve Months Ended December 31, 2015
























Advertising and


Reportable









Communications


Segment


All Other


Corporate


Total












Revenue

$

1,326,256

$

1,101,675

$

224,581

$

-

$

1,326,256












Net loss attributable to MDC Partners Inc.









$

(37,357)

Adjustments to reconcile to Operating profit (loss):











   Net income attributable to the noncontrolling interests










9,054

   Loss from discontinued operations attributable to 











MDC Partners Inc., net of taxes










6,281

   Equity in earnings of non-consolidated affiliates










(1,058)

   Income tax expense










5,664

   Interest expense and finance charges, net










57,436

   Other, net










32,090

Operating profit (loss)

$

137,282

$

135,588

$

1,694

$

(65,172)

$

72,110

margin


10.4%


12.3%


0.8%




5.4%












Additional adjustments to reconcile to Adjusted EBITDA:











Depreciation and amortization


50,449


32,501


17,948


1,774


52,223

Stock-based compensation


15,056


10,231


4,825


2,740


17,796

Acquisition deal costs


704


600


104


2,208


2,912

Deferred acquisition consideration adjustments


36,347


17,975


18,372


-


36,347

Distributions from non-consolidated affiliates **


679


402


277


7,272


7,951

Other items, net ***


-


-


-


8,327


8,327












Adjusted EBITDA *

$

240,517

$

197,297

$

43,220

$

(42,851)

$

197,666

margin


18.1%


17.9%


19.2%




14.9%























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

** 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 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, (iv) write-off of certain assets related to the CEO and CAO termination, and (v) a one-time penalty relating to the final settlement of the SEC investigation.  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 December 31,


Twelve Months Ended December 31, 



2016


2015


2016


2015

Adjusted EBITDA (1)

$

55,734

$

65,554

$

176,708

$

197,666

Net income attributable to the noncontrolling interests


(2,046)


(1,711)


(5,218)


(9,054)

Capital expenditures, net (2)


(6,058)


(5,105)


(24,662)


(21,119)

Cash taxes


(97)


(487)


(2,895)


(1,887)

Cash interest, net & other (3)


(15,683)


(13,776)


(61,372)


(52,199)

Adjusted EBITDA Available for General Capital Purposes (4)

$

31,850

$

44,475

$

82,561

$

113,407










(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)













December 31,


December 31,



2016


2015






Assets





Current Assets:





Cash and cash equivalents

$

27,921

$

61,458

Cash held in trusts


5,341


5,122

Accounts receivable, net


388,340


361,044

Expenditures billable to clients


33,118


44,012

Other current assets


34,862


22,728

Total Current Assets


489,582


494,364






Fixed assets, net


78,377


63,557

Investment in non-consolidated affiliates


4,745


6,263

Goodwill


844,759


870,301

Other intangible assets, net


85,071


72,382

Deferred tax assets


41,793


29,748

Other assets


33,051


41,010

Total Assets

$

1,577,378

$

1,577,625











Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit





Current Liabilities:





Accounts payable

$

251,456

$

359,568

Trust liability


5,341


5,122

Accruals and other liabilities


303,581


297,701

Advance billings


133,925


119,100

Current portion of long-term debt


228


470

Current portion of deferred acquisition consideration


108,290


130,400

Total Current Liabilities


802,821


912,361






Long-term debt, less current portion


936,208


728,413

Long-term portion of deferred acquisition consideration


121,274


216,704

Other liabilities


56,012


44,905

Deferred tax liabilities


103,443


92,844

Total Liabilities


2,019,758


1,995,227






Redeemable Noncontrolling Interests


60,180


69,471






Shareholders' Deficit





Common shares


317,784


269,842

Shares to be issued


2,360


-

Charges in excess of capital


(311,581)


(315,261)

Accumulated deficit


(574,932)


(526,990)

Accumulated other comprehensive income (loss)


(1,824)


6,257

MDC Partners Inc. Shareholders' Deficit


(568,193)


(566,152)

Noncontrolling Interests


65,633


79,079

Total Shareholders' Deficit


(502,560)


(487,073)






Total Liabilities, Redeemable Noncontrolling 





   Interests and Shareholders' Deficit

$

1,577,378

$

1,577,625






 

SCHEDULE 8






MDC PARTNERS INC.

UNAUDITED SUMMARY CASH FLOW DATA

(US$ in 000s)













Twelve Months Ended December 31, 



2016


2015

Cash flows provided by continuing operating activities

$

5,424

$

164,147

Discontinued operations


-


(1,342)

Net cash provided by operating activities


5,424


162,805






Cash flows used in continuing investing activities


(25,196)


(46,994)

Discontinued operations


-


17,101

Net cash used in investing activities


(25,196)


(29,893)






Cash flows used in continuing financing activities


(15,893)


(189,980)

  Discontinued operations


-


(40)

Net cash used in financing activities


(15,893)


(190,020)






Effect of exchange rate changes on cash and cash equivalents


2,128


5,218






Net decrease in cash and cash equivalents

$

(33,537)

$

(51,890)






 

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


Q4


FY

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

$

454

$

4,066

SEC final settlement payment


-


-


-


-


-



-


-


-


1,500


1,500

D&O insurance proceeds


-


-


-


(1,000)


(1,000)



-


(1,107)


(3,230)


(1,583)


(5,920)

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)

$

371

$

(354)















































2015


2016



Q1


Q2


Q3


Q4


FY



Q1


Q2


Q3


Q4


FY

CAPITAL EXPENDITURES, NET






















Capital expenditures

$

(5,656)

$

(3,848)

$

(8,161)

$

(5,910)

$

(23,575)


$

(5,539)

$

(7,909)

$

(6,275)

$

(9,709)

$

(29,432)

Landlord reimbursements


356


36


1,259


805


2,456



-


871


248


3,651


4,770

Total capital expenditures, net

$

(5,300)

$

(3,812)

$

(6,902)

$

(5,105)

$

(21,119)


$

(5,539)

$

(7,038)

$

(6,027)

$

(6,058)

$

(24,662)















































2015


2016



Q1


Q2


Q3


Q4


FY



Q1


Q2


Q3


Q4


FY

CASH INTEREST, NET & OTHER






















Cash interest paid

$

(367)

$

(25,401)

$

(590)

$

(26,308)

$

(52,666)


$

(25,703)

$

(1,212)

$

(1,063)

$

(36,692)

$

(64,670)

Bond interest accrual adjustment


(12,403)


12,403


(12,403)


12,403


-



11,995


(15,680)


(14,625)


20,800


2,490

Adjusted cash interest paid


(12,770)


(12,998)


(12,993)


(13,905)


(52,666)



(13,708)


(16,892)


(15,688)


(15,892)


(62,180)

Interest income


119


105


114


129


467



178


203


218


209


808

Other


-


-


-


-


-



-


-


-


-


-

Total cash interest, net & other

$

(12,651)

$

(12,893)

$

(12,879)

$

(13,776)

$

(52,199)


$

(13,530)

$

(16,689)

$

(15,470)

$

(15,683)

$

(61,372)














































2015


2016



Q1


Q2


Q3


Q4


FY



Q1


Q2


Q3


Q4


FY

MISCELLANEOUS OTHER DISCLOSURES






















Net income attributable to the noncontrolling interests

$

2,380

$

2,841

$

2,122

$

1,711

$

9,054


$

859

$

1,254

$

1,059

$

2,046

$

5,218

Cash taxes

$

540

$

175

$

685

$

487

$

1,887


$

143

$

664

$

1,991

$

97

$

2,895

Acquisition deal costs

$

874

$

842

$

728

$

469

$

2,912


$

553

$

907

$

806

$

374

$

2,640























Note: Actuals may not foot due to rounding






















 

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

 

SOURCE MDC Partners Inc.


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