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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