MDC Partners Inc. reports strong results for the three and nine months ended
September 30, 2009


    
    THIRD QUARTER HIGHLIGHTS:
    -  Revenues decreased to $134.6 million vs. $142.1 million in Q3 2008, a
       decrease of 5.3%
    -  Organic revenues declined 4.4% in Q3 2009
    -  MDC EBITDA increased to $17.7 million vs. $16.1 million in Q3 2008, an
       increase of 9.9%
    -  Free Cash Flow increased to $13.8 million vs. $12.1 million in Q3
       2008, an increase of 14.1%
    -  Free Cash Flow per Share increased to $0.48 vs. $0.44 in Q3 2008, an
       increase of 9.1%
    -  EBITDA margin increased to 14.8% vs. 12.3% in Q3 2008, an increase of
       250 basis points

    YEAR-TO-DATE HIGHLIGHTS:
    -  Revenues decreased to $396.2 million vs. $439.9 million in the first
       nine months of 2008, a decrease of 9.9%
    -  Organic revenues declined 7.9% in the first nine months of 2009
    -  MDC EBITDA increased to $46.5 million vs. $43.9 million in the first
       nine months of 2008, an increase of 5.9%
    -  Free Cash Flow increased to $34.5 million vs. $23.7 million in the
       first nine months of 2008, an increase of 45.6%
    -  Free Cash Flow per Share increased to $1.24 vs. $0.87 in the first
       nine months of 2008, an increase of 42.5%
    -  EBITDA margin increased to 12.6% vs. 11.5% in the first nine months of
       2008, an increase of 110 basis points
    
</pre>
<p/>
<p>NEW YORK, NY, <chron>Oct. 29</chron> /CNW/ - MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and nine months ended <chron>September 30, 2009</chron>.</p>
<p>Consolidated revenues for the third quarter of 2009 were <money>$134.6 million</money>, a decrease of 5.3% compared to <money>$142.1 million</money> in the third quarter of 2008. MDC EBITDA (as defined) for the third quarter of 2009 was <money>$17.7 million</money>, an increase of 9.9% compared to <money>$16.1 million</money> in the third quarter of 2008. Net income attributable to MDC Partners Inc. in the third quarter was minimal compared to <money>$3.3 million</money> in the third quarter of 2008. Diluted earnings per share attributable to MDC Partners Inc. common shareholders for the third quarter of 2009 was minimal compared with <money>$0.12</money> per share in the same period of 2008. Free cash flow (as defined) was <money>$13.8 million</money> in the third quarter of 2009, compared with <money>$12.1 million</money> in the third quarter of 2008.</p>
<p>Consolidated revenues for the first nine months of 2009 were <money>$396.2 million</money>, a decrease of 9.9% compared to <money>$439.9 million</money> in the first nine months of 2008. MDC EBITDA (as defined) for the first nine months of 2009 was <money>$46.5 million</money>, an increase of 5.9% compared to <money>$43.9 million</money> in the first nine months of 2008. Net income attributable to MDC Partners Inc. in the first nine months was <money>$0.1 million</money> compared to a loss of (<money>$4.6</money>) million in the first nine months of 2008. Diluted earnings per share attributable to MDC Partners Inc. common shareholders for the first nine months of 2009 was <money>$0.01</money> compared with a loss of (<money>$0.17</money>) per share in the same period of 2008. Free cash flow (as defined) was <money>$34.5 million</money> in the first nine months of 2009 compared with <money>$23.7 million</money> in the first nine months of 2008.</p>
<p>"We are thrilled with our best in class financial performance in the third quarter," said Miles S Nadal, Chairman and Chief Executive Officer of MDC Partners. "We are especially pleased with the organic growth of our core Strategic Marketing Services Group of positive 6.6%. This, coupled with our strong new business pipeline is expected to position the company for a strong 2010. Our success in leveraging our infrastructure and improving our efficiency and productivity, as well as our investment in thought leadership talent, resulted in our delivering excellent growth in EBITDA, Free Cash Flow and margin improvement for the quarter, despite the continued challenges in the advertising industry. Never in the Company's history has the momentum in the business or financial results been as strong. As of today we have over <money>$200 million</money> of liquidity and we have put in place a permanent capital structure that will allow us to build our business with a patient view toward building shareholder value creation."</p>
<p>Earlier this week MDC announced that it had delivered formal notice to redeem all of its 8.00% convertible unsecured subordinated debentures. The debentures will be redeemed effective <chron>November 26, 2009</chron>.</p>
<p/>
<p>Conference Call</p>
<p/>
<p>Management will host a conference call on <chron>October 30, 2009</chron> at <chron>8:30 a.m. (EST</chron>) to discuss our results. The conference call will be accessible by dialing 1-416-644-3423 or toll free 1-866-250-4892. An investor presentation has been posted on our website <a href="http://www.mdc-partners.com">www.mdc-partners.com</a> and will be referred to during the conference call.</p>
<p>A recording of the conference call will be available until <chron>Friday, November 13, 2009</chron> by dialing 1-416-640-1917 or toll free 1-877-289-8525 (passcode 4175719 followed by the number sign) or by visiting our website.</p>
<p/>
<p>About MDC Partners Inc.</p>
<p/>
<p>MDC Partners is a progressive Marketing and Communications Network, championing the most innovative entrepreneurial talent. MDC Partners provides strategic solutions and services to multinational clients in <location>North America</location>, <location>Europe</location> and Latin America. Our philosophy emphasizes the utilization of Strategy and High Value Creativity to drive growth and measurable impact for our clients. "MDC Partners is The Place Where Great Talent Lives." The company's Class A shares are publicly traded on the NASDAQ under the symbol "MDCA" and on the <location>Toronto</location> Stock Exchange under the symbol "MDZ.A".</p>
<p/>
<p>Non-GAAP Financial Measures</p>
<p/>
<p>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. These non-GAAP financial measures relate to: (1) presenting MDC's share of EBITDA and EBITDA margin (as defined) for the three and nine months ended <chron>September 30, 2009</chron> and 2008; and (2) presenting Free Cash Flow and Free Cash Flow per Share (as defined) for the three and nine months ended <chron>September 30, 2009</chron> and 2008. Included in this earnings release are tables reconciling MDC's reported results to arrive at these non-GAAP financial measures.</p>
<p/>
<p>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, recent business and economic trends, potential acquisitions, estimates of amounts for deferred acquisition consideration and "put" option rights, 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.</p>
<p>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:</p>
<p/>
<pre>
    
    -  risks associated with severe effects of national and regional economic
       downturn;
    -  the Company's ability to attract new clients and retain existing
       clients;
    -  the 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 "put" option right and deferred acquisition consideration;
    -  the successful completion and integration of acquisitions which
       complement and expand the Company's business capabilities; and
    -  foreign currency fluctuations.
    
</pre>
<p/>
<p>In addition to improving organic growth for its existing operations, the Company's business strategy includes ongoing efforts to engage in material 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 and through incurrence of bridge or other debt financing, either 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 material 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.</p>
<p>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.</p>
<p/>
<p/>
<p/>
<pre>
    
                                 SCHEDULE 1

                              MDC PARTNERS INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
              (US$ in 000s, except share and per share amounts)


                                Three Months Ended       Nine Months Ended
                                   September 30,           September 30,
                               ----------------------  ----------------------
                                 2009        2008        2009        2008
    -------------------------------------------------------------------------


    Revenue                     $134,625    $142,089    $396,246    $439,940

    Operating Expenses:
      Cost of services sold       85,526      94,558     259,644     292,410
      Office and general
       expenses                   31,401      31,864      92,726     102,754
      Depreciation and
       amortization                7,514       7,428      22,711      25,789
                               ----------------------  ----------------------
                                 124,441     133,850     375,081     420,953
                               ----------------------  ----------------------

    Operating profit              10,184       8,239      21,165      18,987

    Other Income (Expenses):
      Other income (expense)      (3,080)      2,418      (2,991)      5,545
      Interest expense            (3,792)     (3,573)    (11,276)    (11,140)
      Interest income                 17         456         289       1,350
                               ----------------------  ----------------------

    Income from continuing
     operations before income
     taxes and equity in
     affiliates                    3,329       7,540       7,187      14,742

    Income tax expense             1,149       2,222       3,373       6,415
                               ----------------------  ----------------------

    Income from continuing
     operations before equity
     in affiliates                 2,180       5,318       3,814       8,327
    Equity in earnings of non-
     consolidated affiliates          60          69         258         290
                               ----------------------  ----------------------

    Income from continuing
     operations                    2,240       5,387       4,072       8,617
    Loss from discontinued
     operations attributable
     to MDC Partners Inc.,
     net of taxes                      -        (771)       (361)     (6,698)
                               ----------------------  ----------------------
    Net income                     2,240       4,616       3,711       1,919
    Net income attributable
     to the noncontrolling
     interests                    (2,204)     (1,366)     (3,569)     (6,533)
                               ----------------------  ----------------------
    Net income (loss)
     attributable to MDC
     Partners Inc.                   $36      $3,250        $142     ($4,614)
                               ----------------------  ----------------------
                               ----------------------  ----------------------

    Income (Loss) Per Common
     Share:
      Basic and Diluted:
        Income from continuing
         operations attributable
         to MDC Partners Inc.
         common shareholders       $0.00       $0.15       $0.02       $0.08
        Discontinued operations
         attributable to MDC
         Partners Inc. common
         shareholders              $0.00      ($0.03)     ($0.01)     ($0.25)
                               ----------------------  ----------------------
        Net income (loss)
         attributable to MDC
         Partners Inc. common
         shareholders              $0.00       $0.12       $0.01      ($0.17)
                               ----------------------  ----------------------
                               ----------------------  ----------------------

    Weighted Average Number
     of Common Shares:
      Basic                   27,471,041  26,835,101  27,343,575  26,721,820
      Diluted                 29,009,655  27,290,259  27,838,740  27,235,371
    -------------------------------------------------------------------------



                                 SCHEDULE 2

                              MDC PARTNERS INC.
           RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA*
                      (US$ in 000s, except percentages)

    For the Three Months Ended September 30, 2009

                  Strategic    Customer    Specialized
                  Marketing  Relationship  Communication
                  Services    Management     Services    Corporate    Total
    -------------------------------------------------------------------------

    Revenue          $86,302     $26,276     $22,047           -    $134,625
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported     $13,073        $856      $1,088     ($4,833)    $10,184

    Add:
      Depreciation
       and
       amortization    5,245       1,732         422         115       7,514
      Stock-based
       compensation      705          44         248       1,234       2,231
                   ----------------------------------------------------------

    EBITDA*         19,023       2,632       1,758      (3,484)     19,929
    margin             22.0%       10.0%        8.0%                   14.8%

    Less:
     Net income
     attributable to
     noncontrolling
     interests        (1,817)          -        (387)          -      (2,204)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $17,206      $2,632      $1,371     ($3,484)    $17,725
    -------------------------------------------------------------------------
    *  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization,
         and stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less net income
         attributable to noncontrolling interests.



                              MDC PARTNERS INC.
           RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA*
                      (US$ in 000s, except percentages)

    For the Three Months Ended September 30, 2008

                  Strategic    Customer    Specialized
                  Marketing  Relationship  Communication
                  Services    Management     Services    Corporate    Total
    -------------------------------------------------------------------------

    Revenue          $81,279     $32,673     $28,137           -    $142,089
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported      $8,688      $1,160      $1,359     ($2,968)     $8,239

    Add:
      Depreciation
       and
       amortization    4,872       1,845         642          69       7,428
      Stock-based
       compensation      475          31         174       1,149       1,829
                   ----------------------------------------------------------

    EBITDA*         14,035       3,036       2,175      (1,750)     17,496
    margin             17.3%        9.3%        7.7%                   12.3%

    Less:
     Net income
     attributable to
     noncontrolling
     interests        (1,180)        (60)       (126)          -      (1,366)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $12,855      $2,976      $2,049     ($1,750)    $16,130
    -------------------------------------------------------------------------
    *  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less net income
         attributable to noncontrolling interests.



                                 SCHEDULE 3

                              MDC PARTNERS INC.
           RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA*
                      (US$ in 000s, except percentages)

    For the Nine Months Ended September 30, 2009

                  Strategic    Customer    Specialized
                  Marketing  Relationship  Communication
                  Services    Management     Services    Corporate    Total
    -------------------------------------------------------------------------

    Revenue         $247,675     $85,702     $62,869           -    $396,246
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported     $30,202      $1,789      $2,231    ($13,057)    $21,165

    Add:
      Depreciation
       and
       amortization   15,826       5,340       1,257         288      22,711
      Stock-based
       compensation    1,509          92         574       3,998       6,173
                   ----------------------------------------------------------

    EBITDA*         47,537       7,221       4,062      (8,771)     50,049
    margin             19.2%        8.4%        6.5%                   12.6%

    Less:
     Net income
     attributable to
     noncontrolling
     interests        (2,965)          -        (604)          -      (3,569)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $44,572      $7,221      $3,458     ($8,771)    $46,480
    -------------------------------------------------------------------------
    *  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less net income
         attributable to noncontrolling interests.



                              MDC PARTNERS INC.
           RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA*
                      (US$ in 000s, except percentages)

    For the Nine Months Ended September 30, 2008

                  Strategic    Customer    Specialized
                  Marketing  Relationship  Communication
                  Services    Management     Services    Corporate    Total
    -------------------------------------------------------------------------

    Revenue         $246,383    $104,179     $89,378           -    $439,940
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported     $18,674      $4,682      $7,962    ($12,331)    $18,987

    Add:
      Depreciation
       and
       amortization   18,085       5,550       1,950         204      25,789
      Stock-based
       compensation    1,492          98         648       3,452       5,690
                   ----------------------------------------------------------

    EBITDA*         38,251      10,330      10,560      (8,675)     50,466
    margin             15.5%        9.9%       11.8%                   11.5%

    Less:
     Net income
     attributable to
     noncontrolling
     interests        (3,708)       (247)     (2,578)          -      (6,533)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $34,543     $10,083      $7,982     ($8,675)    $43,933
    -------------------------------------------------------------------------
    *  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less net income
         attributable to noncontrolling interests.



                                 SCHEDULE 4

                              MDC PARTNERS INC.
                               FREE CASH FLOW
              (US$ in 000s, except share and per share amounts)


                                Three Months Ended       Nine Months Ended
                                   September 30,           September 30,
                               ----------------------  ----------------------
                                 2009        2008        2009        2008
    -------------------------------------------------------------------------
    MDC EBITDA                   $17,725     $16,130     $46,480     $43,933
    Capital Expenditures          (1,201)     (1,842)     (3,288)    (10,434)
    Cash Taxes                       (85)        (63)       (487)       (939)
    Cash Interest, net & Other    (2,620)     (2,163)     (8,204)     (8,856)
                               ----------------------  ----------------------
    Free Cash Flow               $13,819     $12,062     $34,501     $23,704
                               ----------------------  ----------------------
                               ----------------------  ----------------------

    Diluted Shares
     Outstanding              29,009,655  27,290,259  27,838,740  27,235,371

    Free Cash Flow per Share       $0.48       $0.44       $1.24       $0.87
                               ----------------------  ----------------------
                               ----------------------  ----------------------



                                 SCHEDULE 5

                              MDC PARTNERS INC.
                         CONSOLIDATED BALANCE SHEETS
                                (US$ in 000s)


                                               September 30,     December 31,
                                                   2009              2008
    -------------------------------------------------------------------------
    Assets
      Current Assets:
        Cash and cash equivalents                  $70,937           $41,331
        Accounts receivable, net                   126,281           106,954
        Expenditures billable to clients            24,466            16,949
        Prepaid expenses                             5,955             5,240
        Other current assets                         3,643             5,270
                                                -----------------------------
      Total Current Assets                         231,282           175,744

      Fixed assets, net                             36,547            44,021
      Investment in affiliates                       1,792             1,593
      Goodwill                                     253,284           238,214
      Other intangible assets, net                  37,662            46,852
      Deferred tax assets                            9,871            11,926
      Other assets                                   9,800            10,889
                                                -----------------------------
    Total Assets                                  $580,238          $529,239
                                                -----------------------------
                                                -----------------------------

    Liabilities and Shareholders' Equity
      Current Liabilities:
        Accounts payable                           $79,364           $75,360
        Accrued and other liabilities               58,984            55,338
        Advance billings                            74,536            50,053
        Current portion of long term debt           43,059             1,546
        Deferred acquisition consideration           2,932             5,538
                                                -----------------------------
      Total Current Liabilities                    258,875           187,835

      Revolving credit facility                      9,347             9,701
      Long-term debt                               131,960           133,305
      Convertible notes                                  -            36,946
      Other liabilities                              9,728             6,949
      Deferred tax liabilities                       4,808             4,700
                                                -----------------------------
      Total Liabilities                            414,718           379,436
                                                -----------------------------

    Redeemable Noncontrolling Interests             65,328            21,751
                                                -----------------------------

      Shareholders' Equity:
        Common shares                              218,147           213,534
        Additional paid in capital                       -            33,470
        Charges in excess of capital                (2,593)                -
        Accumulated deficit                       (112,694)         (112,836)
        Stock subscription receivable                 (341)             (354)
        Accumulated other comprehensive income
         (loss)                                     (5,560)           (6,633)
                                                -----------------------------
        MDC Partners Inc. Shareholders' Equity      96,959           127,181
        Noncontrolling Interests                     3,233               871
                                                -----------------------------
      Total Equity                                 100,192           128,052
                                                -----------------------------

    Total Liabilities, Redeemable Noncontrolling
     Interests and Equity                         $580,238          $529,239
                                                -----------------------------
                                                -----------------------------



                                 SCHEDULE 6

                              MDC PARTNERS INC.
                           SUMMARY CASH FLOW DATA
                                (US$ in 000s)


                                              Nine Months Ended September 30,
                                              -------------------------------
                                                   2009              2008
    -------------------------------------------------------------------------

    Cash flows provided by continuing
     operating activities                          $44,232           $22,830
      Discontinued operations                         (290)             (295)
                                              -------------------------------
    Net cash provided by operating activities      $43,942           $22,535

    Net cash used in investing activities          (11,159)          (21,000)

    Net cash (used in)/provided by financing
     activities                                     (2,691)            5,894

    Effect of exchange rate changes on cash
     and cash equivalents                             (486)             (356)
                                              -------------------------------

    Net increase in cash and cash equivalents      $29,606            $7,073
                                              -------------------------------
                                              -------------------------------
    

For further information: For further information: Donna Granato, VP, Finance & Corporate Development, (646) 429-1809, dgranato@mdc-partners.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890