MDC Partners Inc. reports results for the three and twelve months ended
December 31, 2009
FOURTH QUARTER HIGHLIGHTS:
- Revenue increased to $149.7 million vs. $144.7 million in Q4 2008, an
increase of 3.4%
- Organic revenue increased 1.4% for Q4 2009
- MDC EBITDA increased to $18.3 million vs. $17.1 million in Q4 2008,
an increase of 7.0%
- Free Cash Flow decreased to $6.4 million vs. $9.2 million in Q4 2008,
a decrease of 30.1%
- Free Cash Flow per Share decreased to $0.23 vs. $0.30 in Q4 2008, a
decrease of 23.3%
- EBITDA margin increased to 13.4% vs. 12.9% in Q4 2008, an increase of
50 basis points
- Net new business wins of $20.8 million for Q4 2009
YEAR END HIGHLIGHTS:
- Revenue decreased to $545.9 million vs. $584.6 million in 2008, a
decrease of 6.6%
- Organic revenue declined 5.5% for 2009
- MDC EBITDA increased to $64.8 million vs. $61.0 million in 2008, an
increase of 6.1%
- Free Cash Flow increased to $40.9 million vs. $32.9 million in 2008,
an increase of 24.4%
- Free Cash Flow per Share increased to $1.49 vs. $1.20 in 2008, an
increase of 24.2%
- EBITDA margin increased to 12.9% vs. 11.8% in 2008, an increase of
110 basis points
- Net new business wins of $23.8 million for 2009
NEW YORK, Feb. 24 /CNW/ - MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and twelve months ended December 31, 2009.
"2009 was an extraordinary year for MDC Partners where we exceeded all of our key financial projections," said Miles S Nadal, Chairman and Chief Executive Officer of MDC Partners. "Not only did we outperform our peers in terms of organic revenue and profitability growth; MDC is the first company to return to growth in the fourth quarter. Our focus on acquiring thought leading talent and expanding our capabilities in digital and data analytics are core to our ability to drive increasing return on marketing investment for our clients and market share gains for MDC. We expect another strong year in 2010."
Consolidated revenue for the fourth quarter of 2009 was $149.7 million, an increase of 3.4% compared to $144.7 million in the fourth quarter of 2008. MDC EBITDA (as defined) for the fourth quarter of 2009 was $18.3 million, an increase of 7.0% compared to $17.1 million in the fourth quarter of 2008. Net income (loss) attributable to MDC Partners Inc. in the fourth quarter was a loss of ($18.5) million compared to income of $4.7 million in the fourth quarter of 2008. Diluted earnings (loss) per share from continuing operations attributable to MDC Partners Inc. common shareholders for the fourth quarter of 2009 was a loss of ($0.65) compared with income of $0.29 per share in the same period of 2008. Free cash flow (as defined) was $6.4 million in the fourth quarter of 2009, compared with $9.2 million in the fourth quarter of 2008.
Consolidated revenue for the twelve months of 2009 was $545.9 million, a decrease of 6.6% compared to $584.6 million in 2008. MDC EBITDA (as defined) for the twelve months of 2009 was $64.8 million, an increase of 6.1% compared to $61.0 million in 2008. Net income (loss) attributable to MDC Partners Inc. in the twelve months was a loss of ($18.3) million compared to income of $0.1 million in the twelve months of 2008. Diluted earnings (loss) per share from continuing operations attributable to MDC Partners Inc. common shareholders for the twelve months of 2009 was a loss of ($0.64) compared with income of $0.37 per share in the same period of 2008. Free cash flow (as defined) was $40.9 million in the twelve months of 2009 compared with $32.9 million in the twelve months of 2008.
"Our efforts to optimize our financial performance are bearing fruit with over $55 million of cash generated in 2009 including working capital improvements and 110 basis points of margin improvement," said David Doft, Chief Financial Officer. "The roughly $100 million of cash we generated in the last two years has put MDC in its strongest financial position ever and as we deploy this capital we believe we can generate significant incremental EBITDA, margin expansion, free cash flow and earnings per share."
Conference Call
Management will host a conference call on February 25, 2010 at 8:30 a.m. (EST) to discuss our results. The conference call will be accessible by dialing 1-647-427-7450 or toll free 1-888-231-8191. An investor presentation has been posted on our website www.mdc-partners.com and will be referred to during the conference call.
A recording of the conference call will be available until Thursday, March 11, 2010 by dialing 1-416-849-0833 or toll free 1-800-642-1687 (passcode 4175719 followed by the number sign) or by visiting our website.
About MDC Partners Inc.
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 North America, Europe 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 Toronto Stock Exchange under the symbol "MDZ.A".
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. These non-GAAP financial measures relate to: (1) presenting MDC's share of EBITDA and EBITDA margin (as defined) for the three and twelve months ended December 31, 2009 and 2008; and (2) presenting Free Cash Flow and Free Cash Flow per Share (as defined) for the three and twelve months ended December 31, 2009 and 2008. Included in this earnings release are tables reconciling MDC's reported results to arrive at 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, 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.
Forward-looking statements involve inherent risks and uncertainties. A
number of important factors could cause actual results to differ materially
from those contained in any forward-looking statements. Such risk factors
include, but are not limited to, the following:
- risks associated with 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.
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.
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ in 000s, except share and per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenue $149,678 $144,708 $545,924 $584,648
Operating Expenses:
Cost of services sold 94,668 99,735 354,312 392,145
Office and general
expenses 44,171 35,001 136,897 137,755
Depreciation and
amortization 11,760 8,615 34,471 34,404
----------------------- -----------------------
----------------------- -----------------------
150,599 143,351 525,680 564,304
----------------------- -----------------------
Operating profit (loss) (921) 1,357 20,244 20,344
Other Income (Expenses):
Other income (expense) 953 7,698 (2,038) 13,243
Interest expense and
finance charges (10,822) (3,858) (22,098) (14,998)
Interest income 55 393 344 1,743
----------------------- -----------------------
Income (loss) from
continuing operations
before income taxes and
equity in affiliates (10,735) 5,590 (3,548) 20,332
Income tax expense
(recovery) 5,163 (4,018) 8,536 2,397
----------------------- -----------------------
Income (loss) from
continuing operations
before equity in
affiliates (15,898) 9,608 (12,084) 17,935
Equity in earnings of
non-consolidated
affiliates (266) 59 (8) 349
----------------------- -----------------------
----------------------- -----------------------
Income (loss) from
continuing operations (16,164) 9,667 (12,092) 18,284
Loss from discontinued
operations, net of taxes (515) (3,317) (876) (10,015)
----------------------- -----------------------
Net income (loss) (16,679) 6,350 (12,968) 8,269
Net income attributable
to the noncontrolling
interests (1,787) (1,601) (5,356) (8,136)
----------------------- -----------------------
----------------------- -----------------------
Net income (loss)
attributable to MDC
Partners Inc. ($18,466) $4,749 ($18,324) $133
----------------------- -----------------------
----------------------- -----------------------
Income (Loss) Per Common
Share:
Basic:
Income (loss) from
continuing
operations
attributable to MDC
Partners Inc.
common shareholders ($0.65) $0.30 ($0.64) $0.38
Discontinued
operations ($0.02) ($0.12) ($0.03) ($0.37)
-----------------------------------------------
-----------------------------------------------
Net income (loss)
attributable to MDC
Partners Inc. common
shareholders ($0.67) $0.18 ($0.67) $0.01
----------------------- -----------------------
----------------------- -----------------------
Income (Loss) Per Common
Share:
Diluted:
Income (loss) from
continuing
operations
attributable to MDC
Partners Inc. common
shareholders ($0.65) $0.29 ($0.64) $0.37
Discontinued
operations ($0.02) ($0.11) ($0.03) ($0.36)
-----------------------------------------------
-----------------------------------------------
Net income (loss)
attributable to MDC
Partners Inc. common
shareholders ($0.67) $0.18 ($0.67) $0.01
----------------------- -----------------------
----------------------- -----------------------
Weighted Average Number of
Common Shares:
Basic 27,553,402 26,896,938 27,396,463 26,765,839
Diluted 27,553,402 30,111,225 27,396,463 27,430,162
-------------------------------------------------------------------------
SCHEDULE 2
MDC PARTNERS INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
(US$ in 000s, except percentages)
For the Three Months Ended December 31, 2009
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------------------------------------------------------------------------
Revenue $106,006 $43,672 - $149,678
-----------------------------------------------
-----------------------------------------------
Operating income (loss)
as reported $3,443 $1,098 ($5,462) ($921)
Add:
Depreciation and
amortization 9,338 2,282 140 11,760
Stock-based compensation 7,233 202 1,836 9,271
-----------------------------------------------
EBITDA* 20,014 3,582 (3,486) 20,110
margin 18.9% 8.2% 13.4%
Less income attributable to
noncontrolling interests (914) (873) - (1,787)
-----------------------------------------------
MDC's Share of EBITDA(xx) $19,100 $2,709 ($3,486) $18,323
-------------------------------------------------------------------------
* EBITDA is a non-GAAP measure, but as shown above it represents
operating income (loss) plus depreciation and amortization, and
stock-based compensation.
(xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
represents operating income (loss) plus depreciation and
amortization and stock-based compensation less net income
attributable to noncontrolling interests.
MDC PARTNERS INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
(US$ in 000s, except percentages)
For the Three Months Ended December 31, 2008
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------------------------------------------------------------------------
Revenue $92,783 $51,925 - $144,708
-----------------------------------------------
-----------------------------------------------
Operating income (loss)
as reported $7,107 ($58) ($5,692) $1,357
Add:
Depreciation and
amortization 6,175 2,243 197 8,615
Stock-based compensation 4,670 2,951 1,126 8,747
-----------------------------------------------
-----------------------------------------------
EBITDA* 17,952 5,136 (4,369) 18,719
margin 19.3% 9.9% 12.9%
Less income attributable to
noncontrolling interests (1,081) (520) - (1,601)
-----------------------------------------------
-----------------------------------------------
MDC's Share of EBITDA(xx) $16,871 $4,616 ($4,369) $17,118
-------------------------------------------------------------------------
* EBITDA is a non-GAAP measure, but as shown above it represents
operating income (loss) plus depreciation and amortization, and
stock-based compensation.
(xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
represents operating income (loss) plus depreciation and
amortization and stock-based compensation less net income
attributable to noncontrolling interests.
SCHEDULE 3
MDC PARTNERS INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
(US$ in 000s, except percentages)
For the Twelve Months Ended December 31, 2009
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------------------------------------------------------------------------
Revenue $371,398 $174,526 - $545,924
-------------------------------------------------
-------------------------------------------------
Operating income (loss)
as reported $35,898 $2,865 ($18,519) $20,244
Add:
Depreciation and
amortization 25,577 8,466 428 34,471
Stock-based
compensation 8,742 868 5,834 15,444
-------------------------------------------------
EBITDA* 70,217 12,199 (12,257) 70,159
margin 18.9% 7.0% 12.9%
Less income attributable
to noncontrolling
interests (4,641) (715) - (5,356)
-------------------------------------------------
MDC's Share of
EBITDA(xx) $65,576 $11,484 ($12,257) $64,803
-------------------------------------------------------------------------
-------------------------------------------------------------------------
* EBITDA is a non-GAAP measure, but as shown above it represents
operating income (loss) plus depreciation and amortization, and
stock-based compensation.
(xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
represents operating income (loss) plus depreciation and
amortization and stock-based compensation less net income
attributable to noncontrolling interests.
MDC PARTNERS INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
(US$ in 000s, except percentages)
For the Twelve Months Ended December 31, 2008
Strategic Performance
Marketing Marketing
Services Services Corporate Total
-------------------------------------------------------------------------
Revenue $363,580 $221,068 - $584,648
-------------------------------------------------
-------------------------------------------------
Operating income (loss)
as reported $27,659 $10,708 ($18,023) $20,344
Add:
Depreciation and
amortization 24,814 9,189 401 34,404
Stock-based
compensation 6,162 3,697 4,578 14,437
-------------------------------------------------
EBITDA* 58,635 23,594 (13,044) 69,185
margin 16.1% 10.7% 11.8%
Less income attributable
to noncontrolling
interests (5,302) (2,834) - (8,136)
-------------------------------------------------
MDC's Share of EBITDA(xx) $53,333 $20,760 ($13,044) $61,049
-------------------------------------------------------------------------
* EBITDA is a non-GAAP measure, but as shown above it represents
operating income (loss) plus depreciation and amortization, and
stock-based compensation.
(xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
represents operating income (loss) plus depreciation
and amortization and stock-based compensation less net income
attributale to noncontrolling interests.
SCHEDULE 4
MDC PARTNERS INC.
FREE CASH FLOW
(US$ in 000s, except share and per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- -----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
MDC EBITDA $18,323 $17,118 $64,803 $61,049
Capital Expenditures (2,924) (3,963) (6,212) (14,395)
Cash Taxes 103 (101) (384) (1,037)
Cash Interest, net & Other (9,086) (3,874) (17,290) (12,724)
--------------------- -----------------------
Free Cash Flow* $6,416 $9,180 $40,917 $32,893
--------------------- -----------------------
--------------------- -----------------------
Diluted Common Shares
Outstanding 27,553,402 30,111,225 27,396,463 27,430,162
Free Cash Flow per Share $0.23 $0.30 $1.49 $1.20
--------------------- -----------------------
--------------------- -----------------------
* As defined by MDC Partners
SCHEDULE 5
MDC PARTNERS INC.
CONSOLIDATED BALANCE SHEETS
(US$ in 000s)
December 31, December 31,
2009 2008
-------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $51,926 $41,331
Accounts receivable, net 118,211 106,954
Expenditures billable to clients 24,003 16,949
Prepaid expenses 4,942 5,240
Other current assets 3,163 5,270
-------------------------
Total Current Assets 202,245 175,744
Fixed assets, net 35,375 44,021
Investment in affiliates 1,547 1,593
Goodwill 301,632 238,214
Other intangible assets, net 34,715 46,852
Deferred tax assets 8,736 11,926
Other assets 16,462 10,889
-------------------------
Total Assets $600,712 $529,239
-------------------------
-------------------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $77,450 $75,360
Accrued and other liabilities 66,967 55,338
Advance billings 65,879 50,053
Current portion of long term debt 1,456 1,546
Deferred acquisition consideration 30,645 5,538
-------------------------
Total Current Liabilities 242,397 187,835
Long-term debt 216,490 133,305
Revolving credit facility - 9,701
Convertible notes - 36,946
Other liabilities 8,707 6,949
Deferred tax liabilities 3,118 4,700
-------------------------
-------------------------
Total Liabilities 470,712 379,436
-------------------------
Redeemable Noncontrolling Interests 36,860 21,751
-------------------------
Shareholders' Equity:
Common shares 218,533 213,534
Additional paid in capital 6,553 33,470
Accumulated deficit (131,160) (112,836)
Stock subscription receivable (341) (354)
Accumulated other comprehensive loss (4,265) (6,633)
-------------------------
MDC Partners Inc. Shareholders' Equity 89,320 127,181
Noncontrolling Interests 3,820 871
-------------------------
Total Equity 93,140 128,052
-------------------------
Total Liabilities, Redeemable Noncontrolling
Interests and Equity $600,712 $529,239
-------------------------
-------------------------
SCHEDULE 6
MDC PARTNERS INC.
SUMMARY CASH FLOW DATA
(US$ in 000s)
Twelve Months Ended December 31,
----------------------------------
2009 2008
-------------------------------------------------------------------------
Cash flows provided by continuing
operating activities $60,708 $60,945
Discontinued operations (805) (3,499)
-------------------------
-------------------------
Net cash provided by operating activities 59,903 57,446
-------------------------
-------------------------
Net cash used in continuing
investing activities (66,199) (49,639)
Discontinued operations - (547)
-------------------------
Net cash used in investing activities (66,199) (50,186)
Net cash provided by continuing
financing activities 20,037 23,510
Effect of exchange rate changes on
cash and cash equivalents (3,146) 151
-------------------------
-------------------------
Net increase in cash and cash equivalents $10,595 $30,921
-------------------------
For further information: Donna Granato, VP, Finance & Corporate Development, (646) 429-1809, [email protected]
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