MDC Partners Inc. Reports Results For The Three And Nine Months Ended September 30, 2012 NEW YORK, Nov. 5, 2012 /CNW/ - THIRD QUARTER HIGHLIGHTS: -- Revenue increased to $267.8 million versus $235.7 million in Q3 2011, an increase of 13.6% -- Organic revenue increased 6.7% for Q3 2012 -- EBITDA increased to $33.7 million versus $17.3 million in Q3 2011, an increase of 94.7% -- EBITDA margin increased 530 basis points to 12.6% versus 7.3% in Q3 2011 -- Free Cash Flow (as defined) increased to $17.4 million versus an outflow of ($3.7) million in Q3 2011 -- Net new business wins of $23.4 million for Q3 2012 NINE MONTHS HIGHLIGHTS: -- Revenue increased to $777.3 million versus $686.3 million in the nine months ended September 30, 2011, an increase of 13.2% -- Organic revenue increased 7.2% year to date for 2012 -- EBITDA increased to $73.4 million versus $66.7 million in the nine months ended September 30, 2011, an increase of 10.0% -- Free Cash Flow improved to $24.2 million versus $15.7 million in the nine months ended September 30, 2011, an increase of 54.2% -- Net new business wins of $103.2 million in the nine months ended September 30, 2012, an increase of 36.4% MDC Partners Inc. ("MDC Partners" or the "Company") today announced financial results for the three and nine months ended September 30, 2012. Miles S. Nadal, Chairman and Chief Executive Officer of MDC Partners, said, "We are very pleased with our third quarter financial performance. Following a three-year period of investment in our business, our results in the third quarter, and particularly our growth in EBITDA and margin, are proof that our plan to broaden our service offering and to build new platforms that represent the future of the industry is working. We are well on our way to continued margin expansion in the periods to come as we leverage the investments we have made." Guidance for 2012 is maintained as follows: Implied 2012 Year over Year Guidance Change Revenue $1,050 - $1,075 million +11.3% to +14.0% EBITDA $110 - $115 million +21.2% to +26.7% Free Cash Flow $35 - $40 million +50.8% to +72.3% + Change in Working +$25 million Capital and Other Total Free Cash Flow $60 - $65 million +10.6% to +19.8% Implied EBITDA Margin 10.5% - 10.7% +90 to +110 basis points Consolidated revenue for the third quarter of 2012 was $267.8 million, an increase of 13.6% compared to $235.7 million in the third quarter of 2011. EBITDA (as defined) for the third quarter of 2012 was $33.7 million, an increase of 94.7% compared to $17.3 million in the third quarter of 2011, as the company realized 530 basis points of EBITDA margin expansion from the leveraging of prior investments in growth initiatives. Loss attributable to MDC Partners in the third quarter was ($14.5) million compared to a loss of ($19.6) million in the third quarter of 2011. Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the third quarter of 2012 was ($0.45) compared to ($0.65) per share in the same period of 2011. Free cash flow from operations (as defined) was $17.4 million in the third quarter of 2012, compared with an outflow of ($3.7) million in the third quarter of 2011. For the nine month period ended September 30, 2012, consolidated revenue was $777.3 million, an increase of 13.2% compared to $686.3 million in the nine months ended September 30, 2011. EBITDA (as defined) for the nine months ended 2012 increased 10.0% to $73.4 million compared to $66.7 million in the same period of 2011. Loss attributable to MDC Partners in the nine months ended 2012 was ($60.9) million compared to a loss of ($26.9) million in the nine months ended 2011. Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the nine months ended 2012 was ($1.89) compared to a loss of ($0.86) per share in the same period of 2011. Free cash flow from operations (as defined) was $24.2 million in the nine months ended 2012, compared with $15.7 million in the same period of 2011. David Doft, CFO of MDC Partners, said, "We are making significant progress reducing our balance sheet leverage, which was at 3.46 times net debt-to-pro-forma-EBITDA as of the end of the quarter. Our focus over the next several quarters is to bring our leverage down further, and we expect it to be between 3.0 and 3.5 times net debt-to-pro-forma-EBITDA by year-end and 2.5 to 3 times net debt-to-pro-forma-EBITDA by the end of 2013. We believe that a stronger balance sheet in conjunction with expanding EBITDA and margin growth will result in stronger equity returns for shareholders over time." Conference Call Management will host a conference call on Monday, November 5, 2012 at 4:30 p.m. (EST) to discuss results. The conference call will be accessible by dialing 1-412-858-4600 or toll free 1-800-860-2442. 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 one hour after the call until 9:00 a.m.November 19, 2012, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10019812) or by visiting our website at www.mdc-partners.com. About MDC Partners Inc. MDC is a Business Transformation Organization that utilizes technology, marketing communications, data analytics and insights and strategic consulting solutions to drive meaningful returns on Marketing and Communications Investments for multinational clients in the United States, Canada, Europe, Latin America and the Caribbean. MDC's durable competitive advantage is to Empower the Most Talented Entrepreneurial Thought Leaders to Drive Business Success to new levels of Achievement, for both our Clients and our Shareholders, reinforcing MDC's reputation as "The Place Where Great Talent Lives." MDC Partners' Class A shares are publicly traded on 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 EBITDA and EBITDA margin (as defined) for the three and nine months ended September 30, 2012 and 2011; and (2) presenting Total Free Cash Flow, Free Cash Flow and Free Cash Flow per Share (as defined) for the three and nine months ended September 30, 2012 and 2011. 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, earnings guidance, 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 international, national and regional economic downturn; -- the Company's ability to attract new clients and retain existing clients; -- the spending patterns and financial success of the Company's clients; -- the Company's ability to retain and attract key employees; -- the Company's ability to remain in compliance with its debt agreements and the Company's ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to "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. 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, 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 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 Nine Months Ended September September 30, 30, 2012 2011 2012 2011 Revenue $267,817 $235,706 $777,269 $686,335 Operating Expenses: Cost of services 180,888 173,526 546,117 489,207 sold Office and 73,168 55,373 207,297 152,093 general expenses Depreciation and 12,435 9,778 36,071 29,645 amortization 266,491 238,677 789,485 670,945 Operating profit 1,326 (2,971) (12,216) 15,390 (loss) Other Income (Expenses): Other expense, (433) (3,112) (1,242) (2,350) net Interest expense (11,594) (10,800) (34,420) (31,030) Interest income 70 51 183 152 Loss from continuing operations before income taxes and equity in (10,631) (16,832) (47,695) (17,838) affiliates Income tax expense 2,207 (42) 6,014 904 (recovery) Loss from continuing operations (12,838) (16,790) (53,709) (18,742) before equity in affiliates Equity in earnings (loss) of 93 (120) 399 214 non-consolidated affiliates Loss from continuing (12,745) (16,910) (53,310) (18,528) operations Loss from discontinued (630) (608) (3,153) (1,869) operations, net of taxes Net loss (13,375) (17,518) (56,463) (20,397) Net income attributable to the (1,121) (2,056) (4,428) (6,537) noncontrolling interests Net loss attributable to ($14,496) ($19,574) ($60,891) ($26,934) MDC Partners Inc. Loss Per Common Share: Basic and Diluted: Loss from continuing operations attributable to MDC Partners Inc. common ($0.45) ($0.65) ($1.89) ($0.86) shareholders Discontinued operations attributable to MDC Partners Inc. common ($0.02) ($0.02) ($0.10) ($0.07) shareholders Loss attributable to MDC Partners Inc. common ($0.47) ($0.67) ($1.99) ($0.93) shareholders Weighted Average Number of Common Shares: Basic and 31,051,561 29,158,703 30,606,146 29,051,450 Diluted SCHEDULE 2 MDC PARTNERS INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (US$ in 000s, except percentages) For the Three Months Ended September 30, 2012 Strategic Performance Marketing Marketing Services Services Corporate Total Revenue $176,672 $91,145 - $267,817 Operating income (loss) as $8,158 ($214) ($6,618) $1,326 reported margin 4.6% -0.2% 0.5% Add: Depreciation and 7,813 4,292 330 12,435 amortization Stock-based compensation 2,769 2,009 355 5,133 Acquisition deal costs 213 160 438 811 Deferred acquisition consideration adjustments 10,964 2,667 - 13,631 to P&L Profit distributions from - - 376 376 affiliates EBITDA * $29,917 $8,914 ($5,119) $33,712 margin 16.9% 9.8% 12.6% * EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments and profit distributions from affiliates. MDC PARTNERS INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (US$ in 000s, except percentages) For the Three Months Ended September 30, 2011 Strategic Performance Marketing Marketing Services Services Corporate Total Revenue $146,130 $89,576 - $235,706 Operating income (loss) as ($183) $6,726 ($9,514) (2,971) reported margin -0.1% 7.5% -1.3% Add: Depreciation and 5,353 4,200 225 9,778 amortization Stock-based compensation 2,173 1,608 3,990 7,771 Acquisition deal costs 52 251 494 797 Deferred acquisition consideration adjustments 2,871 (1,027) - 1,844 to P&L Profit distributions from - - 100 100 affiliates EBITDA* $10,266 $11,758 ($4,705) $17,319 margin 7.0% 13.1% 7.3% * EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments and profit distributions from affiliates. SCHEDULE 3 MDC PARTNERS INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (US$ in 000s, except percentages) For the Nine Months Ended September 30, 2012 Strategic Performance Marketing Marketing Services Services Corporate Total Revenue $520,518 $256,751 - $777,269 Operating income (loss) $22,044 ($2,057) ($32,203) ($12,216) as reported margin 4.2% -0.8% -1.6% Add: Depreciation and 21,738 13,326 1,007 36,071 amortization Stock-based compensation 6,602 5,587 14,181 26,370 Acquisition deal costs 863 448 1,170 2,481 Deferred acquisition consideration adjustments 17,820 2,306 - 20,126 to P&L Profit distributions from - - 542 542 affiliates EBITDA * $69,067 $19,610 ($15,303) $73,374 margin 13.3% 7.6% 9.4% * EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments and profit distributions from affiliates. MDC PARTNERS INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (US$ in 000s, except percentages) For the Nine Months Ended September 30, 2011 Strategic Performance Marketing Marketing Services Services Corporate Total Revenue $442,580 $243,755 - $686,335 Operating income (loss) as $30,840 $11,594 ($27,044) $15,390 reported margin 7.0% 4.8% 2.2% Add: Depreciation and 16,342 12,857 446 29,645 amortization Stock-based compensation 3,896 2,591 11,333 17,820 Acquisition deal costs 451 635 1,352 2,438 Deferred acquisition consideration adjustments 3,428 (2,562) - 866 to P&L Profit distributions from - - 548 548 affiliates EBITDA* $54,957 $25,115 ($13,365) $66,707 margin 12.4% 10.3% 9.7% * EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments and profit distributions from affiliates. SCHEDULE 4 MDC PARTNERS INC. FREE CASH FLOW (US$ in 000s, except share and per share amounts) Three Months Ended Nine Months Ended September September 30, 30, 2012 2011 2012 2011 EBITDA $33,712 $17,319 $73,374 $66,707 Net Income Attributable to (1,121) (2,056) (4,428) (6,537) Noncontrolling Interests Capital Expenditures, (4,736) (9,145) (13,679) (16,168) net (1) Cash Taxes (572) (29) (919) (164) Cash Interest, (9,871) (9,744) (30,138) (28,142) net & Other Free Cash Flow $17,412 ($3,655) $24,210 $15,696 (2) Changes in Working Capital 17,742 14,257 96,421 (14,811) (3) Total Free Cash $35,154 $10,602 $120,631 $885 Flow (2) Diluted Common Shares 31,051,561 29,158,703 30,606,146 29,051,450 Outstanding Total Free Cash Flow per Share $1.13 $0.36 $3.94 $0.03 (2) (1) Capital Expenditures, net represents capital expenditures net of landlord reimbursements. (2) Free Cash Flow and Total Free Cash Flow are non-GAAP measures. As shown above, Free Cash Flow represents EBITDA less net income attributable to noncontrolling interests, less capital expenditures, less cash taxes, less net cash interest (including interest paid and other) (3) Changes in Working Capital includes cash acquired in acquisitions. SCHEDULE 5 MDC PARTNERS INC. CONSOLIDATED BALANCE SHEETS (US$ in 000s) September 30, December 31, 2012 2011 Assets Current Assets: Cash and cash equivalents $72,799 $8,096 Accounts receivable, net 313,540 238,592 Expenditures billable to clients 52,554 39,067 Other current assets 17,634 12,657 Total Current Assets 456,527 298,412 Fixed assets, net 51,852 47,737 Investment in affiliates 18 99 Goodwill 718,196 605,244 Other intangible assets, net 75,985 57,980 Deferred tax assets 15,500 15,380 Other assets 33,663 30,893 Total Assets $1,351,741 $1,055,745 Liabilities and Shareholders' Equity (Deficit) Current Liabilities: Accounts payable $311,023 $178,282 Accrued and other liabilities 87,682 72,930 Advance billings 127,636 122,021 Current portion of long term debt 1,871 1,238 Current portion of deferred acquisition 82,765 51,829 consideration Total Current Liabilities 610,977 426,300 Long-term debt 469,780 383,936 Long-term portion of deferred acquisition 85,804 85,394 consideration Other liabilities 49,778 14,900 Deferred tax liabilities 55,248 50,724 Total Liabilities 1,271,587 961,254 Redeemable Noncontrolling 100,455 107,432 Interests Shareholders' Equity (Deficit) Common shares 253,245 228,209 Shares to be issued 424 424 Charges in excess of capital (58,234) (45,102) Accumulated deficit (292,165) (231,274) Stock subscription receivable (55) (55) Accumulated other comprehensive (933) (4,658) loss MDC Partners Inc. Shareholders' (97,718) (52,456) Deficit Noncontrolling Interests 77,417 39,515 Total Deficit (20,301) (12,941) Total Liabilities, Redeemable Noncontrolling Interests and Deficit $1,351,741 $1,055,745 SCHEDULE 6 MDC PARTNERS INC. SUMMARY CASH FLOW DATA (US$ in 000s) Nine Months Ended September 30, 2012 2011 Cash flows provided by (used in) $18,119 ($3,770) continuing operating activities Discontinued operations (2,313) (2,411) Net cash provided by (used in) 15,806 (6,181) operating activities Net cash provided by (used in) 13,727 (37,660) continuing investing activities Discontinued operations 46 (252) Net cash provided by (used in) 13,773 (37,912) investing activities Net cash provided by continuing 35,143 41,162 financing activities Effect of exchange rate changes on (19) (673) cash and cash equivalents Net increase (decrease) in cash and $64,703 ($3,604) cash equivalents ____________________________________________________________________________________________________________ |CONTACT:|David Doft | |________|___________________________________________________________________________________________________| | |Chief Financial Officer | |________|___________________________________________________________________________________________________| | |646-429-1818 | |________|___________________________________________________________________________________________________| | |email@example.com| |________|___________________________________________________________________________________________________| (Logo: http://photos.prnewswire.com/prnh/20120221/NY57031LOGO ) http://www.mdc-partners.com http://photos.prnewswire.com/prnh/20120221/NY57031LOGO PRN Photo Desk, firstname.lastname@example.org SOURCE: MDC Partners Inc. 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MDC Partners Inc. Reports Results For The Three And Nine Months Ended September 30, 2012
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