EX-99.1 2 v112501_ex99-1.htm
 
PRESS RELEASE
FOR IMMEDIATE RELEASE


FOR:
MDC Partners Inc.
  
CONTACT:
Donna Granato
 
950 Third Avenue, 5th Floor
  
 
Director, Finance & Investor Relations
 
New York, NY 10022
  
 
646-429-1809
 
 
  
 
dgranato@mdc-partners.com

 
 MDC PARTNERS INC. REPORTS ANOTHER STRONG QUARTER FOR THE
THREE MONTHS ENDED MARCH 31, 2008

QUARTERLY HIGHLIGHTS: 
 
·
Revenues increased 21.4% to $143.3 million in Q1 2008 vs. $118.1 million in Q1 2007
 
·
Organic revenue growth was 14.6% for Q1 2008
 
·
Net new business wins were $40 million for Q1 2008
 
·
MDC EBITDA increased 78.4% to $9.8 million in Q1 2008 vs. $5.5 million in Q1 2007
 
NEW YORK, NY (May 1, 2008) - MDC Partners Inc. (“MDC Partners” or the “Company”) today announced financial results for the three months ended March 31, 2008.
 
Consolidated revenues for the first quarter of 2008 were $143.3 million, an increase of 21.4% compared to $118.1 million in the first quarter of 2007. MDC EBITDA (as defined) for the first quarter of 2008 was $9.8 million, an increase of 78.4% compared to $5.5 million in the first quarter of 2007. Free cash flow (as defined) was $2.6 million in the first quarter of 2008 compared with ($1.9) million in the first quarter of 2007.
 
“We are very pleased with our tremendous performance during the first quarter of 2008 and are confident in our continuing momentum and ability to achieve increasing profitability and free cash flow as we continue to leverage our infrastructure and demonstrate the scalability of our model,” said Miles S. Nadal, Chairman & CEO of MDC Partners.
 
Conference Call

Management will host a conference call on Friday, May 2, at 8:30 a.m. (EST) to discuss our results. The conference call will be accessible by dialing 1-416-644-3414 or toll free 1-800-732-6179. An investor presentation will be posted on our website www.mdc-partners.com and will be referred to during the conference call.
 
About MDC Partners Inc.
 
MDC Partners is a leading provider of marketing communications solutions and services to clients in North America, Europe and Latin America. Through its partnership of entrepreneurial firms it provides advertising, specialized communications and consulting services to leading brands. MDC Partners’ philosophy emphasizes the utilization of strategy and creativity to drive growth for its clients. “MDC Partners is The Place Where Great Talent Lives”. MDC Partners Class A shares are publicly traded on the NASDAQ under the symbol “MDCA” and on the Toronto Stock Exchange under the symbol “MDZ.A”.

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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 (as defined) for the three months ended March 31, 2008 and March 31, 2007; and (2) presenting Free Cash Flow (as defined) for the three months ended March 31, 2008 and 2007. Included in this earnings release are tables reconciling MDC’s reported results to arrive at these non-GAAP financial measures.
 

 
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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 effects of national and regional economic conditions;
 
 
·
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 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 rights;
 
 
·
the Company’s ability to retain and attract key employees;
 
 
·
the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities;
 
 
·
foreign currency fluctuations; and
 
 
·
risks arising from the Company’s historical option grant practices.
 
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.
 
3
 
SCHEDULE 1
 
MDC PARTNERS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ in 000s, except share and per share amounts)
 
   
Three Months Ended March 31,
 
 
  
2008
  
2007
  
           
           
Revenue
  
$
143,344
  
$
118,080
  
               
Operating Expenses
              
Cost of services sold
    
97,591
   
76,963
 
Office and general expenses
    
35,849
   
33,244
 
Depreciation and amortization
    
10,088
   
5,811
 
     
143,528
   
116,018
 
               
Operating Income (Loss)
    
(184
)
  
2,062
 
               
Other Income (Expenses)
              
Other income (expense)
    
3,603
   
(708
)
Interest expense
    
(3,889
)
  
(2,650
)
Interest income
    
206
   
156
 
Loss from Continuing Operations Before Income Taxes,
              
Equity in Affiliates and Minority Interests
    
(264
)
  
(1,140
)
               
Income Tax Recovery
    
825
   
515
 
               
Income (Loss) from Continuing Operations Before Equity in
             
Affiliates and Minority Interests
    
561
   
(625
)
Equity in Earnings (Losses) of Non-consolidated Affiliates
    
140
   
(50
)
Minority Interests in Income of Consolidated Entities
    
(2,094
)
  
(4,291
)
               
Loss From Continuing Operations
    
(1,393
)
  
(4,966
)
Loss from Discontinued Operations
    
(2,001
)
  
(3,831
)
Net Loss
    
($3,394
)
  
($8,797
)
               
Loss Per Common Share
              
Basic and Diluted:
              
Continuing Operations
    
($0.05
)
  
($0.20
)
Discontinued Operations
    
(0.08
)
  
(0.16
)
Net Loss
    
($0.13
)
  
($0.36
)
               
Weighted Average Number of Common Shares:
              
Basic and Diluted
    
26,497,163
   
24,274,797
 
 
4
SCHEDULE 2
 
MDC PARTNERS INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA*
(US$ in 000s)
 
For the Three Months Ended March 31, 2008
 
   
Marketing Communications Group
          
   
Strategic
 
Customer
 
Specialized
          
   
Marketing
  
Relationship
  
Communication
 
Corporate &
 
 
 
    
  
Services
 
Management
 
Services
 
Other
 
Total
  
                       
Revenue
  
$
77,981
  
$
34,663
  
$
30,700
    
-
 
$
143,344
  
                                 
                                 
                                 
                                 
Operating Income (Loss) as Reported
  
$
730
  
$
1,227
  
$
2,310
    
($4,451
)
  
($184
)
                                 
Add:
                                
Depreciation and amortization
    
7,292
   
1,825
   
903
   
68
   
10,088
 
Stock-based compensation
    
446
   
32
   
252
   
1,268
   
1,998
 
                                 
EBITDA *
    
8,468
   
3,084
   
3,465
   
(3,115
)
  
11,902
 
                                 
Less: Minority Interests
    
(670
)
  
(57
)
  
(1,367
)
  
-
   
(2,094
)
                                 
MDC's Share of EBITDA**
  
$
7,798
  
$
3,027
  
$
2,098
    
($3,115
)
$
9,808
  
*
EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, and stock-based compensation.
 
**
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 charges less minority interests.
 
MDC PARTNERS INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA*
(US$ in 000s)

For the Three Months Ended March 31, 2007
 
   
Marketing Communications Group
          
   
Strategic
 
Customer
 
Specialized
 
 
 
 
 
 
 
Marketing
 
Relationship
 
Communication
 
Corporate &
 
 
 
    
  
Services
 
Management
 
Services
 
Other
 
Total
  
                       
Revenue
  
$
70,563
  
$
23,568
  
$
23,949
    
-
 
$
118,080
  
                                 
                                 
                                 
                                 
                                 
Operating Income (Loss) as Reported
  
$
5,848
  
$
483
  
$
1,189
    
($5,458
)
$
2,062
  
                                 
Add:
                                
Depreciation and amortization
    
3,766
   
1,550
   
427
   
68
   
5,811
 
Stock-based compensation
    
489
   
26
   
124
   
1,277
   
1,916
 
                                 
EBITDA*
    
10,103
   
2,059
   
1,740
   
(4,113
)
  
9,789
 
                                 
Less: Minority Interests
    
(3,716
)
  
(14
)
  
(561
)
  
-
   
(4,291
)
                                 
MDC's Share of EBITDA**
  
$
6,387
  
$
2,045
  
$
1,179
    
($4,113
)
$
5,498
  
*
EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, and stock-based compensation.
 
**
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 minority interests.
 
5
 
SCHEDULE 3
 
MDC PARTNERS INC.
FREE CASH FLOW
(US$ in 000s)
 
   
Three Months Ended March 31,
 
(US$ in millions)
  
2008
 
2007
  
MDC EBITDA
  
$
9,808
  
$
5,498
  
Capital Expenditures
    
(4,223
)
  
(3,502
)
Cash Taxes
    
(280
)
  
(564
)
Cash Interest, net
    
(2,737
)
  
(3,310
)
               
Free Cash Flow
  
$
2,568
    
($1,878
)
 
 
6
 

 
SCHEDULE 4
 
MDC PARTNERS INC.
CONSOLIDATED BALANCE SHEETS
(US$ in 000s)
 
   
(unaudited)
 
 
 
 
 
March 31,
 
December 31,
 
    
 
2008
 
2007
  
           
Assets
              
Current Assets:
              
Cash and cash equivalents
  
$
5,749
  
$
10,410
  
Accounts receivable, net
    
145,749
   
135,260
 
Expenditures billable to clients
    
29,001
   
19,409
 
Prepaid expenses
    
6,707
   
5,937
 
Other current assets
    
2,504
   
2,422
 
Total Current Assets
    
189,710
   
173,438
 
               
Fixed assets
    
47,591
   
47,440
 
Investment in affiliates
    
1,657
   
1,434
 
Goodwill
    
224,240
   
217,726
 
Other intangible assets, net
    
51,010
   
55,399
 
Deferred tax assets
    
10,182
   
9,175
 
Other assets
    
15,300
   
16,086
 
Total Assets
  
$
539,690
  
$
520,698
  
               
               
Liabilities and Shareholders' Equity
              
Current Liabilities:
              
Accounts payable
  
$
58,756
  
$
65,839
  
Accrued and other liabilities
    
64,532
   
74,668
 
Advance billings
    
74,519
   
50,988
 
Current portion of long term debt
    
1,855
   
1,796
 
Deferred acquisition consideration
    
2,223
   
2,511
 
Total Current Liabilities
    
201,885
   
195,802
 
               
Revolving credit facility
    
18,561
   
1,901
 
Long-term debt
    
115,927
   
115,662
 
Convertible notes
    
43,838
   
45,395
 
Other liabilities
    
8,624
   
8,267
 
Deferred tax liabilities
    
530
   
819
 
Total Liabilities
    
389,365
   
367,846
 
               
Minority Interests
    
25,940
   
24,919
 
               
Shareholders' Equity:
              
Common stock
    
212,794
   
207,959
 
Share capital to be issued
    
214
   
214
 
Additional paid in capital
   
25,135
   
26,743
 
Accumulated deficit
    
(116,363
)
  
(112,969
)
Stock subscription receivable
    
(357
)
  
(357
)
Accumulated other comprehensive income
    
2,962
   
6,343
 
Total Shareholders' Equity
    
124,385
   
127,933
 
               
Total Liabilities and Shareholders' Equity
  
$
539,690
  
$
520,698
  
 
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