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MDC Partners Inc. reports another strong quarter for the three months ended March 31, 2008(Canada Newswire English Via Acquire Media NewsEdge) Attention Business/Financial Editors << 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 /CNW/ - 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". 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. 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. << 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) ($0.36) ---------------------------- ---------------------------- Weighted Average Number of Common Shares: Basic and Diluted 26,497,163 24,274,797 ------------------------------------------------------------------------- SCHEDULE 2 MDC PARTNERS INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA* (US$ in 000s) For the Three Months Ended March 31, 2008 Marketing Communications Group ------------------------------------- Strategic Customer Specialized Marketing Relationship Communication Services Management Services Corporate 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(xx) $7,798 $3,027 $2,098 ($3,115) $9,808 ------------------------------------------------------------------------- * EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, and stock-based compensation. (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, and stock-based compensation charges less minority interests. MDC PARTNERS INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA* (US$ in 000s) For the Three Months Ended March 31, 2007 Marketing Communications Group ------------------------------------- Strategic Customer Specialized Marketing Relationship Communication Services Management Services Corporate 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(xx) $6,387 $2,045 $1,179 ($4,113) $5,498 ------------------------------------------------------------------------- * EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, and stock-based compensation. (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization and stock-based compensation less minority interests. SCHEDULE 3 MDC PARTNERS INC. FREE CASH FLOW (US$ 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 ($1,878) ---------------------------- ---------------------------- SCHEDULE 4 MDC PARTNERS INC. CONSOLIDATED BALANCE SHEETS (US$ 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 ---------------------------- ---------------------------- >> Donna Granato, Director, Finance & Investor Relations, (646) 429-1809, [email protected] Copyright ? 2008 Canada Newswire Ltd. 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