MDCA MDC Partners Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

Date of Report (Date Earliest Event reported) — April 27, 2015 (April 27, 2015)

 

MDC PARTNERS INC.

(Exact name of registrant as specified in its charter)

Canada (Jurisdiction of Incorporation)	001-13718 (Commission File Number)	98-0364441 (IRS Employer Identification No.)

 

745 Fifth Avenue, 19^th Floor, New York, NY 10151
(Address of principal executive offices and zip code)

 

(646) 429-1800
(Registrant’s Telephone Number)

 

---

 

Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)

 

¨

Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))

 

¨

Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e− 4(c))

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On April 27, 2015, MDC Partners Inc. (the “Company”) issued an earnings release reporting its financial results for the three months ended March 31, 2015. A copy of this earnings release is attached as Exhibit 99.1 hereto. Following the issuance of this earnings release, the Company hosted an earnings call in which its financial results for the three months ended March 31, 2015 were discussed. The investor presentation materials used for the call are attached as Exhibit 99.2 hereto.

 

The Company has posted the materials attached as Exhibit 99.2 on its web site (www.mdc-partners.com). The information found on, or otherwise accessible through, the Company’s website is not incorporated into, and does not form a part of, this Current Report on Form 8-K.

 

The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02 - Results of Operations and Financial Condition.” Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

The foregoing information and the exhibits hereto contain forward-looking statements within the meaning of the federal securities laws. These statements are based on present expectations, and are subject to the limitations listed therein and in the Company's other SEC reports, including that actual events or results may differ materially from those in the forward-looking statements.

 

Item 5.02 Departures of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Effective as of April 23, 2015, the Company’s prior Chief Accounting Officer, Michael Sabatino, transitioned to become Senior Vice President, Special Projects.  In connection with this transition, David Doft (the Company’s Chief Financial Officer) has assumed the additional role as the Company’s principal accounting officer. 

 

Item 7.01 Regulation FD Disclosure.

 

On April 27, 2015, the Company issued a press release announcing that its Board of Directors has declared a cash dividend of $0.21 per share on all of its outstanding Class A shares and Class B shares. The quarterly dividend will be payable on or about May 22, 2015, to shareholders of record at the close of business on May 8, 2015.

 

 

The foregoing information (including the exhibit hereto) is being furnished under “Item 7.01 - Regulation FD Disclosure.” Such information (including the exhibit hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

The foregoing information and the exhibit hereto contain forward-looking statements within the meaning of the federal securities laws. These statements are based on present expectations, and are subject to the limitations listed therein and in the Company's other SEC reports, including that actual events or results may differ materially from those in the forward-looking statements.

 

 

 

 

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1

Press release dated April 27, 2015, relating to the Company’s earnings for the three months ended March 31, 2015.

 

99.2

Slideshow presentation dated April 27, 2015.

 

99.3

Press release dated April 27, 2015, relating to the announcement of the Company’s dividend.

 

 

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed by the undersigned hereunto duly authorized.

 

Date: April 27, 2015	MDC Partners Inc.
	By:	/s/ Mitchell Gendel
		Mitchell Gendel General Counsel & Corporate Secretary

 

 

 

 

 

 

 

Exhibit 99.1

 

 

PRESS RELEASE FOR IMMEDIATE ISSUE

 

FOR:	MDC Partners Inc.		CONTACT:	Matt Chesler, CFA
	745 Fifth Avenue, 19th Floor			VP, Investor Relations
	New York, NY 10151			646-412-6877
				mchesler@mdc-partners.com

 

MDC PARTNERS INC. REPORTS RESULTS FOR THE
THREE MONTHS ENDED MARCH 31, 2015

 

FIRST QUARTER HIGHLIGHTS:

 

·

Revenue increased to $302.2 million from $274.9 million, an increase of 10.0%

·

Net loss attributable to MDC Partners of ($32.1) million versus ($8.8) million in the same period last year

·

Organic revenue increased 7.4%

·

Adjusted EBITDA of $31.2 million versus $35.8 million in the same period last year (see Schedules 2 and 3)

·

Adjusted EBITDA margin of 10.3% versus 13.0% in the same period last year (see Schedules 2 and 3)

·

Adjusted EBITDA Available for General Capital Purposes of $10.3 million versus $20.5 million in the same period last year (see Schedule 4)

·

Net New Business wins totaled $27.9 million

·

Declared cash dividend of $0.21 per share

 

New York, NY, April 27, 2015 (NASDAQ: MDCA; TSX: MDZ.A) – MDC Partners Inc. (“MDC Partners” or the “Company”) today announced financial results for the three months ended March 31, 2015.

 

Miles S. Nadal, Chairman and Chief Executive Officer of MDC Partners, said, “We are pleased with our operational and financial results in the first quarter, which included organic revenue growth of 7.4% and profitability that is tracking according to our full-year plan. The $28 million of net new business in the first quarter, last year’s record new business performance, and our ongoing focus on profitable organic growth, expanding margins, and improved cash generation, positions us nicely to deliver on our annual projections and we are therefore reiterating our 2015 financial guidance.”

 

 

Guidance for 2015 is maintained as follows:

 

						Implied
		2014		2015		Year over Year
		Actuals		Guidance		Change
Revenue		$1.22 billion		$1.300 - $1.330 billion		+6.5% to +8.5%
Adjusted EBITDA		$179.4 million		$195 - $205 million		+8.7% to +14.3%
Implied Adjusted EBITDA Margin		14.7%		15.0% to 15.4%		+35 to 75 basis points
Adjusted EBITDA Available for
General Capital Purposes		$98.8 million		$109 - $119 million		+10.3% to +20.4%

 

Consolidated revenue for the first quarter of 2015 was $302.2 million, an increase of 10.0%, compared to $274.9 million in the first quarter of 2014. Adjusted EBITDA for the first quarter of 2015 was $31.2 million compared to $35.8 million in the first quarter of 2014. Net loss attributable to MDC Partners in the first quarter was ($32.1) million compared to a loss of ($8.8) million in the first quarter of 2014. Loss per share from continuing operations attributable to MDC Partners common shareholders for the first quarter of 2015 was ($0.52) compared to a loss of ($0.17) per share in the first quarter of 2014. Adjusted EBITDA Available for General Capital Purposes was $10.3 million in the first quarter of 2015 compared to $20.5 million in the first quarter of 2014.

 

David Doft, CFO of MDC Partners, said, “This was a solid performance this quarter despite continued currency headwinds that negatively impacted reported revenue by two percent and the previously disclosed timing of revenue recognition for some of our larger, more complicated pieces of new business. Notwithstanding these factors, the year is very much on track with our projections as we expect profitability growth to accelerate as the year progresses. Our business is strong and we remain highly focused on executing the strategic and financial framework that we have previously presented, which we are confident will drive increasing value to our shareholders over time.”

 

Perquisite Repayment; Implementation of New Policies and Procedures

 

MDC Partners is committed to the highest standards of corporate governance and transparency in its reporting practices. Since October 5, 2014, the Company has been actively cooperating with the production of documents for review by the Securities and Exchange Commission (the “SEC”) pursuant to a Subpoena. In connection with this production of documents, the Company formed a Special Committee of independent directors to review certain matters relating to the reimbursement of expenses incurred by the CEO. The Special Committee is being advised by Bruch Hanna LLP, as special independent advisor, and by Simpson Thacher & Bartlett LLP, as legal counsel. The Special Committee, through its counsel, received full cooperation from Company management and Board members, reviewed and analyzed thousands of documents, emails and other accounting information, and interviewed several individuals.

 

The Special Committee completed an extensive review of perquisites and payments made by the Company to or on behalf of Miles Nadal and Nadal Management Limited during the six-year period from 2009 through 2014. The review included a detailed analysis of the available back-up documentation supporting such payments, as well as consideration of the Management Services Agreement among Mr. Nadal, Nadal Management Limited and the Company and certain historical practices. These payments included, among other things, travel and commutation expenses, charitable donations, medical expenses, and certain expenses for which the information was incomplete.

 

 

Mr. Nadal cooperated fully with the review. Following the review, Mr. Nadal agreed to reimburse the Company for perquisites and payments for which the Company sought reimbursement, in the aggregate amount of $8.6 million. The Company does not expect there will be any impact to its previously issued financial statements as a result of the review.

 

During the quarter ended March 31, 2015, the Company incurred approximately $5.8 million in legal fees and other related expenses relating to the SEC inquiry. The Company expects to recognize a gain of $8.6 million in the quarter ending June 30, 2015, relating to the reimbursement of perquisites and payments by the CEO.

 

In addition to this reimbursement, the Special Committee recommended, the Audit Committee has adopted, and the Company has adopted and implemented, a series of remedial steps to improve and strengthen the Company’s internal controls and procedures regarding travel, entertainment and related expenses. The remedial steps include:

 

·

Adoption and implementation of a new Private Aircraft Usage Policy and a new Travel & Entertainment Policy.

 

·

Hiring two (2) new senior executives, including a Senior Vice President, Internal Controls and Compliance and a Director, Compliance & Risk Management. These new senior executives are responsible for managing internal controls, reviewing monthly expense reports and ensuring full compliance with the Company’s new policies. Both senior executives report to the Company’s independent Audit Committee.

 

·

Quarterly review and reporting to the Company’s Audit Committee with respect to compliance by the Company’s executive officers with travel and expense reimbursement policies.

 

The Subpoena received from the SEC also requested production of documents relating to the Company’s goodwill and certain other accounting practices, as well as information relating to trading in the Company’s securities by third parties. The Company has been fully cooperating with the SEC and believes that the inquiries are at an early stage.

 

Effective as of April 23, 2015, the Company’s prior Chief Accounting Officer, Michael Sabatino, transitioned to a new role in the company, in which he will work on special projects. In connection with this transition in Mr. Sabatino’s role and responsibilities, Mr. Doft has assumed the additional role as the Company’s principal accounting officer.

 

MDC Partners Announces $0.21 per Share Quarterly Cash Dividend

 

MDC Partners today also announced that its Board of Directors has declared a cash dividend of $0.21 per share on all of its outstanding Class A shares and Class B shares. The quarterly dividend will be payable on or about May 22, 2015, to shareholders of record at the close of business on May 8, 2015.

 

Conference Call

 

Management will host a conference call on Monday, April 27, 2015, at 4:30 p.m. (ET) to discuss results. Access the conference call by dialing 1-412-902-4266 or toll free 1-888-346-6216. An investor presentation has been posted on our website www.mdc-partners.com and may 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. (ET), May 12, 2015, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10064651), or by visiting our website at www.mdc-partners.com.

 

 

About MDC Partners Inc.

 

MDC Partners is one of the world’s largest Business Transformation Organizations that utilizes technology, marketing communications, data analytics, insights and strategic consulting solutions to drive meaningful returns on Marketing and Communications Investments for multinational clients in the United States, Canada, Europe, Asia and Latin America.

 

MDC Partners’ 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 the Company’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”.

 

Please visit us: www.mdc-partners.com

Follow us on Twitter: http://www.twitter.com/mdcpartners

 

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 Adjusted EBITDA and EBITDA margin (as defined) for the three months ended March 31, 2015, and 2014; and (2) presenting Adjusted EBITDA Available for General Capital Purposes for the three ended March 31, 2015, and 2014. Included in this earnings release are tables reconciling MDC Partners’ 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 the Subpoena and ongoing SEC investigation outlined in this press release;

·

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.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(US$ in 000s, except share and per share amounts)

 

		Three Months Ended March 31,
		2015				2014
Revenue		$	302,222			$	274,854
Operating Expenses:
Cost of services sold			210,419				181,468
Office and general expenses			74,308				71,336
Depreciation and amortization			12,300				10,482
			297,027				263,286
Operating profit			5,195				11,568
Other Income (Expenses):
Other, net			(18,040	)			(6,571	)
Interest expense and finance charges			(15,096	)			(12,759	)
Interest income			119				140
Loss from continuing operations before income taxes
and equity in non-consolidated affiliates			(27,822	)			(7,622	)
Income tax benefit			(4,054	)			(346	)
Loss from continuing operations before equity in non-consolidated affiliates			(23,768	)			(7,276	)
Equity in earnings of non-consolidated affiliates			351				63
Loss from continuing operations			(23,417	)			(7,213	)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes			(6,294	)			(271	)
Net loss			(29,711	)			(7,484	)
Net income attributable to the noncontrolling interests			(2,380	)			(1,362	)
Net loss attributable to MDC Partners Inc.		$	(32,091	)		$	(8,846	)
Loss Per Common Share:
Basic and Diluted
Loss from continuing operations attributable to MDC
Partners Inc. common shareholders		$	(0.52	)		$	(0.17	)
Discontinued operations attributable to MDC
Partners Inc. common shareholders		$	(0.13	)		$	(0.01	)
Net loss attributable to MDC Partners Inc.
common shareholders		$	(0.65	)		$	(0.18	)
Weighted Average Number of Common Shares Outstanding:
Basic and Diluted			49,754,961				49,338,332

 

 

SCHEDULE 2

 

MDC PARTNERS INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)

 

For the Three Months Ended March 31, 2015
		Strategic				Performance
		Marketing				Marketing
		Services				Services				Corporate				Total
Revenue		$	240,436			$	61,786			$	-			$	302,222
Net loss attributable to MDC Partners Inc.														$	(32,091	)
Adjustments to reconcile to Operating profit (loss):
Net income attributable to the noncontrolling interests															2,380
Loss from discontinued operations attributable to
MDC Partners Inc., net of taxes															6,294
Equity in earnings of non-consolidated affiliates															(351	)
Income tax benefit															(4,054	)
Interest expense and finance charges, net															14,977
Other, net															18,040
Operating profit (loss)		$	18,831			$	809			$	(14,445	)			5,195
margin			7.8	%			1.3	%							1.7	%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization			6,423				5,430				447				12,300
Stock-based compensation			2,524				1,121				800				4,445
Acquisition deal costs			449				6				419				874
Deferred acquisition consideration adjustments to P&L			1,548				700				-				2,248
Profit distributions from non-consolidated affiliates			304				30				8				342
Other non-recurring items **			-				-				5,762				5,762
Adjusted EBITDA *		$	30,079			$	8,096			$	(7,009	)		$	31,166
margin			12.5	%			13.1	%							10.3	%

 

 

*

Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization,

**

Other non-recurring items includes ongoing legal fees and other related expenses related to the SEC inquiry. Additional costs may be incurred in future periods

 

 

SCHEDULE 3

 

MDC PARTNERS INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(US$ in 000s, except percentages)

 

For the Three Months Ended March 31, 2014
		Strategic				Performance
		Marketing				Marketing
		Services				Services				Corporate				Total
Revenue		$	214,804			$	60,050			$	-			$	274,854
Net loss attributable to MDC Partners Inc.														$	(8,846	)
Adjustments to reconcile to Operating profit (loss):
Net loss attributable to the noncontrolling interests															1,362
Loss from discontinued operations attributable to
MDC Partners Inc., net of taxes															271
Equity in earnings of non-consolidated affiliates															(63	)
Income tax benefit															(346	)
Interest expense and finance charges, net															12,619
Other, net															6,571
Operating profit (loss)		$	24,050			$	(2,005	)		$	(10,477	)		$	11,568
margin			11.2	%			-3.3	%							4.2	%
Additional adjustments to reconcile to Adjusted EBITDA:
Depreciation and amortization			5,148				4,832				502				10,482
Stock-based compensation			2,139				1,277				952				4,368
Acquisition deal costs			155				584				332				1,071
Deferred acquisition consideration adjustments to P&L			4,445				3,577				-				8,022
Profit distributions from non-consolidated affiliates			-				238				43				281
Adjusted EBITDA *		$	35,937			$	8,503			$	(8,648	)		$	35,792
margin			16.7	%			14.2	%							13.0	%

 

 

*

Adjusted EBITDA is a non-GAAP measure, but as shown above it represents operating profit (loss) plus depreciation and amortization, stock-based compensation,

 

 

SCHEDULE 4

 

MDC PARTNERS INC.

ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES

(US$ in 000s)

 

		Three Months Ended March 31,
		2015				2014
Adjusted EBITDA (1)		$	31,166			$	35,792
Net income attributable to noncontrolling interests			(2,380	)			(1,362	)
Capital expenditures, net (2)			(5,300	)			(2,496	)
Cash taxes			(540	)			(83	)
Cash interest, net & other (3)			(12,651	)			(11,331	)
Adjusted EBITDA Available for General Capital Purposes (4)		$	10,295			$	20,520

 

 

(1)

Adjusted EBITDA is a non GAAP measure.  See schedules 2 and 3 for a reconciliation of Net income (loss) to Adjusted EBITDA.

(2)

Capital expenditures, net represents capital expenditures net of landlord reimbursements.

(3)

Cash interest, net & other represents the quarterly accrual of cash interest under our Senior Notes.

(4)

Adjusted EBITDA Available for General Capital Purposes is a non-GAAP measure, and represents funds available for repayment of debt, acquisitions, deferred acquisition consideration, dividends, and other general corporate initiatives.

 

 

SCHEDULE 5

 

MDC PARTNERS INC.

CONSOLIDATED BALANCE SHEETS

(US$ in 000s)

 

		March 31,				December 31,
		2015				2014
Assets
Current Assets:
Cash and cash equivalents		$	17,612			$	119,767
Accounts receivable, net			453,362				355,295
Expenditures billable to clients			45,854				40,202
Other current assets			48,892				36,978
Total Current Assets			565,720				552,242
Fixed assets, net			59,598				60,240
Investment in non-consolidated affiliates			8,888				6,110
Goodwill			838,857				851,373
Other intangible assets, net			77,365				86,121
Deferred tax assets			23,570				18,758
Other assets			66,127				74,046
Total Assets		$	1,640,125			$	1,648,890
Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Deficit
Current Liabilities:
Accounts payable		$	251,892			$	316,285
Accruals and other liabilities			324,021				271,273
Advance billings			173,104				142,608
Current portion of long term debt			532				534
Current portion of deferred acquisition consideration			100,131				90,804
Total Current Liabilities			849,680				821,504
Long-term debt, less current portion			761,799				742,593
Long-term portion of deferred acquisition consideration			100,673				114,564
Other liabilities			45,814				45,861
Deferred tax liabilities			78,740				77,997
Total Liabilities			1,836,706				1,802,519
Redeemable Noncontrolling Interests			202,338				194,951
Shareholders’ Deficit
Common shares			268,822				265,818
Charges in excess of capital			(229,622	)			(209,668	)
Accumulated deficit			(521,724	)			(489,633	)
Accumulated other comprehensive loss			(40	)			(7,752	)
MDC Partners Inc. Shareholders’ Deficit			(482,564	)			(441,235	)
Noncontrolling Interests			83,645				92,655
Total Shareholders’ Deficit			(398,919	)			(348,580	)
Total Liabilities, Redeemable Noncontrolling
Interests and Shareholders’ Deficit		$	1,640,125			$	1,648,890

 

 

SCHEDULE 6

 

MDC PARTNERS INC.

SUMMARY CASH FLOW DATA

(US$ in 000s)

 

		Three Months Ended March 31,
		2015				2014
Cash flows used in continuing operating activities		$	(118,552	)		$	(40,049	)
Discontinued operations			(1,294	)			746
Net cash used in operating activities			(119,846	)			(39,303	)
Cash flows used in continuing investing activities			(8,913	)			(44,243	)
Discontinued operations			(153	)			(500	)
Net cash used in investing activities			(9,066	)			(44,743	)
Net cash provided by (used in) continuing financing activities			26,086				(451	)
Discontinued operations			(40	)			(40	)
Net cash provided by (used in) financing activities			26,046				(491	)
Effect of exchange rate changes on cash and cash equivalents			711				27
Net increase in cash and cash equivalents		$	(102,155	)		$	(84,510	)

 

 

Exhibit 99.2

 

 

April 27, 2015 Management Presentation First Quarter 2015 Results

2 FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation, including our “ 2015 Financial Outlook”, contains forward - looking statements . The Company’s representatives may also make forward - looking statements orally from time to time . Statements in this presentation 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 the Subpoena and ongoing SEC investigation outlined in the Q 1 2015 press release ; • 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 remain in compliance with its debt agreements and the Company’s ability to finance its contingent pa yme nt obligations when due and payable, including but not limited to those relating to “put” option rights and deferred acquisition co nsideration; • the successful completion and integration of acquisitions which compliment and expand the Company’s business capabilities; an d • 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 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 • Solid quarter - results tracking in - line with expectations on all key metrics • Industry leading organic revenue growth • Year over year declines in profitability due to new business recognition timing, as expected • $27.9 million of net annualized new business revenue; robust pipeline • Ongoing progress across key strategic growth initiatives such as International, Media Buying & Planning, and Data Science & Technology • Maintaining 2015 financial guidance FIRST QUARTER 2015 SUMMARY

4 • Industry - leading organic revenue growth of 7.4% • Revenue increased 10.0% to $302.2 million from $274.9 million • Net loss attributable to MDC Partners of ($32.1) million versus ($8.8) million a year ago • Adjusted EBITDA of $31.2 million versus $35.8 million a year ago • Adjusted EBITDA margin at 10.3% versus 13.0% a year ago • Net new business wins of $27.9 million • Adjusted EBITDA Available for General Capital Purposes of $10.3 million versus $20.5 million a year ago • Declared cash dividend of $0.21 per share FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS

5 Note: Actuals may not foot due to rounding CONSOLIDATED REVENUE AND EARNINGS (US$ in millions, except percentages) 2015 2014 Revenue 302.2$ 274.9$ 10.0 % Operating Expenses Cost of services sold 210.4 181.5 16.0 % Office and general expenses 74.3 71.3 4.2 % Depreciation and amortization 12.3 10.5 17.3 % Operating Profit (Loss) 5.2 11.6 Other, net (18.0) (6.6) Interest expense and finance charges (15.1) (12.8) Interest income 0.1 0.1 Income tax benefit (4.1) (0.3) Equity in earnings of non-consolidated affiliates 0.4 0.1 Loss from Continuing Operations (23.4) (7.2) Loss from discontinued operations, net of taxes (6.3) (0.3) Net Loss (29.7) (7.5) Net income attributable to non- (2.4) (1.4) controlling interests Net Loss Attributable to MDC Partners Inc. (32.1)$ (8.8)$ % Change Three Months Ended March 31,

6 • Q1 2015 revenue of $302.2 million represents 10.0% YoY growth • Strength across disciplines and geographies including CRM, Media , Strategic Communications & PR, Advertising, Design , and International SUMMARY OF SEGMENT RESULTS - REVENUE Note: Actuals may not foot due to rounding (US$ in millions, except percentages) 2015 2014 Revenue Strategic Marketing Services 240.4$ 214.8$ 11.9 % Performance Marketing Services 61.8 60.1 2.9 % Total Revenue 302.2$ 274.9$ 10.0 % % Change Three Months Ended March 31,

7 ORGANIC REVENUE GROWTH BY SEGMENT Note: Actuals may not foot due to rounding • Solid overall organic growth of +7.4% on top of +11.0% in Q1 2014 (ex Accent) Strategic Performance Weighted Marketing Marketing Average Services Services Total Organic Growth 8.7% 2.7% 7.4% Acquisition Growth 5.1% 2.3% 4.5% Foreign Exchange Impact -1.9% -2.1% -2.0% Total 11.9% 2.9% 10.0% Three Months Ended March 31,

8 Q1 2015 Mix Year - over - Year Growth by Category • Fastest growing sectors: Healthcare, Food & Beverage, and Consumer Products • Our top 10 clients declined to 24.3% of revenue in Q1 2015 from 25.0% a year ago, demonstrating the ongoing diversification of the business (largest ~5%) FIRST QUARTER REVENUE BY CLIENT INDUSTRY * Excludes discontinued operations Note : Actuals may not foot due to rounding. Year - over - year category growth shown on a reported basis. Q1 2015 Above 10% Healthcare, Food & Beverage, Consumer Products, Technology, Other 0% to 10% Automotive, Communications Below 0% Retails, Financials

9 ORGANIC GROWTH HIGHLIGHTS SUSTAINED MARKET SHARE GAINS Notes: (1) MDC organic growth excludes Accent in all periods. (2) Peers include Omnicom, IPG, WPP, Havas and Publicis . Havas has not yet reported Q1 2015 results and therefore consensus estimates for organic growth rates are used in place of actuals for the most recent quarter.

10 Note: Actuals may not foot due to rounding • Q1 Adjusted EBITDA down on a year over year basis, as expected, due in part to timing related to revenue recognition for recent new business SUMMARY OF SEGMENT RESULTS – ADJUSTED EBITDA * Other non - recurring items includes ongoing legal fees and other related expenses relating to the SEC inquiry. Additional costs may be incurred in future periods related to these matters. (US$ in millions, except percentages) 2015 2014 Adjusted EBITDA Strategic Marketing Services 30.1$ 35.9$ (16.3) % margin 12.5% 16.7% Performance Marketing Services 8.1 8.5 (4.8) % margin 13.1% 14.2% Marketing Communications 38.2 44.4 (14.1) % margin 12.6% 16.2% Corporate Expenses (12.8) (8.6) 48.3 % Profit Distributions from Affiliates (0.0) (0.0) (81.4) % Other non-recurring items, net 5.8 0.0 NM % Total Adjusted EBITDA 31.2$ 35.8$ (12.9) % margin 10.3% 13.0% % Change Three Months Ended March 31,

11 Note: Actuals may not foot due to rounding ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES (1) Adjusted EBITDA is a non GAAP measure. See schedules 2 through 3 of the Q1 2015 press release for a reconciliation of Net Income (loss) to Adjusted EBITDA. (2) Capital Expenditures, net represents capital expenditures net of landlord reimbursements . (3) Cash Interest, net & Other represents the quarterly accrual of cash interest under our Senior Notes . (4) Adjusted EBITDA Available for General Capital Purposes is a non - GAAP measure, and represents funds available for repayment of de bt, acquisitions, deferred acquisition consideration, dividends, and other general corporate initiatives. (US$ in millions) 2015 2014 Adjusted EBITDA (1) $31.2 $35.8 Net Income Attibutable to Noncontrolling Interests (2.4) (1.4) Capital Expenditures, net (2) (5.3) (2.5) Cash Taxes (0.5) (0.1) Cash Interest, net & Other (3) (12.7) (11.3) Adjusted EBITDA Available for General Capital Purposes (4) $10.3 $20.5 Three Months Ended December 31,

12 AVAILABLE LIQUIDITY (US$ in millions) March 31, 2015 December 31, 2014 Commitment Under Facility $325.0 $325.0 Drawn 19.6 - Undrawn Letters of Credit 4.8 4.8 Funds Available Under Facility $300.6 $320.2 Total Cash & Cash Equivalents 17.6 119.8 Liquidity $318.2 $440.0

13 2015 FINANCIAL OUTLOOK Note: See appendix for definitions of non - GAAP measures Revenue Adjusted EBITDA Adjusted EBITDA Available for General Capital Purposes Implied Adjusted EBITDA Margin $1.22 billion $179.4 million $98.8 million 14.7% $1.300 to $1.330 billion $195 to $205 million $109 to $119 million 15.0% to 15.4% +6.5% to +8.5% organic: +7% to +9% acquisitions: +150bp foreign currency: - 200bp +8.7% to +14.3% +10.3% to +20.4% +35 to +75 basis points 2014 Actuals Implied Year over Year Change 2015 Guidance • Assumes unfavorable FX rate movements to negatively impact 2015 revenue by 200 basis points and reported Adjusted EBITDA by approximately 3%

14 APPENDIX

15 TEMPORAL PUT OBLIGATIONS AND IMPACT ON EBITDA Incremental (US$ in millions) Cash Stock Total EBITDA in Period 2015 2.3 0.0 2.3 3.1 2016 3.5 0.1 3.6 0.0 2017 3.9 0.0 3.9 1.4 2018 5.0 0.0 5.0 1.3 Thereafter 6.8 0.0 6.8 0.0 Total $21.5 $0.1 $21.6 $5.8 Effective Multiple 3.7x Estimated Put Impact at March 31, 2015 Payment Consideration

16 Note: Actuals may not foot due to rounding SUMMARY OF CASH FLOW Note: Actuals may not foot due to rounding (US$ in millions) 2015 2014 Cash flows used in continuing operating activities ($118.6) ($40.0) Discontinued operations (1.3) 0.7 Net cash used in operating activities ($119.8) ($39.3) Cash flows used in continuing investing activities ($8.9) ($44.2) Discontinued operations (0.2) (0.5) Net cash used in investing activities ($9.1) ($44.7) Cash flows provided by (used in) continuing financing activities $26.1 ($0.5) Discontinued operations (0.0) (0.0) Net cash provided by (used in) financing activities $26.0 ($0.5) Effect of exchange rate changes on cash and cash equivalents $0.7 $0.0 Net increase in cash and cash equivalents ($102.2) ($84.5) Three Months Ended March 31,

17 Note: Actuals may not foot due to rounding DEFINITION OF NON - GAAP MEASURES Adjusted EBITDA: Adjusted EBITDA is a non - GAAP measure, that represents operating profit plus depreciation and amortization, stock - based compensation, acquisition deal costs, deferred acquisition consideration adjustments, profit distributions from affiliates and other non - recurring items. Organic Growth: Organic revenue growth is a non - GAAP measure that refers to growth in revenues from sources other than acquisitions or foreign exchange impacts. Adjusted EBITDA Available for General Capital Purposes: Adjusted EBITDA Available for General Capital Purposes is a non - GAAP measure, and represents funds available for repayment of debt, acquisitions, deferred acquisition consideration, dividends, and other general corporate initiatives . Net Bank Debt or Net Debt: Debt due pertaining to the revolving credit facility plus debt pertaining to the Senior Notes less total cash and cash equivalents. Note: A reconciliation of Non - GAAP to US GAAP reported results has been provided by the Company in the tables included in the earnings release issued on April 27, 2015.

MDC Partners Innovation Centre 745 Fifth Avenue, Floor 19 New York, NY 10151 646 - 429 - 1800 www.mdc - partners.com

 

Exhibit 99.3

 

 

 

PRESS RELEASE FOR IMMEDIATE ISSUE

 

 

FOR:	MDC Partners Inc.		CONTACT:	Matt Chesler, CFA
	745 Fifth Avenue, 19th Floor			VP, Investor Relations
	New York, NY 10151			646-412-6877
				mchesler@mdc-partners.com

 

 

MDC Partners Declares Quarterly Dividend of $0.21 Per Share

 

New York, NY, April 27, 2015 (NASDAQ: MDCA; TSX: MDZ.A) – MDC Partners Inc. ("MDC Partners" or the "Company") today announced that its Board of Directors has declared a cash dividend of $0.21 per share on all of its outstanding Class A shares and Class B shares. The quarterly dividend will be payable on or about May 22, 2015 to shareholders of record at the close of business on May 8, 2015.

 

About MDC Partners Inc.

MDC Partners is one of the world’s largest Business Transformation Organizations that utilizes technology, marketing communications, data analytics, insights and strategic consulting solutions to drive meaningful returns on Marketing and Communications Investments for multinational clients in the United States, Canada, Europe, Asia and Latin America.

 

MDC Partners’ 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 the Company'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".

 

Please visit us: www.mdc-partners.com

Follow us on Twitter: http://www.twitter.com/mdcpartners

 

 

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve risks and uncertainties which may cause the actual results or objectives to be materially different from those expressed or implied by such forward-looking statements. Such risk factors include, among other things, the Company’s financial performance; risks associated with the SEC’s ongoing investigation of the Company; risks associated with the effects of economic downturns; ability to attract and retain key clients; ongoing compliance with debt agreements and the Company’s ability to satisfy contingent payment obligations when due; and other risk factors set forth in the Company’s Form 10-K for its fiscal year ended December 31, 2014 and subsequent SEC filings.

 

 

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