Slide 1: Management Presentation Third Quarter 2016 Results
November 3, 2016 Management Presentation Third Quarter 2016 Results
Slide 2: Forward Looking Statements & Other Information
2 FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation, including our “ 2016 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 histor
Slide 3: Third Quarter 2016 Summary
3 THIRD QUARTER 2016 SUMMARY » Diminished 2H topline recovery due to a lack of client decisions on incremental new assignments and a select client loss » Revenue growth driven by strong traction in Media and International, and continued strength in Data & Analytics » 2H profitability impacted by act
Slide 4: Third Quarter 2016 Financial Highlights
4 » Revenue increased 6.3% to $349.3 million from $328.4 million » Organic revenue growth of 2.7%, after a 30 basis points benefit from increased billable pass - through costs » Net loss attributable to MDC Partners of ($33.5) million versus ($8.6) million, including a non - cash impairment charge o
Slide 5: Year-to-Date Financial Highlights
5 » Revenue increased 2.9% to $995.3 million from $967.2 million » Organic revenue growth of 1.7%, after a 70 basis points reduction from decreased billable pass - through costs » Net loss attributable to MDC Partners of ($55.7) million versus ($11.1) million, including a non - cash impairment charg
Slide 6: Consolidated Revenue and Earnings
6 CONSOLIDATED REVENUE AND EARNINGS Note: Actuals may not foot due to rounding (US$ in millions, except percentages) 2016 2015 2016 2015 Revenue 349.3$ 328.4$ 6.3 % 995.3$ 967.2$ 2.9 % Operating Expenses Cost of services sold 235.7 212.9 10.7 % 675.9 648.4 4.2 % Office and general expenses 83.3 78.8
Slide 7: Revenue Summary
7 » Organic revenue growth of 2.7% in Q3 and 1.7% year - to - date REVENUE SUMMARY The Reportable segment is comprised of our integrated advertising and media specialist agencies as well as public relations f irm s, including Allison + Partners, Anomaly, CPB, Doner , F&B, Hunter PR, KBS, MDC Media P
Slide 8: Revenue by Geography and Segment
8 REVENUE BY GEOGRAPHY AND SEGMENT » U.S. led by Technology & Data Science, Media and contribution from new business, partially offset by impact of prior client losses » International strengthens to +19.1%, aided by Forsman & Bodenfors , due to broad strength across geographies and disciplines The R
Slide 9: Revenue by Client Industry
9 Year - over - Year Growth by Category » Best performing sectors: Communications, Food & Beverage, Consumer Products » Diversification continues: Top 10 clients declined to 22.4% of revenue in Q3 2016 from 23.5% a year ago (largest <4%) REVENUE BY CLIENT INDUSTRY Q3 2016 2016 YTD Above 10% Communic
Slide 10: Adjusted EBITDA
10 » Adjusted EBITDA negatively impacted by actions to align costs, including incremental severance and real estate consolidation expenses ADJUSTED EBITDA 1 Adjusted EBITDA is a non GAAP measure. See schedules 2 through 5 of the Q3 2016 press release for a reconciliation of Net los s t o Adjusted EB
Slide 11: Adjusted EBITDA Available for General Capital Purposes
11 ADJUSTED EBITDA AVAILABLE FOR GENERAL CAPITAL PURPOSES 1 Adjusted EBITDA is a non GAAP measure. See schedules 2 through 5 of the Q3 2016 press release for a reconciliation of Net los s t o Adjusted EBITDA. 2 Capital Expenditures, net represents capital expenditures net of landlord reimbursements.
Slide 12: Summary of Cash Flow
12 Note: Actuals may not foot due to rounding SUMMARY OF CASH FLOW Note: Actuals may not foot due to rounding (US$ in millions) 2016 2015 Cash flows used in continuing operating activities ($58.9) ($9.1) Discontinued operations 0.0 (1.3) Net cash used in operating activities ($58.9) ($10.5) Cash flo
Slide 13: 2016 Financial Outlook
13 2016 FINANCIAL OUTLOOK Revenue Adjusted EBITDA Adjusted EBITDA Available for General Capital Purposes Implied Adjusted EBITDA Margin $1.326 billion $197.7 million $113.4 million 14.9% $1.365 to $1.375 billion $170 to $180 million $75 to $85 million 12.4% to 13.2% +2.9% to +3.7% - 14.0% to - 8.9%
Slide 14: Adjusted EBITDA Guidance Bridge
14 Note: Actuals may not foot due to rounding ADJUSTED EBITDA GUIDANCE BRIDGE Note: Actuals may not foot due to rounding $175 $7 $3 $10 $15 $210 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 Prior 2016 Adjusted EBITDA Guidance Incremental severance Real estate consolidation Delayed cost cuts
Slide 15: Appendix
15 APPENDIX
Slide 16: Revenue Trending Schedule
16 Note: Actuals may not foot due to rounding REVENUE TRENDING SCHEDULE (US$ in thousands, except percentages) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD Revenue United States $228,833 $243,128 $249,128 $272,385 $993,474 $252,018 $271,375 $270,511 $291,147 $1,085,051 $252,198 $272,991 $274,506 $799,
Slide 17: Adjusted EBITDA Trending Schedule
17 Note: Actuals may not foot due to rounding ADJUSTED EBITDA TRENDING SCHEDULE (US$ in thousands, except percentages) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD ADVERTISING AND COMMUNICATIONS GROUP Revenue $302,222 $336,606 $328,415 $359,013 $1,326,256 $309,042 $337,047 $349,254 $995,343 Operating profit (loss) 2
Slide 18: Adjusted EBITDA Trending Schedule (cont.)
18 Note: Actuals may not foot due to rounding ADJUSTED EBITDA TRENDING SCHEDULE (cont.) (US$ in thousands, except percentages) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD CORPORATE GROUP Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 Operating profit (loss) (20,818) (9,890) (19,801) (14,663) (65,172) (13,130) (12,801) (7,051)
Slide 19: Acquisition Revenue Detail
19 Note: Actuals may not foot due to rounding ACQUISITION REVENUE DETAIL (1) For the twelve months ended December 31, 2015, 2015 revenue from acquisitions was comprised of $32.0 million from 2014 acquis iti ons and $13.8 million from 2015 acquisitions. For the three months ended September 30, 2016,
Slide 20: Reconciliations
20 Note: Actuals may not foot due to rounding RECONCILIATIONS Note: Actuals may not foot due to rounding (US$ in millions) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 YTD Other items, net SEC investigation and class action litigation expenses 5,762$ 3,882$ 2,722$ 1,340$ 13,706$ 1,486$ 1,359$ 767$ 3,612$ D&O insurance p
Slide 21: Available Liquidity
21 AVAILABLE LIQUIDITY 1 1 Subject to available borrowings under the Credit Facility. (US$ in millions) September 30, 2016 December 31, 2015 Commitment Under Facility $325.0 $325.0 Drawn 70.5 - Undrawn Letters of Credit 4.6 5.0 Undrawn Commitments Under Facility $249.9 $320.0 Total Cash & Cash Equiv
Slide 22: Current Credit Picture
22 Note: Actuals may not foot due to rounding CURRENT CREDIT PICTURE (1) These ratios and measures are not based on generally accepted accounting principles and are not presented as alternatives mea sur es of operating performance or liquidity. Some of these ratios and measures include, among other
Slide 23: Temporal Put Obligations and Impact on EBITDA
23 TEMPORAL PUT OBLIGATIONS AND IMPACT ON EBITDA 1 This amount is in addition to ( i ) $43.2 million of options to purchase only exercisable upon termination not within the control of the Company, or death, and (i i) the excess of the initial redemption value recorded in Redeemable Noncontrolling In
Slide 24: Definition of Non-GAAP Measures
24 DEFINITION OF NON - GAAP MEASURES Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of the following calculation: ( i ) the change in revenue during the relevant time period, less (ii) for each business acquired in the
Slide 25: MDC Partners contact information
MDC Partners Innovation Center 745 Fifth Avenue, Floor 19 New York, NY 10151 646 - 429 - 1800 www.mdc - partners.com November 3, 2016 Management Presentation Third Quarter 2016 Results