Stagwell Inc. · NASDAQ:STGW
Stagwell — Investor Presentation (September 2021)
37 slides from Stagwell's investor presentation, Sep 23, 2021
Slide 1: Investor Presentation September 2021
INVESTOR PRESENTATION SEPTEMBER | 2021
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward - Looking Statements This presentation contains forward - looking statements. Statements in this presentation that are not historical facts, including without limitatio n the information under the heading "Financial Outlook" and statements about the Company’s b
Slide 3: Forward Looking Information & Other Information (Cont'd)
Pro Forma Financial Information: The unaudited summary pro forma financial information contained in this presentation has been prepared for illustrative purpo ses only and is not necessarily indicative of the operating results or financial position that would have been achieved if the Transaction or
Slide 4: Non-GAAP Financial Measures
Non - GAAP Financial Measures The presentation includes certain financial measures that the SEC defines as “non - GAAP financial measures.” The Company’s manage ment believes that such non - GAAP financial measures, when read in conjunction with the results reported in accordance with generally acce
Slide 5: Company Overview
Company Overview 5
Slide 6: A technology-based marketing services company
A technology - based marketing services company that can transform marketing through its unique combination of creativity & high - growth digital services. “An investment in Stagwell is an investment in the future of marketing” Mark Penn, Chairman & CEO 6
Slide 7: Stagwell at a Glance
We provide clients with everything they need today to get the right ad to the right person at the right time. This means we develop integrated marketing strategies and campaigns that include: → CREATIVE SERVICES → DIGITAL TRANSFORMATION → E - COMMERCE ENGINEERING → RESEARCH & INSIGHTS, & → ADVANCED
Slide 8: Our History
We started with a big idea 6 years ago and with a record of organic growth as the network has been built from the ground up. Led by Mark Penn, former Chief Strategy Officer of Microsoft, CEO of Burston - Marsteller , and founder of Penn and Schoen, with more than 45 years of successful operating and
Slide 9: Investment Highlights
Investment highlights Industry - Leading Growth for a marketing services company Unlimited Opportunity to grow and expand globally Strong Margins fueled by high - growth digital services & SaaS products Prudent Cost Management proven by past execution Growing Free Cash Flow for reducing debt and inv
Slide 10: The Marketplace
The Marketplace 10
Slide 11: A $120B Total Addressable Market, Ripe for Disruption
Source: Morgan Stanley research An opportunity to disrupt the $60B of the legacy holding company marketplace ~$2B STAGWELL A $120B TOTAL ADDRESSABLE MARKET, RIPE FOR DISRUPTION THE MARKETPLACE $21B $15B $12B $10B $9B $8B $5B $5B $5B $26B Dentsu Accenture Interactive PwC Digital Deloitte Digital IBM
Slide 12: Digital Media Is Disrupting Marketing
7% 5% 31% 6% 1% 6% 44% 33% 15% 35% 9% 6% 2% Source: Zenith research DIGITAL MEDIA IS DISRUPTING MARKETING GLOBAL AD SPENDING 2000 (Total $329B) GLOBAL AD SPENDING 2020 (Total $613B) The new marketplace creates new opportunities THE MARKETPLACE Newspapers Magazines Television Radio Cinema Outdoor Int
Slide 13: Digital Marketing Is Growing Rapidly
Source: US Census Bureau, Targeted Victory, eMarketer Research Political & advocacy consulting, digital strategy, & online fundraising Political funds raised online ($ in billions) $0.4 $1.3 $2.2 $7.0 2014 2016 2018 2020 Online Advocacy Services enabling influencers & global performance marketing $1
Slide 14: The Stagwell Approach
The Stagwell Approach 14
Slide 15: A platform with the right mix of talent + technology
A platform with the right mix of talent + technology for the modern marketer Consulting firms lack essential creative talent JUST RIGHT FOR THE TIMES Legacy holding companies grew too big THE STAGWELL APPROACH 15
Slide 16: Cutting Edge Digital Transformation, Data & Insights
THE STAGWELL APPROACH Cutting Edge Digital Transformation Data & Insights Shaping The Digital Future THE MAGIC WALL Design an experience that brings election results to life. On election night, CNN needs a way to show huge amounts of quickly changing information simply, beautifully. Working collabor
Slide 17: Streamlined Go-to-Market Structure Optimized for Growth
THE STAGWELL APPROACH 17 Communications & Advocacy MEDIA DIGITAL INNOVATION GROUP GLOBAL SOLUTIONS CONSTELLATION Streamlined GO - TO - MARKET STRUCTURE Optimized for Growth
Slide 18: Access Points for Growth
Access Points FOR GROWTH Blue - Chip Customer Base Provides Significant Expansion Opportunity Communications Media & Entertainment Retail Food & Beverage Consumer Products Technology Automotive Financial Services Healthcare THE STAGWELL APPROACH 18
Slide 19: Our Global Network
Stagwell +Affiliates CITIES 68 80 COUNTRIES 24 32 EMPLOYEES 10,000 +12,000 STAGWELL AFFILIATES Our Global NETWORK 10,000+ Employees Across 24 Countries & 68 Cities In Addition To Vast Affiliate Network THE STAGWELL APPROACH 19
Slide 20: Growing Unique Digital Revenue Streams
Growing Unique DIGITAL REVENUE STREAMS Suite Of Digital Marketing Products Based On AI, Proprietary Data & Insights Audience Identification & Activation I nfluencer Management Platform AI For Public Relations Pros Mobile Device Usage & Behavior Modern Brand Management Transformational Media Executio
Slide 21: Disciplined Investment Approach
Disciplined INVESTMENT APPROACH THE STAGWELL APPROACH TARGET TO ACQUIRE >$325 MILLION OF REVENUE EXPANDING REACH & CAPABILITIES Lower Multiples (5 - 7x) Higher Multiples (9 - 12x) Expand Global Footprint Expand Digital Platforms Invest Emerging Technologies 21
Slide 22: Opportunity to Grow to $3 Billion+ and Beyond
* Targeted by 2025 OPPORTUNITY TO GROW TO $3 BILLION+ AND BEYOND OF TARGET GAAP REVENUE IN 2025 THROUGH COMBINATION OF ORGANIC, NEW REVENUE STREAMS & ACQUISITIONS Potential Equation for Success * ($M) Combined Revenue + Organic Growth $2,600 + New Digital Revenue Streams $75 + M&A Growth $325 = TARG
Slide 23: Financial Highlights
Financial Highlights 23
Slide 24: Enhanced Market Position
Enhanced Market Position LTM (6/30/21 Pro Forma Actual) GAAP REVENUE $2,197 M ADJ. EBITDA $ 378 M
Slide 25: Financial Highlights Q2 2021
Financial highlights FINANCIAL HIGHLIGHTS Q2 2021 • Q2 GAAP revenue up 33% year - over - year, driven by growth in all sectors and disciplines • Strongest ever second quarter Adjusted EBITDA of $60 million, up 67% over the prior year • Adjusted EBITDA margins of 17.4% from 13.9% a year ago • LTM Adj
Slide 26: GAAP Revenue & Adjusted EBITDA
GAAP REVENUE & ADJUSTED EBITDA FINANCIAL HIGHLIGHTS GAAP Revenue Adjusted EBITDA $1,901.5 $2,044.5 $2,087.0 $2,196.8 1,475.1 1,415.8 1,199.0 1,264.8 426.4 628.7 888.0 932.0 2018 2019 2020 LTM 6/30/21 $231.9 $273.0 $320.5 $377.7 161.5 174.2 177.3 213.8 70.4 98.8 143.2 163.9 2018 2019 2020 LTM 6/30/21
Slide 27: Free Cash Flow
FREE CASH FLOW FINANCIAL HIGHLIGHTS FCF Conversion Historical ($M) MDC Stagwell Group Note: FCF defined as Adj. EBITDA less Capex, Interest, Cash Taxes, Minority Interest distributions, and Changes in Working Ca pit al. Excludes transaction costs and M&A payments; FCF conversion defined as FCF divid
Slide 28: Record of Controlling Costs
RECORD OF CONTROLLING COSTS FINANCIAL HIGHLIGHTS Consistent Margin Expansion During Pandemic Note: PF EBITDA Margin calculated with aggregate GAAP Revenue and as reported Adjusted EBITDA from legacy Stagwell and legacy MD C Partners Cost reductions reflect 2020 legacy MDC Partners 12.2% 13.4% 15.6%
Slide 29: Further Cost Synergies to Achieve
FURTHER COST SYNERGIES TO ACHIEVE FINANCIAL HIGHLIGHTS Targeting $30 Million Note: Estimates do not include cost to achieve of $24 million. 1 Includes consolidation of IT staff, decrease in third party spend on employee benefits and consolidation of translation ser vic es 29 Corporate 9% T&E 5% Shar
Slide 30: Optimized Capital Structure
OPTIMIZED CAPITAL STRUCTURE FINANCIAL HIGHLIGHTS Lower Pro Forma Leverage Note: Assumes ~$30 million of cost savings. Does not include costs to achieve. Synergies expected to be fully realized by yea r 3 . 1 MDC net leverage as of 6/30/21. E xcludes Deferred Acquisition Costs and Minority Investment
Slide 31: Capital Structure August 2021
FINANCIAL HIGHLIGHTS 31 Debt & Debt - Like ($M) Revolving Credit Facility, Net $159 Bonds $1,100 M&A Obligations $118 TOTAL $1377 Common Equity Class A & B 78,779,922 Class C 179,970,051 Fully Diluted 260,572,761 FULLY DILUTED + PREF. CONVERSION 293,608,207 Note: Figures pro forma for combination, p
Slide 32: Rising Above Traditional Holding Companies
FINANCIAL HIGHLIGHTS 32 -50% 0% 50% 100% 150% 200% 250% 300% STGW SFOR IPG WPP PUB OMC Performance YTD Rising Above Traditional Holding Companies Compelling INVESTMENT + ~ 230% VS. 38% PEER A VERAGE Note: market data as of 9/14/2021
Slide 33: Investment Recap
Investment recap Industry - Leading Growth for a marketing services company Unlimited Opportunity to grow and expand globally Strong Margins fueled by high - growth digital services & SaaS products Prudent Cost Management proven by past execution Growing Free Cash Flow for reducing debt and investin
Slide 34: Appendix
Appendix 34 These materials are not to be printed, downloaded or distributed. These materials are only available to QIBs and non - US persons.
Slide 35: Legacy MDC Non-GAAP Reconciliation
Source: Public filings 1 Other items, net includes items such as severance expense, other restructuring expenses and costs associated with the Compa ny' s strategic review process LEGACY MDC NON - GAAP RECONCILIATION APPENDIX Fiscal year ended Dec. 31, LTM $M 2018 2019 2020 Q3'20 Q4'20 Q1'21 Q2'21 6
Slide 36: Legacy Stagwell Group Non-GAAP Reconciliation
Source: Public filings 1 Other items, net includes items such as severance expense, other restructuring expenses and costs associated with the Compa ny' s strategic review process LEGACY STAGWELL GROUP NON - GAAP RECONCILIATION APPENDIX Fiscal year ended Dec. 31, LTM $M 2018 2019 2020 Q3'20 Q4'20 Q1
Slide 37: Thank You
Thank You Contact Us IR@stagwellglobal.com