Stagwell Inc. · NASDAQ:STGW
Stagwell — MDC Partners — Merger or Acquisition (March 2021)
30 slides from Stagwell's merger presentation, Mar 2, 2021
Slide 1: Transforming Marketing
TRANSFORMING MARKETING
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward - Looking Statements This communication may contain certain forward - looking statements (collectively, “forward - looking statements”) within the meanin g of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Exchange Act an
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the Proposed Transactions, MDC and New MDC has filed with the SEC a registration statement on Form S - 4 (the “Form S - 4”) that includes a proxy statement of MDC (the “Proxy Statement” and, together with the Form S - 4, the “Proxy State
Slide 4: Pro Forma Financial Information
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 Proposed Transa
Slide 5: Non-GAAP Financial Measures
Non - GAAP Financial Measures The presentation includes certain financial measures that the SEC defines as “non - GAAP financial measures.” MDC’s and Stagwell’s respective managements believe that such non - GAAP financial measures, when read in conjunction with the results reported in accordance wi
Slide 6: Better Together
BETTER TOGETHER “The combination unites the award - winning talent of MDC with the advanced technology platform of Stagwell. Together, we become the transformative company that modern marketers need.” MARK PENN Chairman & CEO 6
Slide 7: Better Together Today: One Company That Together...
7 Combined company with targets of 5%+ annual organic growth , driven by 10 - 15% digital marketing growth and complementary capabilities, and 9%+ total annual revenue growth including new products and acquisitions Integrated services driving $30M in cost synergies , with ~90% achieved in the first
Slide 8: Better Together: Combined Financials and 2021 Projections
BETTER TOGETHER ($ M ) 8 MDC 2020 Actual Stagwe ll 2020 PF Est. REVENUE: $890 NET REV: $655 ADJ. EBITDA: $138 COUNTRIES: 20 EMPLOYEES: 3,775 GAAP REV: $1,199 NET REV: $1,023 ADJ. EBITDA: $177 COUNTRIES: 14 EMPLOYEES: 4,900 2021 PF Projections MDC 2021 Est. GAAP REVENUE: $1,285 - 1,305 ADJ. EBITDA: $
Slide 9: Equation for Success
9 Equation for Success ($M) 2025 Combined Organic Revenue Growth $2,600 + New Digital Revenue Streams $75 + M&A Growth $325 = TARGET GOAL $3,000 $3 BILLION+ OF GAAP REVENUE IN 2025 THROUGH COMBINATION OF ORGANIC, NEW REVENUE STREAMS & ACQUISITIONS OPPORTUNITY TO GROW TO BETTER TOGETHER TOMORROW
Slide 10: The Marketplace: Just Right for the Times
10 THE MARKETPLACE The combination brings together the right mix of talent + technology Consulting firms lack essential creative talent JUST RIGHT FOR THE TIMES Legacy holding companies grew too big 10
Slide 11: Combination Offers the Integrated Solutions Needed to Transform Marketing
11 COMBINATION OFFERS THE INTEGRATED SOLUTIONS NEEDED TO TRANSFORM MARKETING LEADERSHIP THAT BRINGS IT ALL TOGETHER INTO ONE SYNERGISTIC OFFERING Second - to - None Creativity & Communications Blue Chip Customer Base Precision Media & Data Capabilities Addressable on a Global Scale Rigorous Consumer
Slide 12: Results-Driven Technology & Digital Transformation
RESULTS - DRIVEN TECHNOLOGY & DIGITAL TRANSFORMATION NEW PRODUCTS & REVENUE STREAMS Audience identification and activation I nfluencer management platform AI for public relations pros Mobile device usage and behavior Modern brand management Online reputation management Transformational media executi
Slide 13: Combined Presence Spans 23 Countries and 67 Cities
13 STAGWELL MDC BOTH AS OF 6.30.20 Cities 42 49 67 Countries 14 20 23 Employees 4,900 3,775 8,675 BETTER TOGETHER: MDC & STAGWELL’S COMBINED PRESENCE SPANS 23 COUNTRIES AND 67 CITIES
Slide 14: Second-to-None Creativity & Communications, Blue Chip Customer Base
SECOND - TO - NONE CREATIVITY & COMMUNICATIONS BLUE CHIP CUSTOMER BASE Communications / Media Retail Food & Beverage Consumer Products Technology Automotive Financial Services Healthcare 14
Slide 15: What We Can Build Together: Organic Growth Acceleration
MDC & Stagwell’s complementary capabilities have previously resulted in pitch invitations for $15+ million assignments; just a handful of potential collaborative wins could generate $90 - $150 million annual top - line benefit over time 15 Multi - year, multi - brand creative work serviced by joint
Slide 16: What We Can Build Together: Cost Synergies of $30 Million
Corporate 9% T&E 5% Shared Services 16% Media 32% Production 10% Research 12% Real Estate 9% Other 1 7% Annualized Cost Synergies ~55% Expected To Be Realized by Year 1 ~9 0 % Expected To Be Realized by Year 2 100% Expected To Be Realized by Year 3 $30 MILLION ~ WHAT WE CAN BUILD TOGETHER: COST SYNE
Slide 17: Leadership Team with Experience in Value Creation and Marketing Services
LEADERSHIP TEAM WITH EXPERIENCE IN VALUE CREATION AND MARKETING SERVICES MARK PENN HAS OVER 45 YEARS OF SUCCESSFUL OPERATING EXPERIENCE AND INDUSTRY EXPERTISE 17 Founder & Pollster Founded Penn and Schoen in 1975 with his Harvard roommate Doug Schoen Grower Under Penn’s leadership, firm expanded to
Slide 18: Financial Detail
FINANCIAL DETAIL 18
Slide 19: MDC: Growing Profitability & Declining Leverage Ratio
EXPANDING COVENANT EBITDA (LTM) MDC: GROWING PROFITABILITY & DECLINING LEVERAGE RATIO 1 Indicates fair value of M&A obligations 2 Represents aggregate of contingent payments and fixed payments balances 3 Total leverage calculation, as defined under the credit agreement, includes issued but undrawn l
Slide 20: Stagwell: A Proven Platform for Growth & Acquisitions
20 STAGWELL: A PROVEN PLATFORM FOR GROWTH & ACQUISITIONS $294 $426 $629 2017A 2018A 2019A 2020 PF Est. $ in millions GAAP REVENUE 2015 & 2016 $890 20 Note: Stagwell financials are pro forma for certain in - period acquisitions and other adjustments based on reports from MDC third party accounting ad
Slide 21: What We Can Build Together: An Enhanced Credit Profile
WHAT WE CAN BUILD TOGETHER: AN ENHANCED CREDIT PROFILE TRANSACTION REDUCES LEVERAGE BY ~1X SYNERGY IMPACT $ in millions, (unaudited) LTM as of: 12/31/20 9/30/20 Revenue $1,199 1 $797 $1,996 Adj. EBITDA (Incl. Synergies) $190 2 $117 $307 ($337) Net Debt $840 4 $256 5 $1,188 6 Note: Assumes ~$30 milli
Slide 22: Improving Credit Outlook
IMPROVING CREDIT OUTLOOK “We believe [Stagwell’s] specialty in digital services and polling research will complement MDC’s portfolio of creative advertising agencies. Moreover, we expect the combined company will benefit from Stagwell’s history of positive revenue growth, good EBITDA margins and fav
Slide 23: Making Progress: Added Value to Debt and Equity
23 MAKING PROGRESS ADDED VALUE TO DEBT AND EQUITY MDC 2024 Senior Notes MDC Class A Shares Update Graph Stagwell Investment In MDC Partners Stagwell Investment In MDC Partners
Slide 24: Appendix
APPENDIX 24
Slide 25: Pro Forma Credit Profile
APPENDIX PRO FORMA CREDIT PROFILE LESS LEVERAGE, BROADER SCALE AND FINANCIAL FLEXIBILITY PRO FORMA CAPITAL STRUCTURE PRO FORMA MATURITY SCHEDULE 8 1 Adjustments based on Stagwell projected balance sheet as of 3/31/21. All Stagwell financial information and outlook presented herein is unchanged from
Slide 26: Other Obligations
APPENDIX OTHER OBLIGATIONS 26 $Millions (unaudited) MDC 12/31/20 Stagwell 9/30/20 Pro Forma Net Debt $809 $256 $1,157 Deferred Acquisition Consideration 83 13 96 Redeemable NCI 27 – 27 Non - Redeemable NCI 41 38 79 Series 4 Preferred 1 129 – 99 Series 6 Preferred 58 – 58 Investments 2 – (19) (19) To
Slide 27: MDC Non-GAAP Reconciliation
APPENDIX MDC NON - GAAP RECONCILIATION 27 1 Covenant EBITDA is a measure that includes pro forma adjustments for acquisitions, one - time charges, permitted dispositions an d other adjustments, as defined in the Company’s Credit Agreement. Covenant EBITDA is calculated as the aggregate of operatin g
Slide 28: Stagwell Non-GAAP Reconciliation
APPENDIX STAGWELL NON - GAAP RECONCILIATION 28 Source: Stagwell's financials and gives effect to certain sell - side adjustments and other adjustments based on reports by MDC th ird party accounting advisors 1 PF Revenue and quarterly results include unaudited results, 2 Pre acquisition results incl
Slide 29: Stagwell Non-GAAP Reconciliation (Cont'd)
APPENDIX STAGWELL NON - GAAP RECONCILIATION (CONT’D) 29 Source: Based on Stagwell's financials and gives effect to other adjustments based on reports by MDC third party accounting a dvi sors 1 Net income, as shown by MDC third party accounting advisors, adjusted for PCAOB adjustments 2 Sell - side a
Slide 30: Transforming Marketing
TRANSFORMING MARKETING 30