Slide 1: Strategic & Financial Update
Strategic & Financial Update
Slide 2: Forward Looking Statements & Other Information
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 historical
Slide 3: Definition of Non-GAAP Measures
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, distributions from non - consolidated af
Slide 4: Strategic Update
Strategic Update Scott Kauffman Chairman & CEO, MDC Partners
Slide 5: Unencumbered creativity, cutting edge technology, MDC Culture
Unencumbered creativity Cutting edge technology MDC Culture Talent, Entrepreneurism, Innovation & Invention The modern global model built for t he digital world
Slide 6: A Portfolio for Today's CMO
A PORTFOLIO FOR TODAY’S CMO
Slide 7: Clients Who Inspire Our Work
CLIENTS WHO INSPIRE OUR WORK Communications / Media Retail Food & Beverage Consumer Products Technology Automotive Financials Healthcare
Slide 8: Most Highly Awarded Agencies
&) ® & AGENCY DIGITAL AGENCY AGENCY ADVERTISING FEDERATION 12 CANNES LIONS. PR AGENCY FAST COMPANY ® of) (*) GRAND EFFIE (*) MOST INNOVATIVE, (x) MOST HIGHLY AWARDED HEALTHCARE AGENCY TITANIUM GRAND PRIX MDCPartners
Slide 9: Consumer Recognition
Consumer Recognition Most Watched SuperBowl Ad – 3 Years in a Row Budweiser: “Lost Dog” (2015), “Puppy Love” (2014), “The Clydesdales” (2013) – Anomaly The Budweiser puppy has done what the Seattle Seahawks could not — it won back - to - back Super Bowls. If you're keeping score, not only is that tw
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Slide 11: Vision for Growth
VISION FOR GROWTH 1. S caling our agencies globally 2. Fueling the next wave 3. Leveraging emerging technologies 4. Bolstering high demand services 5. Enhancing collaboration to drive incremental opportunities
Slide 12: Scaling Our Agencies: Global Growth
SCALING OUR AGENCIES: GLOBAL GROWTH 2012 2013 2014 2015 Q1 - 16+ Key Public Wins* % of MDC Revenue 4.5% 5.3% 6.5% 8.5% 9.2% Int’l Organic Growth +53% +31% +28% +32% +41% Brazil * Includes wins in the public domain only Outside of North America: 11 countries, 15 cities, 12 agencies
Slide 13: MEDIALABS | COLLE+MeVOY YAMAMOTO,
MEDIALABS | COLLE+MeVOY YAMAMOTO, PARTNERS © E Geritas civivian vawneoson HL hunter public relations J kenaa LARD +PARTNERS Ka Knespate legend @® SOURCE somsfasasings SLOANE & COMPANY, MDCPartners
Slide 14: Leveraging Emerging Technologies: Mobile and Analytics
LEVERAGING EMERGING TECHNOLOGIES: MOBILE AND ANALYTICS
Slide 15: Bolstering High Demand Services: Media
BOLSTERING HIGH DEMAND SERVICES: MEDIA Varick Media Management established as first agency programmatic trading desk Varick joins The Media Kitchen, MDC’s existing boutique media agency born out of KBS <2% of MDC Revenue 2008 2015 2016 2010 - 12 2014 2013 MDC acquires the pieces that would later be
Slide 16: Driving Incremental Opportunities
DRIVING INCREMENTAL OPPORTUNITIES US creative All of China Media, PR Creative, Media M edia US creative Canada China Global Creative Global Creative Public Relations Brazil Select examples: 2014 2015 Top 10 3.4 4.4 Top 25 2.7 3.1 Avg. # of MDC Agencies Per Client Global Creative Creative Creative US
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Slide 18: Financial Update
Financial Update David Doft Chief Financial Officer, MDC Partners
Slide 19: Robust New Business Trends
ROBUST NEW BUSINESS TRENDS * Includes wins in the public domain only 2015 New Business* Brazil 55 2016 YTD New Business* m 2016 YTD Net New Business $
Slide 20: Portfolio Risk Reduction as We Grow
PORTFOLIO RISK REDUCTION AS WE GROW 2009 1 2015 » Revenue $546 million $1.33 billion » Adjusted EBITDA $70 million $198 million » CFO 2 less Capex $55 million $141 million » Contracted retainer based revenue 63% 81% » Client concentration - top 10 49% 24% » Agency concentration - largest >30% teens
Slide 21: Solid Underlying Segment Profitability
SOLID UNDERLYING SEGMENT PROFITABILITY Advertising & Communications 18.1% Corporate - 3.2% Total MDC Partners 14.9% * 2015 Adjusted EBITDA margins. See appendix for definitions of non - GAAP measures.
Slide 22: Corporate Efficiency
CORPORATE EFFICIENCY Gross Savings Reduced CEO compensation Exited Toronto HQ facility De - listed from TSX Cut unproductive s pending Accelerated Investments New business r esources Education/talent initiatives Information technology = $10 million net savings incremental in 2016
Slide 23: Adjusted EBITDA Margin Upside Potential
ADJUSTED EBITDA MARGIN UPSIDE POTENTIAL
Slide 24: Distinctive M&A Strategy
DISTINCTIVE M&A STRATEGY » Self - selection ensures right fit for MDC with leaders in it for long term » Financial alignment with agency leadership underpinned through minority equity ownership and earnout structure » Deals generally self - funding beyond closing payment » Priority return structure
Slide 25: Reduction of Contingent Obligations & Minority Interest
REDUCTION OF CONTINGENT OBLIGATIONS & MINORITY INTEREST * Proforma as if April and May contingent payments took place by March 31, 2016. ^ 2017 aggregate amount assumes actual future performance consistent with current projections , constant WACC at 9.23% , and no incremental transactions including
Slide 26: De-Leveraging the Balance Sheet
DE - LEVERAGING THE BALANCE SHEET 3.4 x 2.5 x or below 12/31/2015 2 to 3 years 1 turn de - leveraging over next 2 - 3 years Net Debt / Adjusted EBITDA
Slide 27: Clear Visibility into 2H Acceleration
CLEAR VISIBILITY INTO 2H ACCELERATION Timing + New Business + Billable Pass - through Costs = 2H Revenue Acceleration
Slide 28: Timing of Projects
TIMING OF PROJECTS $ in millions Q1 Q2 Q3 Q4 FY Yr / Yr Chg 2014 $2,796 $1,317 $2,722 $1,682 $8,516 2015 $4,833 $2,278 $2,009 $2,405 $11,575 +36% 2016 $2,458 flat to up $2.4m timing impact in Q1, or nearly 1% drag to organic growth An Actual Client Example
Slide 29: Billable Pass-Through Costs
BILLABLE PASS - THROUGH COSTS One More Actual Client Example Historical MDC Organic Revenue and Pass - Through Impact Organic Revenue Impact 2014 10.8% 60bp 1Q2015 7.4% - 50bp 2Q2015 8.3% - 10bp 3Q2015 5.7% - 420bp 4Q2015 7.2% - 230bp 2015 7.1% - 190bp 1Q2016 2.2% - 240bp Q1 2015 Q1 2016 $ in millio
Slide 30: 2016 Financial Outlook
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% $1.410 to $1.440 billion $225 to $235 million $130 to $140 million 15.8% to 16.4% +6.3% to +8.6% +13.8% to +18.9% +1
Slide 31: The Path to Long-Term Growth
THE PATH TO LONG - TERM GROWTH North American Creative + New Services (e.g. media, mobile, analytics, public relations, healthcare) + International Expansion = 5 - 7% organic growth = 2x industry growth (industry average 2.8% since 2007)
Slide 32: MDC Financial Framework
MDC FINANCIAL FRAMEWORK Double - Digit Total Revenue Growth 50 - 100 bps Annual Margin Expansion 25 - 30% Compounded Adjusted EBITDA Available for General Capital Purposes Growth Mid - Teens Adjusted EBITDA Growth +20% Organic Compounded Adjusted EBITDA Available for General Capital Purposes Growth
Slide 33: Key Takeaways
KEY TAKEAWAYS 1. P ortfolio management optimizes performance and limits risk 2. Self - funding acquisition model creates long - term asset value 3. Balance sheet at inflection point 4. Poised for topline acceleration beginning in 3Q 5. Long - term financial framework never stronger
Slide 34: Appendix
Appendix MpoPartners
Slide 35: Adjusted EBITDA Schedule
ADJUSTED EBITDA SCHEDULE Mpco<Partners
Slide 36: Can tert ot oe? (on)
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Slide 37: Revenue Trending Schedule
REVENUE TRENDING SCHEDULE (US$ in thousands, except percentages) 2016 Q1-14 Q2-14 Q3-14 Q4-14 FY 2014 Q1-15 Q2-15 Q3-15 Q4-15 FY 2015 Q1-16 Revenue United States $228,833 $243,128 $249,128 $272,385 $993,474 $252,018 $271,375 $270,512 $291,146 $1,085,051 $252,198 Canada 30,913 39,028 38,052 42,397 15
Slide 38: Thank You
Thank You Investor Contact: Matt Chesler , CFA Head of Investor Relations mchesler@mdc - partners.com