Stagwell Inc. · NASDAQ:STGW
Stagwell — MDC Partners — Q1 2018 Earnings Presentation
22 slides from Stagwell's earnings presentation, May 9, 2018
Slide 1: Management Presentation First Quarter 2018 Results
Management Presentation First Quarter 2018 Results May 9, 2018
Slide 2: Forward Looking Statements & Other Information
FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by thos
Slide 3: Summary
SUMMARY Challenging start to 2018 Slower-than-expected revenue trends and dampened near-term outlook reflect select client cutbacks and slower conversion of our new business pipeline with budgets smaller than anticipated, in some instances Adjusted EBITDA significantly impacted by the adoption
Slide 4: First Quarter 2018 Financial Highlights
FIRST QUARTER 2018 FINANCIAL HIGHLIGHTS Adopted ASC 606 effective January 1, 2018 using the Modified Retrospective Method, therefore reported results are not comparable with the prior period (which continues to be reported under ASC 605) Revenue of $327.0 million versus $344.7 million (as report
Slide 5: Consolidated Revenue and Earnings
CONSOLIDATED REVENUE AND EARNINGS (US$ in millions, except percentages) Three Months Ended March 31, 2018 (1) 2017 % Change Revenue $ 327.0 $ 344.7 (5.1) % Operating expenses Cost of services sold 243.0 237.6 2.3 % Office and general expenses 83.9 87.8 (4.5) % Depreciation and amortization 12.4 10.9
Slide 6: Application of ASC 606
APPLICATION OF ASC 606 Adopted ASC 606 effective January 1, 2018 Only the accounting changes No change to our business model or performance metrics No change to our client relationships or underlying client contracts No change to cash or cash flow No change to 2018 Adjusted EBITDA dollar
Slide 7: Impact of Adoption of ASC 606 on Reported Results
IMPACT OF ADOPTION OF ASC 606 ON REPORTED RESULTS (US$ in millions, except percentages) Three Months Ended March 31, 2018 Adjusted to Exclude Impact of As Reported Adjustments Adoption of ASC 606 Revenue $ 326,968 $ 21,276 $ 348,244 Costs of services sold 243,030 15,197 258,227 Operating loss (14,63
Slide 8: Revenue Summary
REVENUE SUMMARY (US$ in millions, except percentages) Three Months Ended Revenue $ % Change March 31, 2017 (ASC 605) $344.7 Organic Revenue Growth (Decline) 3.3 1.0% Non-GAAP Acquisitions (Dispositions), net (5.3) (1.5%) Foreign Exchange impact, net 5.5 1.6% Impact of Adoption of ASC 606 (1) (21.3)
Slide 9: Revenue by Geography and Segment
REVENUE BY GEOGRAPHY AND SEGMENT (US$ in millions, except percentages) Three Months Ended March 31, 2018 Total Total Organic Revenue Revenue Growth Growth (Decline) United States $256.5 (6.6%) (1.8%) Canada 26.4 (0.3%) (1.1%) North America 282.9 (6.1%) (1.8%) Other 44.1 1.2% 19.8% Total $327.0 (5.1%
Slide 10: Revenue by Client Industry
REVENUE BY CLIENT INDUSTRY Q1 2018 Mix Year-over-Year Growth by Category Q1 2018 (normalized for impact of adoption of ASC 606) Above 10% Healthcare, Technology, Transportation and Travel/Lodging, Food & Beverage, Financials 0% to 10% ---- Below 0% Communications, Retail, Consumer Products, Automoti
Slide 11: Adjusted EBITDA
ADJUSTED EBITDA (US$ in millions, except percentages) Three Months Ended March 31, 2018 2017 (ASC 606) (ASC 605) % Change Advertising and Communications Group $ 18.0 $ 43.3 (58.5) % Global Integrated Agencies (3.8) 16.8 (122.4) % Domestic Creative Agencies 4.0 4.4 (9.9) % Specialized Communications
Slide 12: Summary of Cash Flow
SUMMARY OF CASH FLOW (US$ in millions) Three Months Ended March 31, 2018 2017 Net cash used in operating activities ($61.0) ($33.2) Net cash used in investing activities ($3.9) ($11.1) Net cash provided by financing activities $47.6 $39.6 Effect of exchange rate changes on cash and cash equivalents
Slide 13: 2018 Financial Outlook
2018 FINANCIAL OUTLOOK 2018 Outlook Commentary Organic Revenue Growth We expect 1-3% growth in organic revenue (versus approximately 4% growth previously), whose definition now excludes the impact of the adoption of ASC 606 in the reconciliation of reported revenue. Pass-through and The adoption of
Slide 14: Appendix
APPENDIX 13
Slide 15: Revenue Trending Schedule
REVENUE TRENDING SCHEDULE (US$ in thousands, except percentages) 2016 (ASC 605) 2017 (ASC 605) 2018 (ASC 606) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Revenue United States $252,199 $272,992 $274,506 $304,016 $1,103,712 $274,682 $304,463 $289,701 $303,517 $1,172,364 $256,524 Canada 28,406 33,614 30,233 31,8
Slide 16: Adjusted EBITDA Trending Schedule
ADJUSTED EBITDA TRENDING SCHEDULE (US$ in thousands, except percentages) 2016 (ASC 605) 2017 (ASC 605) 2018 (ASC 606) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 ADVERTISING AND COMMUNICATIONS GROUP Revenue $309,042 $337,047 $349,254 $390,442 $1,385,785 $344,700 $390,532 $375,800 $402,747 $1,513,779 $326,968 O
Slide 17: Reconciliations
RECONCILIATIONS (US$ in millions) 2016 2017 2018 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Non-GAAP acquisitions (dispositions), net GAAP revenue from prior year acquisitions * $ 6,556 $ 2,817 $ 17,083 $ 24,657 $ 51,113 $ 18,552 $ 24,983 $ - $ - $ 43,535 $ - Foreign exchange impact 39 7 113 1,343 1,502 1,046
Slide 18: Available Liquidity
AVAILABLE LIQUIDITY1 (US$ in millions) March 31, 2018 December 31, 2017 Commitment Under Facility $325.0 $325.0 Drawn $ 59.0 $ 0.0 Undrawn Letters of Credit 5.2 5.1 Undrawn Commitments Under Facility $260.7 $319.9 Total Cash & Cash Equivalents 29.2 46.2 Liquidity $289.9 $366.1 1 Subject to available
Slide 19: Current Credit Picture
CURRENT CREDIT PICTURE $325 million Credit Facility Covenants (1) Current Debt Maturity Profile (5) (US$ in millions) Twelve Months Ended March 31, 2018 Covenants I. Total Senior Leverage Ratio 0.3 Maximum per covenant 2.0 II. Total Leverage Ratio 5.1 Maximum per covenant 5.5 III. Fixed Charges Rati
Slide 20: Temporal Put Obligations and Impact on Adjusted EBITDA
TEMPORAL PUT OBLIGATIONS AND IMPACT ON ADJUSTED EBITDA Estimated Put Impact at March 31, 2018 Payment Consideration Incremental (US$ in millions) Cash Stock Total Income in Period 2018 $3.9 $0.0 $3.9 $2.4 2019 2.7 0.0 2.7 0.1 2020 4.2 0.1 4.3 1.5 2021 2.1 0.1 2.2 0.0 Thereafter 2.1 0.0 2.1 0.4 Total
Slide 21: Definition of Non-GAAP Measures
DEFINITION OF NON-GAAP MEASURES In addition to its reported results, MDC Partners has included in its earnings release and supplemental management presentation certain financial results that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that suc
Slide 22: MDC Partners Innovation Center, New York
MDC Partners Innovation Center 745 Fifth Avenue, Floor 19 New York, NY 10151 646-429-1800 www.mdc-partners.com