MDC Partners (MDCA) Tops Q1 EPS by 18c, Revenues Miss

MDC Partners (NASDAQ: MDCA) reported Q1 EPS of ($0.04), $0.18 better than the analyst estimate of ($0.22). Revenue for the quarter came in at $328.7 million versus the consensus estimate of $331.7 million.

• Revenue of $328.8 million versus $327.0 million a year ago, an increase of 0.6%.
• Organic revenue decrease of 0.9%
• Net loss attributable to MDC Partners common shareholders of $2.5 million in the first quarter of 2019 versus a loss of $31.4 million a year ago. Net loss attributable to MDC Partners common shareholders for the last twelve months (LTM) of $103.3 million as of March 31, 2019 versus $132.3 million loss as of December 31, 2018.
• Adjusted EBITDA of $21.5 million versus $7.8 million a year ago, an increase of 175%. Adjusted EBITDA Margin of 6.5%, an increase of 410 basis points compared to prior year quarter.
• Covenant EBITDA (LTM) of $183.8 million versus $172.6 million at year end 2018, an increase of 6.5%. (Refer to Schedule 5)

"In a time of continued disruption in the advertising industry, MDC Partners is off to a solid start in 2019 with Adjusted EBITDA significantly ahead of the first quarter of last year as a result of our cost-savings initiatives," said Mark Penn, Chairman and CEO of MDC Partners. "The 175% increase in Adjusted EBITDA puts us on a path to return to both bottom and top-line growth and achieve significant positive cash flow by year end, as we expect new measures to further increase efficiencies, encourage intra-agency cooperation and expand the offerings of our lead agencies.

We are implementing a two-year plan designed to transform MDC to the model of a modern marketing services company, combining top creative talent with leading data, research, strategy, digital and media offerings. The talent in the network is already impressive in its ability to work for the top clients in the world and we plan to enhance our capabilities to deliver more impactful results for those same clients. In addition to facilitating revenue growth, we will bring comp to revenue ratio, real estate and other key costs in line to create meaningfully improved margins and cash flow through 2020. We plan to issue two-year guidance for this plan."

David Doft, Chief Financial Officer, added, "The impact of our cost savings initiatives in 2018 are clear, with reductions in staff, real estate and corporate expense during the quarter, helping to drive Adjusted EBITDA growth. We see continued opportunity for efficiency in 2019 and remain focused on optimizing our profit margin while reinvigorating the business."

For earnings history and earnings-related data on MDC Partners (MDCA) click here.

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