MDC Partners said first-quarter results were hit by increased severance costs and the impact of acquisition activity in the second half of last year. The company said EBITDA, earnings before interest, taxes, depreciation and amortization, dropped to $7.5 million, a 51 percent decline from $15.4 million reported in the 2011 quarter.
Organic growth rose 5.4 percent in the first quarter while revenue increased 9.7 percent to $236 million.
In September, MDC acquired majority stakes in two specialty agencies: Concentric Pharma Advertising and fashion, luxury firm Laird & Partners. The company also bought London's Epoch PR in October for Kwittken & Co., a public relations unit that is part of MDC’s Kirshenbaum Senecal & Partners unit. Earlier in the year MDC acquired a majority stake in N.Y. agency Anomaly.
The company’s acquisition activity has continued into this year when MDC acquired media independent RJ Palmer and took a majority stake in another, TargetCast. Last month MDC said it took a minority holding in Doner, one of the country’s largest independent ad agencies, with the option to boost that to a majority stake.
MDC chief executive Miles Nadal, in speaking to analysts about the first-quarter results, said it has been important to invest heavily in the company’s business even though MDC knew it would come at the “detriment” to short-term margins and earnings. He emphasized, however, “Our acquisition activity this year is virtually done” and said that going forward MDC would be very discriminating in its acquisitions.
For all of 2012, MDC projects revenue of $1.05 to $1.07 billion, which would be an 11.3 to 14 percent increase over 2011. EBITDA is expected to climb 21.2 to 26.7 percent to $110 to $115 million.