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10% Q1 Revenue Drop for MDC

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NEW YORK MDC Partners said consolidated revenue for the three months ended March 31 dropped 10 percent to $126.7 million, after what CEO Miles Nadal described as a "very difficult" first quarter.

Net income attributable to MDC was $29,000 compared to a loss of $3.4 million in the year-earlier period.

MDC also disclosed it made just over $2 million in earn-out payments in the first quarter and, based on current performance at the agencies involved, will pay out a total of $3.3 million this year; $43.7 million next year and $100,000 in 2011. MDC currently lists 33 partners on its Web site.

The company, whose subsidiaries and affiliates include Crispin Porter + Bogusky and Kirshenbaum Bond + Partners, said organic revenue dropped 6.7 percent. MDC reported new business wins of $1.1 million.

MDC's EBITDA -- earnings before interest, taxes, depreciation and amortization have been subtracted -- rose to $11.2 million from $10.8 million in the year-earlier period. Free cash flow nearly doubled to $7.8 million from $4 million.

"We are extremely proud of our ability to continue to grow MDC's EBITDA and free cash flow, despite a challenging quarter for revenue growth," said Nadal (shown above). "Our first quarter demonstrated that our retainer businesses continue to grow, and our disciplined approach to managing expenses and capital investments was successful. We believe that revenue growth will accelerate in the second half of the year and we remain confident in our ability to meet our annual guidance."

In a call with analysts, Nadal reiterated those ambitious targets in this tough year for the industry: The company is aiming to grow revenue 1-3 percent to $590-605 million; increase MDC's share of EBITDA 3-6 percent to $63-65 million; and raise cash flow 3-9 percent to $34-36 million.

Related:

"Miles Nadal Sees Industry Under Siege"

"MDC Bucks Trend, Forecasts Growth for '09"