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MDC Posts Q4 Organic Gain

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MDC Partners said organic revenue grew 1.4 percent in the fourth quarter, a better-than-expected result in an industry that has been measuring recovery in increments of slowing organic declines. The company posted a 3.4 percent increase in revenue to $149.7 million in the quarter.

"2009 was an extraordinary year for MDC Partners where we exceeded all of our key financial projections," Miles Nadal, MDC chairman, CEO, said in the earnings release. "Not only did we outperform our peers in terms of organic revenue and profitability growth, MDC is the first company to return to growth in the fourth quarter. . . . We expect another strong year in 2010."

In a call with analysts, Nadal said MDC, the Toronto-based parent of companies like Crispin Porter + Bogusky and Kirshenbaum Bond Senecal + Partners, said the company outperformed the industry because its operating partners "run more efficiently than agencies with legacy structures of a time gone by."

In the fourth quarter, 37 percent of the company's revenue came from digital operations. Nadal said that by mid-2011 he expects that level to exceed 40 percent.

In the fourth quarter, MDC, which derives 85 percent of its revenue in the U.S., recorded $21 million in new business and $24 million for all of 2009.

In the fourth quarter, MDC said earnings before interest, taxes, depreciation and amortization climbed 7 percent to $18.3 million. Because of non-recurring, non-cash charges, the company posted a loss of $18.5 million compared to net income of $4.7 million a year earlier.

For the full year, organic revenue declined 5.5 percent and overall revenue fell 6.6 percent to $545.9 million. EBITDA rose 6.1 percent to $64.8 million in 2009. Because of the non-recurring, non-cash charges in the fourth quarter, MDC posted a loss of $18.3 million compared to net income of $100,000 in 2008.
 
MDC, which has generated "in excess" of $100 million in free cash flow over the past two years, will become more aggressive in making acquisitions in 2010, Nadal said. He said the current environment -- where capital is tougher for entrepreneurs to find, multiples have dropped because of the weak industry climate and competitors have largely stayed on the sidelines -- has created a "unique window of opportunity on the M&A front."

Nadal added that MDC has a "robust pipeline" and said the three acquisition areas of greatest interest to MDC are: data analysis, data mining and database marketing; social media; and public relations.
 
For all of 2010, Nadal forecasted revenue gains of 5 to 7 percent, or $573-584 million. He also said EBITDA would increase 6.5 to 9.6 percent to $69-71 million.

See also:

"Despite Organic Slide, Publicis Says Recovery Has Begun"

"6.3% Organic Decline for Omnicom in Q4"

"Havas Sees 4.4% Organic Slide"