MDCA - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen. Welcome to your MDC Partners Third Quarter Results Conference Call. [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your host, Alexandra Delanghe. Ma'am, the floor is yours.

Alexandra Ewing

good and operator, you, morning, everyone. Thank the Quarter of to MDC Partners Third the for Call XXXX. Conference Welcome

Joining me today Officer; are Mark Penn, Chairman Lanuto, Financial and and Chief Officer. Frank Chief Executive

remind forward-looking statements non-GAAP our I'd prepared Before and the we contains like financial begin to discussion following you remarks, data. that

the earnings further and the Form statements included cautionary company's to those in about detailed slide to SEC subject our including company, are Forward-looking release presentation statements are and uncertainties in the earnings subsequent and related guidance, referenced XX-K in filings.

investor For we've posted your reference, presentation an to our website.

to to morning's the Chairman definitions, start financial Officer, Executive you refer also and presentation of And slide data. release call, for I'd We Chief and non-GAAP our reconciliations Penn. this over Mark press like to and to now explanations it turn

Mark Penn

and you, despite quarter the continued Thank announce to morning. pleased performance COVID-XX good a drag this strong but of pandemic. reduced the I'm

to decline a estate, or partners operations a year's networks, line continued will into of meet EBITDA. meet exceed prediction this in bringing in real success office expect of we centralizing together now while is This offerings. revenue and are modernizing but services Covenant our and in back We that my XX% result last to our XX% year,

year-to-date, $XXX in We our the nicely activity compared reduced resuming as Improving year, segment's growth increasing expansion. pitch of Other X% sequential revenue only Specifically, continued strong This on XX% an also XX% earnest softness in the reductions declined outlook expectations. quarter QX Covenant place X XX% the organic year-over-year cost lows, in contraction was X led margin million and XX% basis. our our prior and taking pass-through respectively. in to the of Year-over-year, organic of XX% reporting million fundamentals quarter, driven million, EBITDA declined revenue base improved consistent All third experiential Net off quarter. with nearly year-to-date XX% where cost the with revenue, or an on rebounded those With in revenue seen in and due year-to-date, by $XX and on to in QX quarter $XXX units, XX% basis. to second business. costs, in LTM excluding our basis and XX% by the a to

in $XX increased we the cash having quarter, flow strength year. our after This the financial in operations. and on borrowing million even with our million cash We from adding earlier of $XX million sheet, revolver, balance bonds the quarter in ended no $XX repurchased in

X.X our also leverage year down We ratio to brought ago. from X a

in slowdown business trends slowdown revenue more COVID-impacted sectors. our Looking a the paused decline reason from closely is Nearly our and revenue sectors. and delayed driven at for overwhelming by a the transportation the few is QX, the revenue specific in half experiential travel or both

be Another from technology a loss third down companies less-than-normal the clients to of sector, we future. that client observed and revenue reduced spend within will the temporary advertising new was product the from back decline We is those the reduction largely turn know launches. so slowed as in

just months. million new million $XX totaled We from more we're Despite reversing strategic an a to MDC's brand, everything to the recently Singleton network many central power part in of of million the new pandemic, seeing million client recorded our notable The Sound, million up holding and pitches in company wins at disrupt the the clients of superior totaled last of quarter are $XXX is collaborative in model. model we're offering. Net between and quarter, premise public and demonstration activity $XX the urgency strategy, solution we Glyconic wins for challenges customer and beverage than the and from are resumed our creative, with the to global and is $XX both These are entire that. all engagement, in across over new nimble This of QX business last Like the as over food Importantly, clear conducting the and OPPO, $XX ever was for integrated looking What of media, clients client Sony new plan. before, BXC and the the Diageo charged seeing the we BXB. category. data both success Anomaly. fortunes $XX attracted digital, more nod, quarter. social, include billion with the in business traditional General billing. others, significant Vision Lucky to Mills, under just charge our relations net creative seamless for at to these specifically and transformation amount delivering won billion and a journey, a includes among the year Other business Charms and in data, XX $XX

Inn Vitro. Additionally, at Health Labs, our with clients relationships Abbott at Meals Board Y expanded Mono, Labs We've at on among we also F&B, Albertsons won Club, NetOnNet Samsung, Gaming Concentric, Vacation Target, Holiday at Constellation and Merck Wheels Media Animal including others. and brands Diageo, at

the verticals major quarter, extremely with client a needs. communications integrative agencies deliver these brings deliver our growth. over Our corporate by to model PR digital creative increasing continue solutions our now aided to meet to growth, network in year-over-year and continue quarter, strong that Similar together services to XX% last

event its Media anticipate scaled are clients being and into XX% our advantage an for production We we successfully and improvement future. the though. Experiential offering up in against to that Data segment, sequentially well QX. beginning product introduced soft, remains to has see virtual It

our a sector which consumers. ramped of all solid sequential points segments, sector flat. did continued opened on client business back Retail consumer spend the up rebounded Both in companies exception remained basis. markets sectors with revenue, also product automotive to our strongly QX. as at and over client and to Looking as Healthcare percentage QX growth almost improved see of

it pandemic, creating company the for business still. we our make modern not World the year marketing. is Marketing This and of We're I choice achieved the us to not we New of combine will just means standing be plan Having the at two of hopeful Even digital world. promised the to strategic. battle levels Stagwell. evident and more as on we in the creating focused to right pillars implementing DIGS, the the are new and at digital, increased expanded remain X cost here is companies, We're but as These with comes together integrated, partners the that able creativity to be the with eighth complementary have that marketing global on and technology MDC. exceptional extended with the costs, us three in world. collaboration, the when been today's company integration largest data, abilities new results, between the the centralizing give strategy reductions to operating offerings possible

new First, for customers. our we digital creating are experiences

recently major customers. we work for For digital entire to example, the experience chain for consumer won transformation the products the a online create

Second, to of to we recently AI-driven developing And market book proprietary the and help potential teams our using streamline the more experience modernizing our to journalists. platform a even studios significant believe positive for kinds network, of that movie way this that released ever pitched, efficiency the Leveraging interact PRophet. data there designed a the for and news is in has first professionals commercial to a of intelligently the tens with new community, strategies operations. greater dollars. story are before script. PR to for technology revenue PR to third, publishers We and client using around SaaS spread sentiment order of combine effectiveness It's similar millions is technology and predict predict as and create We emerging workings internal media interest, AI product of streams. are products develop we threats enables both are the

a the World of integration global have XX front, technology very on scale, architecture. reside. where In underlying of and growth our of good X now of designed new of about through year, network the all, systems formation the including work today a infrastructure we collaboration seasoned thus phase where technology group, pandemic announced EBITDA the of managed the to of the solid we of far. will by the global the delivered unleash I the We global bold real feel vision in across how month and marked end tapping rebound and business in completion MDC's On fundamentals. out Internet a drive group the strategy a year-over-year Center estate new operating stands transformation with our roster recently brands The global saw our corporate technology campus quarter agency with This team first our cloud Trade areas will security, design leaders. technology nice

fundamentals across executing With are at priorities and work improvements continuing and We deliver and deeper while expect year reinforce over to financial a QX for disciplines. let see to our X things continued our all for performance. our look strategic our turn to clients Frank operational me in Frank? exceptional that, on

Frank Lanuto

Good Mark. everyone. Thanks, morning,

from good us points implemented our cost We took disruption We have and year-over-year sheet Margin offset high surpassed in year. ongoing and deliver decline this and revenue EBITDA the the more company higher comprehensive further year, year-to-date. the improved early third pandemic. despite balance across helped prior our and swiftly from made actions progress measures that the quarter than previous

the lows A Data Revenue Pandemic-related our Specialist of up third communications from a experiential to by up reported slowdowns organic X we've the year-to-date principally million from basis to revenue respectively. B quarter, the the XX% several offsetting up pandemic-driven XX%, segment and declined pandemic our the in to quarter experiential X% and outset well revenue segments, driven clients the Media the organic for and second XX% declines, year-to-date quarter, part periods, those from With latter in by in the and million. expenses, second declines up of the Networks softness trend declined and XX% taken year-over-year these business. Other accounted Networks rapidly, seen as of made the X%. by in For at Integrated continued grow for digital and the approximately also QX $XXX $XXX XXXX. periods. of rebounded operating XX% declined quarter, Sequentially, continued XX% sequentially. as XX% and continued rose quarter, X technology Integrated we of to Partially continuing grew business in up on respect for our increasing in XX% All X%. benefit the actions The to led

cost by For aforementioned third lower were costs. similar and million in charges primarily by lower with savings staff the over from million million XX% million were We $XXX $X Through the coming severance controllable coming from quarter to XX% to effect costs QX or savings the prior X XX% months, the compared costs percentage year-to-date, $XX year, of with in recorded $XX or savings. year, costs. staff from approximately the prior

taken We prior savings; margin have verse the And generate our a some line points XX% carefully revenue year, costs range continue the $XX increased approximately basis the related at some to XX.X%. permanent, EBITDA actions the in recovery. to in Adjusted with to XXX these quarter and increased of manage million we'll temporary.

of XX%. and Excluding On our XX% and basis, a adjusted year-to-date by the rose to by Kingsdale increased divestitures, EBITDA basis XX.X%. increased margins impact points Sloane to $XXX EBITDA XXX million adjusted

$XXX and by Our sequentially from from X% $XXX Covenant QX to increased year million million, trailing XX-month million. ago from up a $XXX EBITDA XX% higher

at end a borrowings to under and QX. quarter X.Xx expect to Xx we $XX the in with cash With second of strong the ended of at improved our remains funded sheet. million Liquidity balance the year down fund Leverage through no million as liabilities, million to approximately $XX Moving net to revolver. X.Xx, quarter. already from acquisition-related we ago and September September respect and have $X the

we obligations currently respect ago. stand the $XXX year the XXXX period, With a verse remaining lower prior to CapEx million end at million down in we from $XXX compared CapEx, manage of as $XX expenditures X-month in Through continue Our M&A had million $XX year. XXXX. to at to million

We with our have transformation in estate the project City progress quarter. York made New real significant

full plan. profitability on expect our phases and we for XXXX, I to for on and of the on in QX. closing, complete take track We Overall, want I'd time moved will to CapEx employees our year. the like long-term on project recently line And in our the in all budget net I have. range our any In team be to support. plans the to remain open their corporate for full expect excited the growth stakeholders Our for and other thank $XX and deliver with million and now, are next questions may you of Operator? continued to

Operator

[Operator Instructions]. Mr. we for Penn, it questions appears comments. at no have signals or this time

Mark Penn

Sure. if I question. has a will another anybody minute give people

Operator

a have signal we with Swope Baird. And Matt from do

Matthew Swope

nice quarter. Very

could and, if you'd any you at whether you buying could. couple, Mark, any some talk price think be out the about, interested back next could And special I you from you a bonds obviously, now, the know, April, but more Just give timing they're on higher and update there? guys play levels I in how things in back. might bought us committee much

Mark Penn

in bonds, I time, think basket bought that terms the we at of the had. we, allowable

now, were a I to considerable we then the at been looked bargain. at So and had and they thought Wish trading, were those buy they able prices more.

capital and we at they're different kind price now so that uses at for level now. in this an entirely price level other right So of presumably have they're

for Obviously, to the I principle. Stagwell, committee, special like special in speak itself. agreement an committee the of terms have In announced we let

the of agreement. that hopeful next that bring committee. into beyond able fact we'll so go specific I requests steps And be I to next are the companies should think level to obviously together. the special their - the to And that And go remain optimistic the

Matthew Swope

time taking is on I than or of expected? the this expected as longer line Could ask, just sort

Mark Penn

complex steps. modern lot simply world, a have of legal and In just combinations the evaluative

this. in such So is I in a I won't I've It's seen that far. an nothing comment in has every some transaction unusual just T to significant process just, directly. one dot But how and education so there in very as sense, the

Operator

to on remarks? you And signals. Mr. Would go no further to closing Penn, like there are

Mark Penn

want to just thank and I MDC I everyone continued Partners. faith interest for guess in Sure.

the shape. it to the financial how of of see, can through come of the you firm reorganization As in the positioned kind worst strong pandemic

sectors the to before and that pandemic, time as industry-setting declines, a take pulled actually the everybody pandemic the but much. able back we at of out again, wanted, and then It once, revenue recedes. sector very I back these Thank resume all to will it back into, strong marketing growth beginning, as be hope that and have vibrant coming bring than may happen will growth little You'll that. a and us here that longer had client had remember we you the over come it think, way reversed eventually actually both

Operator

conclude Thank does for We your you. This teleconference. today's participation. thank you

day. at lines time. this a your disconnect Have may great You

Stagwell (STGW) 31 Oct 202020 Q3 Earnings call transcript