MDCA - Earnings call transcript Q4 2020

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

Operator

Good day, and welcome to the MDC Partners Fourth Quarter and Year-End Results Conference Call. All participants will be in a listen-only mode. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Alexandra Ewing. ahead. go Please

Alexandra Ewing

good conference and year Welcome the to Thank for morning, the Partners call full fourth MDC you, everyone. quarter XXXX. and

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

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

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

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

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

Mark Penn

important a Good the call Thank We'll us. you, thank cover joining Alex. you topics in for morning, few and today.

progress XXXX may we'll and hold shortly a to we on any Then and have. see will they its to XXXX our results Lanuto we'll Stagwell Stagwell that operating opportunities planned the to answer in discuss balance First, sheet. give financial further and will QX combination that call Separately, those I'll release and announce questions happy backdrop understand MDC's against time of ahead. challenging you conditions. we in date MDC's results. be will a results review review with global uniquely detail the Frank for

performance first review MDC's me Let XXXX. in

changed XXXX, Partners everything. pacesetting the and hit QX MDC in industry of renewed achieved as Just pandemic growth

expected expenses million were plummeted. the reducing discount pitches our to businesses teams stop. partners to ground cost margins performance bonds companies a and year these the Meanwhile, the and We XXX budgets more Stock difficult agency and the cut and cut back, a general in all Our we employment of for industry $XXX serve came and purchased their our by all revenue. extended our than steep range, to travel-related significantly talented to at growth We offerings a to and these times. and and of marketing. industry, saw through revolver, bond Experiential XX% basis We cooperation tech clients contrast margins up, we in marketing said year's million shift cut and declines be points. to acknowledged XX% to digital values lowered Tech responded most as gained for to of in complete e-commerce businesses staff on fronts. our revenue of XX% dried the digital halt. company the challenges more $XX our this virtual

closed expectations PR report I yet we same to as range, revenue to the adjusted companies At marketers new and also above pandemic a Our messages. Today, is covenant the that EBITDA achieving business. begins recede levels. get XX% quarter-by-quarter rebuilt time, and to back pivoted business the being XXXX companies meeting in can loss of year growth to showed as out XX% the the

We business. are new delivering consistent net

implemented While it to response of a levels, crisis to get XXXX new the will the the us. revenue back and plan for quick the take to to cost pre-pandemic in backbone XXXX provided our world savings continue benefit execution in

significant offer But continue in strongest EBITDA. history, to tough be one with line bottom quarters sequential subsequent results on in organic of a of strong the similar expect year-over-year growth XXXX QX QX of growth with X% for X% opportunity momentum expect XXXX QX firm of performance. to we the in XXXX to We and QX quarters Because comparison. was the

and Technology strong more MDC's improving fourth from XX.X% on revenue XX% Consumer quarter XX%, up fundamentals, segment sequentially of a side segments improved Products and specifically MDC's at Looking QX. growth, results. respectively, In with

We also lows quarter. these from the and Financials segments saw In second QX, Beverage, double-digit in rebounded Food, in Automotive. Healthcare, growth sequential

year the guide XX.X% year, consistent in QX the the For revenue the full our organic our year-over-year. a in sharply by cost costs last us with adjusted and revenue deliver XX.X% for cash excluding and declined million with XX% on net in EBITDA cost an and strong three management. for declined EBITDA fundamentals ended position in Net revenue the cash XXXX Year-over-year margins XX.X% and for basis XXXX, covenant in year. XX.X% at full declined XXXX XXX year line helped points the strongest X.X% Disciplined borrowings. quarter full million years $XXX basis. improving XX.X% pass-through on revenue, XX% our full diligent to We with no net management revolver from XX.X%, year, the increased the in expectations. XX% up to year in for organic $XX

Our to leverage continued ratio to X.Xx. decline

recorded client wins the business the quarter. activity and engagement robust On business new in new with resumption to continue we fourth in front, see

F&B, the at Super was to the $XX XXXX, modernize consumption, at Indeed, business Netflix of Our compared in which also work Polestar a Jimmy considering spots Air sports for the billion challenges Bowl, COVID-XX the Anomaly, business at clients national net of performed million year, Yeti at company $XX.X LifeSpace the $XX others. XXandSunny, Notable the Fetch Skyy performance year the at Jimmy approach well and Room, a mission course, quarter to in Partners, arena like the in by in Doner, to marketing MDC totaled and seven Allison strong marketing consumers in new extremely to Network and net category. and Johns, companies and Assembly [indiscernible] Indeed bring Johns saw new wins NFL. Jeep, $XX solid billion funded in educating and nation's Hunter include biggest to fluid XXXX million $XX.X and to YML, a including our Visit the business and, Hotels.com, its selected Full milk $XX.X & Vodka in versus Miracle-Ear [indiscernible] at the Paint Mono, QX MilkPEP, QX. million Rewards increasing Gale as Sweden and presented million at to in milk dedicated also and

New As a that way, creative we value a scaled that accounted market momentum, and of audience XX% several the formalizes Taiwan media MDC's in global to to in announced brands Mid-East, differentiated technology need and Russia agency the new game this out partners opportunities building agreements Affiliate than to clients unique great in reflect in drive year in underscores we're Particularly outside performance and ability offering. in disrupted Global been international culture. Program had of the the showcase. scale X% now that for the more have thrive than with creative less global on which represent in presence February, a so we our network, so capabilities few today's connect our with ads global clients has a Building a ad marketing see and economy. to the In

drive making newly We we global hiring structure providing XX marketing bringing enhanced reductions even as place our by leading pitches. scaled the today the year's global solutions, so deep Chief global modern creative global Stagwell cost keeping enhance and in management will innovative, top world. Today, The data companies, But ambitious contracts. of position technology our to was talent leading capabilities pausing is company focus marketing the the technology and Deirdre the attractive marketers for XX superior most evolve results. with and a centerpiece created recently plan Stagwell. offering and end, achieved We're into expect will larger to and global and continuing in around have the more power McGlashan integrated and choice. combination success fa, the celebrated Officer. sophisticated on us not award-winning with its scaled pitch business to data-driven media of with the opportunities is with media world's core. adding services also to company while MDC central in form are modern announced solutions MDC turn capabilities, the Together, strategy to technology to unleashing our affiliates Supporting clients the We're MDC's firepower of at global marketing integrated we Media commitment that advanced of built

are with side, SaaS Together, $X.X and how transformation. marketing into With give digital sophistication. Bringing within bringing capital by content, revenues we and started include a will XXXX, modern million and billion majority leader Stagwell's a company GAAP revenue firmly span intend new work media to AI a ultimately integrated to of expertise the data of disciplines. Stagwell brands using the that's P-R of in in all is agencies communications; and four with the news based marketing of platform, create run revenue. received and and be PRophet, services. -- between These insights; digital digital with categories marketing derived are of nearly MDC research MDC and run marketing; company this creating a communications performance spend jointly predict and digital growing of I products O-P-H-E-T, will digitally MDC, building In with to muscle $XXX marketing scale intention covered in five media. and Stagwell MDC. transformation flagship developed marketing the market global that rate enhanced launched already company, built and respective and powerhouse The advantage the that this thoroughly us digital-first together their stream kind years, a Stagwell Stagwell positioned quietly On just to take we've growing

triple possibility combination offerings business. also of of the over achieve More alternatives. terms a new XX% continued media growth combined anticipate accelerate will in save years does cost examining take than primed importantly, This grow today's to a we of drive expect not of the improved million to as through with million interest we be up we'll will expense, and offerings deliver our to data-powered and integrated growth annualized could are roughly revenue and with also lower path XX% $XX savings. those upward concentration financing are much opens digital and of coming more year years. include have will digital two synergies, Further, high services leverage the to its combination, lower a MDC's the acquisition, that these interest as organic cost products. in five it XXXX. by growth, the to We achieved will This $XX its in $X to mix Together, though billion ratio, in

close expect in to continue half We to XXXX. of combination the the first

to X% $XXX MDC's EBITDA million XX% or We to $XXX adjusted in in growth to revenue currently and organic adjusted EBITDA million turning from deliver to million up Finally, growth X% approximately XXXX. outlook EBITD expect for $XXX X% XXXX. to and

demand including XXXX, continued assets, Our outlook in is out revenue continued in driven XXXX, our by the the of digital of our communications, over strength a in rebound earlier things rapidly organic turn With the close that, our continued return and grew pandemic well. of Lanuto, some PR experiential which me from to and CFO. Frank as in rebound creative agencies let work

Frank Lanuto

Thanks, Mark. Good everyone. morning,

Adjusted year-end made XXX despite EBITDA year, remained our with early We revenue significant margins measures our us decline XXXX. borrowings revolver. company We over took at sheet progress $XX and basis flexible have under prior XXXX than no comprehensive the more points in deliver and million our pandemic. in year-over-year cash the and and swiftly by implemented across higher balance improved EBITDA offset ongoing cost good from disruption actions during that and helped

quarter we for and more our quarter respectively. and full for Partially Pandemic-related full for XX% and the rapidly, Sequentially, to respectively. approximately XX.X% full declines periods, XX% X%; continued and led declines, the to Financials. continue year. revenue all and a full XX%; client For second integrated Food networks XX.X% $XXX With in made the the on XX.X% The up declined experiential rebound billion. of XX.X% continued B declined media revenue Net and as year. to the declined expenses, to by increasing & technology respectively. the reported rose from and for up for accounted the business quarter, to quarters, Organic to clients respectively. up in respect full well as Products, for virtually taken those year continued revenue XXXX. billion by the segments driven lows slowdowns third the the and in net X% segment, of basis, XX.X% of and up growth quarter and quarter, Revenue our the XX% XX%; at in offsetting revenue the XX% the by these declined for integrated XX.X% growth operating to pandemic and four part the sequential of XX.X% was slightly. the by revenue $XXX quarter, networks year, million quarter year double-digit quarter other than and declined organic in in Technology, fourth grow sector, latter in every Beverage led year, actions up and for Healthcare, revenue $X A, all digital benefit $X.X pandemic-driven our XX% and data, XX% Consumer Automotive, from to the outset Organic the and million; over

the the quarter, savings lower to compared fourth were costs. million from XX% of year, For staff with costs $XX by controllable prior coming over or XX%

from coming year a For or the from million full were percentage costs. lower year, the prior XX% staff by costs approximately savings of $XXX with similar

savings and approximately quarter million in recorded cost Excluding for $XXX $XX savings. that be million Kingsdale, permanent. $XX $XX in the We for million charges, $X the million to primarily the were year. QX, for these anticipate affect severance Sloane will We cost including these of approximately and savings million

completion quarter, charges related the fourth into approximately million real Trade with In the annually. the the also properties World we planned the generate project, will connection of Center. in $XX completed exited, During recorded to as our approximately we transformation million savings we in moved project $XX.X which New estate York

noncash, business quarter, charges fourth declines. million to goodwill recorded $XX.X of COVID-driven we tangible impairment the asset During related approximately also and principally

assets, With for cost covenant across continuing increased than a We the margins XX.X% up EBITDA Adjusted a the million, to income some $XXX some during we been of taxes in respect plan million, and actions. $XXX the In With positive our income three the increased temporary. million X% including taxes, we'll increased have the recorded with company company's year for years. less contributions savings, $XXX $XX and revenue reflecting taxes a sharply to year of XXXX, to to EBITDA range restored related cost versus of continue manage million cash deductible X% over the $XXX adjusted some organization. $XXX to revenue past have utilize of savings line XX.X%, U.S. certain made million provision recovery. respectively, recorded of income organization annually EBITDA NOLs allowance for The establish tax the $XXX other XXXX, actions contributions prior jurisdictions. our for taken a year, charge consisting offset EBITDA benefits to to income. company's year recover outperforming previously And by limit permanent, cost generate benefit cuts offset the partially a temporary does to salaries charge have The Covenant existing international recorded and and year. valuation noncash the million future of management across tax in against the deferred taxable the items ago. carefully tax not to the to from million ability EBITDA the and

New estate and X.X an versus increase of CapEx, to by borrowings net in our leading million principally The flow cash Sequentially, of strong to our million to agencies York from revolver. our to improved ended incurred QX led With million Moving million during under $XX M&A delivered obligations. operations QX from respect million of liabilities, ago. no respect Liquidity we performance to we under ago times, earn-out, ago. year year cash generated transformation $XXX $XXX number the our our a and strong in $XX further year and the X.X M&A $XX from a $XX.X balance real as sheet. obligations a remained million in times project. $XX With Leverage remaining limited our driven acquisition-related in from increased during million by year funded $XXX cost we agencies, million to decreased XXXX. with down XXXX, digital

continued quarter, we As other I for completing World to on The previously fourth budget. project employees their support. moved Center stakeholders time In all Trade closing, and and discussed, into the want on thank in the our

are questions. and for with now the combination the ahead. and enthusiastically Stagwell to to We look you. our the opportunities any Thank And year I about like over operator call the would forward to excited turn

Operator

first ahead. The Instructions] Steiner JPMorgan. Please go Avi is [Operator question from with

Avi Steiner

I the Or the spend company there picture, gets is a the as out we start tone market if to and tone? talking can. is maybe it big get CMOs better? want is to? Are they to What world in itching still of more from cautious

Mark Penn

CMOs relative we're We've so I of and think seeing of get for are in coming business bid. the business time, in period to back a hibernation for RFPs a there. flood a and tone up been

back call get it to So of time I would mode. to kind business a

back little you to but that months the three uncertain the whether they're -- is or preparing summer about nevertheless, a start business really in marketing, that to fall, I in out. think in need

Avi Steiner

And answer then assume do company's what year today, guidance, into if with is MDC or at I you have which the only. visibility forward X, here all? last that I could going Sitting dovetail the of March sort

Mark Penn

the just clear Well, pandemic. we've beginning given of clear I as I gave guidance guidance the at think

I experiential the nicely. require moving I think think, forward. business of goods, the tourism a of obviously, But be, are along coming travel, I because safety. rest new wins seem those to net the industry; we've as services, degree here said, had automotive, nice And and they high laggards packaged

we achievable and kind So of back. leg good that a growth of the extensive process based the kind X% year, on believe X% we to represents budgeting through go that each is

XX% same organic the revenue and, EBITDA. then in As don't after entirely the year, we're revenue I I can a at said, in down up in or year. time, net think recover But we XX%

we gets on and too that building keep base can revenue won. restored So as

Avi Steiner

pandemic, to the don't more But you MDC greater is, your if noted my tech you. during in XX%. And been Clearly, from it linear can. and than I if one, see picture forward? want think I misquote digital so, is I to permanent digital your big seems And opening, offering, shift more shift one this platforms. And there's in do this positioned going a how question you really view? grew Terrific.

Mark Penn

shift, is it most clearly. think a Well, permanent I

people accelerated the transfer performance marketing. kind creative been permanent a shift think, for has got had too it as realized a to been decade. of So I to, It they last slow that

of think that digital in are high-growth about the MDC, areas. X% I companies

thing But marketplace. much saw the went a number of business. in them being we bigger digital greatly earn-out, of in growth meant they're the solid and earn-out getting -- sense higher to a the of some a will that and that's the increase to combination lot good is combined high-growth because so are that's of of that point services. underpinnings our of the we're up. a of under XX%, And that services to value that, level which appreciated also combination in And that is and book really obligations digitally in based Part of the advantage the key greatly increase take number think much I the a happening transformation one of have of

Avi Steiner

will one. else, a investments maybe can spend means last and from Program, the terrific? anything here if on could what think perspective, that the I be company it how early about more just And announcement we would you leave The little this economic or that February it an of it's Affiliate Global whether for walking Terrific. time through

Mark Penn

marketplaces world. affiliate to in discovering The close is I certain program, that were and around fastest think, emerging gaps Great. particularly the we the way

get is win-win they global affiliates business those pieces companies to it the team markets. a will were lot on global they also think us areas. bringing that of will very out a that us application by access competing more will affiliation it basis. with that And contracts. this may put winning -- location us. us those And may there to experience serve a terrific then the for to the get will looking extend farm having the that -- turned there on markets network within in these to in be wings is for working refer entire for these They we I potential companies in affiliates really have of those winning and -- and to really a also low-cost So companies like in not wings. available affiliates technology holding way us They agency up And coming these oftentimes, creative, on stronger a bigger see single network, effectively have And they as an resources globally. acquisitions. I but compete because into in the a of we also effective give position, And will in global-enough every against areas,

So our the to look enhancing position at enhancing and giving in and as network. position, permanently footprint it in better you acquisitions filling team marketing, a as the our global serving pitches enhance of us farm a for can

Operator

for closing I over session. question-and-answer our the any turn concludes to Mark back This would like remarks. conference to Penn

Mark Penn

you. Thank

I this think trying overview an year. make progress that -- during given continue thank hope of to and we has the you the you. I difficult

to can forward Thank of that company, possibilities a April. higher you will all great its a this employees, position And need. year-end much. incredibly and with the this the they position, Stagwell in March a think full detail with it I with all combination at shortly partners, situation This which people, all get we're company and information cash call and financial from so will year the in people very the financials emerges Stagwell. look the stronger well. EBITDA, the They dire announce looking responded

Operator

The conference presentation. attending has concluded. Thank for you today's now

disconnect. now may You

Stagwell (STGW) 2 Mar 212020 Q4 Earnings call transcript