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Share Name | Share Symbol | Market | Type |
---|---|---|---|
MDC Partners Inc | NASDAQ:MDCA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.42 | 5.36 | 5.45 | 0 | 01:00:00 |
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Canada
|
|
98-0364441
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer Identification No.)
|
|
|
|
745 Fifth Avenue
New York, New York
|
|
10151
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Subordinate Voting Shares, no par value
|
MDCA
|
NASDAQ
|
Large accelerated Filer
¨
|
Accelerated filer
x
|
Non-accelerated Filer
¨
|
Smaller reporting company
x
|
Emerging growth company
¨
|
|
|
|
Page
|
|
PART I. FINANCIAL INFORMATION
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
PART II. OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Services
|
$
|
362,130
|
|
|
$
|
379,743
|
|
|
$
|
690,921
|
|
|
$
|
706,711
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
240,749
|
|
|
253,390
|
|
|
477,903
|
|
|
496,420
|
|
||||
Office and general expenses
|
87,276
|
|
|
83,878
|
|
|
154,394
|
|
|
167,757
|
|
||||
Depreciation and amortization
|
10,663
|
|
|
11,703
|
|
|
19,501
|
|
|
24,078
|
|
||||
Other asset impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
2,317
|
|
||||
|
338,688
|
|
|
348,971
|
|
|
651,798
|
|
|
690,572
|
|
||||
Operating income
|
23,442
|
|
|
30,772
|
|
|
39,123
|
|
|
16,139
|
|
||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense and finance charges, net
|
(16,413
|
)
|
|
(16,859
|
)
|
|
(33,174
|
)
|
|
(32,942
|
)
|
||||
Foreign exchange gain (loss)
|
2,932
|
|
|
(6,549
|
)
|
|
8,374
|
|
|
(13,209
|
)
|
||||
Other, net
|
(746
|
)
|
|
592
|
|
|
(4,128
|
)
|
|
1,033
|
|
||||
|
(14,227
|
)
|
|
(22,816
|
)
|
|
(28,928
|
)
|
|
(45,118
|
)
|
||||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates
|
9,215
|
|
|
7,956
|
|
|
10,195
|
|
|
(28,979
|
)
|
||||
Income tax expense (benefit)
|
2,088
|
|
|
1,977
|
|
|
2,835
|
|
|
(6,353
|
)
|
||||
Income (loss) before equity in earnings of non-consolidated affiliates
|
7,127
|
|
|
5,979
|
|
|
7,360
|
|
|
(22,626
|
)
|
||||
Equity in earnings (losses) of non-consolidated affiliates
|
206
|
|
|
(28
|
)
|
|
289
|
|
|
58
|
|
||||
Net income (loss)
|
7,333
|
|
|
5,951
|
|
|
7,649
|
|
|
(22,568
|
)
|
||||
Net income attributable to the noncontrolling interest
|
(3,043
|
)
|
|
(2,545
|
)
|
|
(3,472
|
)
|
|
(3,442
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
4,290
|
|
|
3,406
|
|
|
4,177
|
|
|
(26,010
|
)
|
||||
Accretion on and net income allocated to convertible preference shares
|
(3,515
|
)
|
|
(2,273
|
)
|
|
(5,625
|
)
|
|
(4,095
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
775
|
|
|
$
|
1,133
|
|
|
$
|
(1,448
|
)
|
|
$
|
(30,105
|
)
|
Income (loss) Per Common Share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.53
|
)
|
Diluted
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.53
|
)
|
Weighted Average Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
71,915,832
|
|
|
57,439,823
|
|
|
66,118,749
|
|
|
56,924,208
|
|
||||
Diluted
|
72,024,689
|
|
|
57,802,872
|
|
|
66,118,749
|
|
|
56,924,208
|
|
||||
Stock-based compensation expense is included in the following line items above:
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services sold
|
$
|
2,442
|
|
|
$
|
4,047
|
|
|
$
|
6,987
|
|
|
$
|
7,394
|
|
Office and general expenses
|
1,192
|
|
|
1,556
|
|
|
(381
|
)
|
|
3,246
|
|
||||
Total
|
$
|
3,634
|
|
|
$
|
5,603
|
|
|
$
|
6,606
|
|
|
$
|
10,640
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|||||||
Net income (loss)
|
$
|
7,333
|
|
|
$
|
5,951
|
|
|
$
|
7,649
|
|
|
$
|
(22,568
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of applicable tax:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(1,385
|
)
|
|
(1,848
|
)
|
|
(6,044
|
)
|
|
429
|
|
||||
Other comprehensive income (loss)
|
(1,385
|
)
|
|
(1,848
|
)
|
|
(6,044
|
)
|
|
429
|
|
||||
Comprehensive income (loss) for the period
|
5,948
|
|
|
4,103
|
|
|
1,605
|
|
|
(22,139
|
)
|
||||
Comprehensive income attributable to the noncontrolling interests
|
(3,081
|
)
|
|
(1,641
|
)
|
|
(3,861
|
)
|
|
(1,436
|
)
|
||||
Comprehensive income (loss) attributable to MDC Partners Inc.
|
$
|
2,867
|
|
|
$
|
2,462
|
|
|
$
|
(2,256
|
)
|
|
$
|
(23,575
|
)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
||
Current Assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
27,304
|
|
|
$
|
30,873
|
|
Accounts receivable, less allowance for doubtful accounts of $2,792 and $1,879
|
434,512
|
|
|
395,200
|
|
||
Expenditures billable to clients
|
40,605
|
|
|
42,369
|
|
||
Assets held for sale
|
—
|
|
|
78,913
|
|
||
Other current assets
|
44,815
|
|
|
42,499
|
|
||
Total Current Assets
|
547,236
|
|
|
589,854
|
|
||
Fixed assets, at cost, less accumulated depreciation of $141,167 and $128,546
|
83,950
|
|
|
88,189
|
|
||
Right of use assets - operating leases
|
237,418
|
|
|
—
|
|
||
Investments in non-consolidated affiliates
|
6,761
|
|
|
6,556
|
|
||
Goodwill
|
743,582
|
|
|
740,955
|
|
||
Other intangible assets, net, less accumulated amortization of $168,748 and $161,868
|
60,848
|
|
|
67,765
|
|
||
Deferred tax assets
|
92,439
|
|
|
92,741
|
|
||
Other assets
|
26,415
|
|
|
25,513
|
|
||
Total Assets
|
$
|
1,798,649
|
|
|
$
|
1,611,573
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
228,069
|
|
|
$
|
221,995
|
|
Accruals and other liabilities
|
253,868
|
|
|
313,141
|
|
||
Liabilities held for sale
|
—
|
|
|
35,967
|
|
||
Advance billings
|
168,142
|
|
|
138,505
|
|
||
Current portion of lease liabilities - operating leases
|
46,338
|
|
|
—
|
|
||
Current portion of deferred acquisition consideration
|
35,439
|
|
|
32,928
|
|
||
Total Current Liabilities
|
731,856
|
|
|
742,536
|
|
||
Long-term debt
|
914,092
|
|
|
954,107
|
|
||
Long-term portion of deferred acquisition consideration
|
22,804
|
|
|
50,767
|
|
||
Long-term lease liabilities - operating leases
|
233,165
|
|
|
—
|
|
||
Other liabilities
|
19,503
|
|
|
54,255
|
|
||
Deferred tax liabilities
|
6,571
|
|
|
5,329
|
|
||
Total Liabilities
|
1,927,991
|
|
|
1,806,994
|
|
||
Redeemable Noncontrolling Interests
|
42,635
|
|
|
51,546
|
|
||
Commitments, Contingencies, and Guarantees (Note 13)
|
|
|
|
||||
Shareholders’ Deficit:
|
|
|
|
||||
Convertible preference shares, 145,000 authorized, issued and outstanding at June 30, 2019 and 95,000 at December 31, 2018
|
152,746
|
|
|
90,123
|
|
||
Common stock and other paid-in capital
|
97,455
|
|
|
58,579
|
|
||
Accumulated deficit
|
(460,726
|
)
|
|
(464,903
|
)
|
||
Accumulated other comprehensive loss (income)
|
(1,713
|
)
|
|
4,720
|
|
||
MDC Partners Inc. Shareholders' Deficit
|
(212,238
|
)
|
|
(311,481
|
)
|
||
Noncontrolling interests
|
40,261
|
|
|
64,514
|
|
||
Total Shareholders' Deficit
|
(171,977
|
)
|
|
(246,967
|
)
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit
|
$
|
1,798,649
|
|
|
$
|
1,611,573
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income (loss)
|
$
|
7,649
|
|
|
$
|
(22,568
|
)
|
Adjustments to reconcile net income (loss) to cash used in operating activities:
|
|
|
|
||||
Stock-based compensation
|
6,606
|
|
|
10,640
|
|
||
Depreciation
|
12,621
|
|
|
14,642
|
|
||
Amortization of intangibles
|
6,880
|
|
|
9,436
|
|
||
Amortization of deferred finance charges and debt discount
|
1,663
|
|
|
1,605
|
|
||
Other asset impairment
|
—
|
|
|
2,317
|
|
||
Adjustment to deferred acquisition consideration
|
(5,570
|
)
|
|
(2,479
|
)
|
||
Deferred income taxes
|
2,835
|
|
|
(9,494
|
)
|
||
Loss on sale of assets
|
3,407
|
|
|
(955
|
)
|
||
Earnings of non-consolidated affiliates
|
(289
|
)
|
|
(58
|
)
|
||
Other and non-current assets and liabilities
|
(4,139
|
)
|
|
(1,114
|
)
|
||
Foreign exchange
|
(7,363
|
)
|
|
12,128
|
|
||
Changes in working capital:
|
|
|
|
||||
Accounts receivable
|
(21,570
|
)
|
|
19,181
|
|
||
Expenditures billable to clients
|
1,763
|
|
|
(27,935
|
)
|
||
Prepaid expenses and other current assets
|
(3,345
|
)
|
|
(12,732
|
)
|
||
Accounts payable, accruals and other current liabilities
|
(66,343
|
)
|
|
(60,015
|
)
|
||
Acquisition related payments
|
(4,376
|
)
|
|
(23,894
|
)
|
||
Advance billings
|
29,334
|
|
|
29,582
|
|
||
Net cash used in operating activities
|
(40,237
|
)
|
|
(61,713
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(7,923
|
)
|
|
(9,689
|
)
|
||
Proceeds from sale of assets
|
23,050
|
|
|
—
|
|
||
Acquisitions, net of cash acquired
|
(5,130
|
)
|
|
(27,299
|
)
|
||
Other investments
|
(179
|
)
|
|
867
|
|
||
Net cash provided by (used in) investing activities
|
9,818
|
|
|
(36,121
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Repayment of revolving credit facility
|
(834,538
|
)
|
|
(782,600
|
)
|
||
Proceeds from revolving credit facility
|
793,940
|
|
|
897,844
|
|
||
Proceeds from issuance of common and convertible preference shares, net of issuance costs
|
98,620
|
|
|
—
|
|
||
Acquisition related payments
|
(24,219
|
)
|
|
(29,172
|
)
|
||
Distributions to noncontrolling interests
|
(7,957
|
)
|
|
(8,927
|
)
|
||
Payment of dividends
|
(56
|
)
|
|
(168
|
)
|
||
Purchase of shares
|
(78
|
)
|
|
(493
|
)
|
||
Other
|
—
|
|
|
(141
|
)
|
||
Net cash provided by financing activities
|
25,712
|
|
|
76,343
|
|
||
Effect of exchange rate changes on cash, cash equivalents, and cash held in trusts
|
4
|
|
|
311
|
|
||
Net decrease in cash, cash equivalents, and cash held in trusts including cash classified within assets held for sale
|
(4,703
|
)
|
|
(21,180
|
)
|
||
Change in cash and cash equivalents held in trusts classified within held for sale
|
(3,307
|
)
|
|
—
|
|
||
Change in cash and cash equivalents classified within assets held for sale
|
4,441
|
|
|
—
|
|
||
Net decrease in cash and cash equivalents
|
(3,569
|
)
|
|
(21,180
|
)
|
||
Cash and cash equivalents at beginning of period
|
30,873
|
|
|
46,179
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents at end of period
|
$
|
27,304
|
|
|
$
|
24,999
|
|
Supplemental disclosures:
|
|
|
|
|
|
||
Cash income taxes paid
|
$
|
3,494
|
|
|
$
|
2,626
|
|
Cash interest paid
|
$
|
31,643
|
|
|
$
|
31,414
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||
|
June 30, 2019
|
||||||||||||||||||||||||||||||||
|
Convertible Preference Shares
|
|
Common Shares
|
|
Common Stock and Other Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
MDC Partners Inc. Shareholders' Deficit
|
|
Noncontrolling Interests
|
|
Total Shareholder's Deficit
|
||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
(in thousands, except share amounts)
|
Shares
|
|
Amount
|
|
Shares
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at March 31, 2019
|
145,000
|
|
|
$
|
152,117
|
|
|
71,890,021
|
|
|
$
|
98,693
|
|
|
$
|
(465,016
|
)
|
|
$
|
(290
|
)
|
|
$
|
(214,496
|
)
|
|
$
|
40,223
|
|
|
$
|
(174,273
|
)
|
Net income attributable to MDC Partners Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,290
|
|
|
—
|
|
|
4,290
|
|
|
—
|
|
|
4,290
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,423
|
)
|
|
(1,423
|
)
|
|
38
|
|
|
(1,385
|
)
|
|||||||
Issuance of common and convertible preference shares
|
—
|
|
|
629
|
|
|
—
|
|
|
362
|
|
|
—
|
|
|
—
|
|
|
991
|
|
|
—
|
|
|
991
|
|
|||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
76,979
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares acquired and cancelled
|
—
|
|
|
—
|
|
|
(19,257
|
)
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
1,800
|
|
|
—
|
|
|
—
|
|
|
1,800
|
|
|
—
|
|
|
1,800
|
|
|||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,190
|
)
|
|
—
|
|
|
—
|
|
|
(3,190
|
)
|
|
|
|
(3,190
|
)
|
||||||||
Business acquisitions and step-up transactions, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|||||||
Changes in ownership interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
(91
|
)
|
|||||||
Balance at June 30, 2019
|
145,000
|
|
|
$
|
152,746
|
|
|
71,947,743
|
|
|
$
|
97,455
|
|
|
$
|
(460,726
|
)
|
|
$
|
(1,713
|
)
|
|
$
|
(212,238
|
)
|
|
$
|
40,261
|
|
|
$
|
(171,977
|
)
|
|
Six Months Ended
|
||||||||||||||||||||||||||||||||
|
June 30, 2019
|
||||||||||||||||||||||||||||||||
|
Convertible Preference Shares
|
|
Common Shares
|
|
Common Stock and Other Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
MDC Partners Inc. Shareholders' Deficit
|
|
Noncontrolling Interests
|
|
Total Shareholder's Deficit
|
||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
(in thousands, except share amounts)
|
Shares
|
|
Amount
|
|
Shares
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at December 31, 2018
|
95,000
|
|
|
$
|
90,123
|
|
|
57,521,323
|
|
|
$
|
58,579
|
|
|
$
|
(464,903
|
)
|
|
$
|
4,720
|
|
|
$
|
(311,481
|
)
|
|
$
|
64,514
|
|
|
$
|
(246,967
|
)
|
Net income attributable to MDC Partners Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,177
|
|
|
—
|
|
|
4,177
|
|
|
—
|
|
|
4,177
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,433
|
)
|
|
(6,433
|
)
|
|
389
|
|
|
(6,044
|
)
|
|||||||
Issuance of common and convertible preference shares
|
50,000
|
|
|
62,623
|
|
|
14,285,714
|
|
|
35,997
|
|
|
—
|
|
|
—
|
|
|
98,620
|
|
|
—
|
|
|
98,620
|
|
|||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
193,979
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares acquired and cancelled
|
—
|
|
|
—
|
|
|
(53,273
|
)
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
509
|
|
|
—
|
|
|
—
|
|
|
509
|
|
|
—
|
|
|
509
|
|
|||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
2,729
|
|
|
—
|
|
|
—
|
|
|
2,729
|
|
|
—
|
|
|
2,729
|
|
|||||||
Business acquisitions and step-up transactions, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|||||||
Changes in ownership interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(184
|
)
|
|
—
|
|
|
—
|
|
|
(184
|
)
|
|
(24,642
|
)
|
|
(24,826
|
)
|
|||||||
Balance at June 30, 2019
|
145,000
|
|
|
$
|
152,746
|
|
|
71,947,743
|
|
|
$
|
97,455
|
|
|
$
|
(460,726
|
)
|
|
$
|
(1,713
|
)
|
|
$
|
(212,238
|
)
|
|
$
|
40,261
|
|
|
$
|
(171,977
|
)
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||
|
June 30, 2018
|
||||||||||||||||||||||||||||||||
|
Convertible Preference Shares
|
|
Common Shares
|
|
Common Stock and Other Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
MDC Partners Inc. Shareholders' Deficit
|
|
Noncontrolling Interests
|
|
Total Shareholder's Deficit
|
||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
(in thousands, except share amounts)
|
Shares
|
|
Amount
|
|
Shares
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at March 31, 2018
|
95,000
|
|
|
$
|
90,123
|
|
|
56,436,067
|
|
|
$
|
38,412
|
|
|
$
|
(370,586
|
)
|
|
$
|
1,425
|
|
|
$
|
(240,626
|
)
|
|
$
|
50,964
|
|
|
$
|
(189,662
|
)
|
Net income attributable to MDC Partners Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,406
|
|
|
—
|
|
|
3,406
|
|
|
—
|
|
|
3,406
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(944
|
)
|
|
(943
|
)
|
|
(905
|
)
|
|
(1,848
|
)
|
|||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
12,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares acquired and cancelled
|
—
|
|
|
—
|
|
|
(6,185
|
)
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(39
|
)
|
|||||||
Shares issued, acquisitions
|
—
|
|
|
—
|
|
|
1,011,561
|
|
|
7,030
|
|
|
—
|
|
|
—
|
|
|
7,030
|
|
|
—
|
|
|
7,030
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
2,107
|
|
|
—
|
|
|
—
|
|
|
2,107
|
|
|
—
|
|
|
2,107
|
|
|||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,687
|
)
|
|
—
|
|
|
—
|
|
|
(1,687
|
)
|
|
—
|
|
|
(1,687
|
)
|
|||||||
Business acquisitions and step-up transactions, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,357
|
|
|
27,357
|
|
|||||||
Balance at June 30, 2018
|
95,000
|
|
|
$
|
90,123
|
|
|
57,454,028
|
|
|
$
|
45,824
|
|
|
$
|
(367,180
|
)
|
|
$
|
481
|
|
|
$
|
(230,752
|
)
|
|
$
|
77,416
|
|
|
$
|
(153,336
|
)
|
|
Six Months Ended
|
||||||||||||||||||||||||||||||||
|
June 30, 2018
|
||||||||||||||||||||||||||||||||
|
Convertible Preference Shares
|
|
Common Shares
|
|
Common Stock and Other Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
MDC Partners Inc. Shareholders' Deficit
|
|
Noncontrolling Interests
|
|
Total Shareholder's Deficit
|
||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
(in thousands, except share amounts)
|
Shares
|
|
Amount
|
|
Shares
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at December 31, 2017
|
95,000
|
|
|
$
|
90,220
|
|
|
56,375,131
|
|
|
$
|
38,191
|
|
|
$
|
(340,000
|
)
|
|
$
|
(1,954
|
)
|
|
$
|
(213,543
|
)
|
|
$
|
58,030
|
|
|
$
|
(155,513
|
)
|
Net loss attributable to MDC Partners Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,010
|
)
|
|
—
|
|
|
(26,010
|
)
|
|
—
|
|
|
(26,010
|
)
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,435
|
|
|
2,435
|
|
|
(2,006
|
)
|
|
429
|
|
|||||||
Expenses for convertible preference shares
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
122,029
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares acquired and cancelled
|
—
|
|
|
—
|
|
|
(54,693
|
)
|
|
(493
|
)
|
|
—
|
|
|
—
|
|
|
(493
|
)
|
|
—
|
|
|
(493
|
)
|
|||||||
Shares issued, acquisitions
|
—
|
|
|
—
|
|
|
1,011,561
|
|
|
7,030
|
|
|
—
|
|
|
—
|
|
|
7,030
|
|
|
—
|
|
|
7,030
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
4,324
|
|
|
—
|
|
|
—
|
|
|
4,324
|
|
|
—
|
|
|
4,324
|
|
|||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,062
|
)
|
|
—
|
|
|
—
|
|
|
(2,062
|
)
|
|
—
|
|
|
(2,062
|
)
|
|||||||
Business acquisitions and step-up transactions, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,166
|
)
|
|
—
|
|
|
—
|
|
|
(1,166
|
)
|
|
27,357
|
|
|
26,191
|
|
|||||||
Changes in ownership interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,965
|
)
|
|
(5,965
|
)
|
|||||||
Cumulative effect of adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,170
|
)
|
|
—
|
|
|
(1,170
|
)
|
|
—
|
|
|
(1,170
|
)
|
|||||||
Balance at June 30, 2018
|
95,000
|
|
|
$
|
90,123
|
|
|
57,454,028
|
|
|
$
|
45,824
|
|
|
$
|
(367,180
|
)
|
|
$
|
481
|
|
|
$
|
(230,752
|
)
|
|
$
|
77,416
|
|
|
$
|
(153,336
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Industry
|
Reportable Segment
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Food & Beverage
|
All
|
|
$
|
73,305
|
|
|
$
|
84,464
|
|
|
$
|
139,969
|
|
|
$
|
147,932
|
|
Retail
|
All
|
|
39,894
|
|
|
38,396
|
|
|
72,350
|
|
|
76,411
|
|
||||
Consumer Products
|
All
|
|
45,296
|
|
|
41,367
|
|
|
78,232
|
|
|
77,973
|
|
||||
Communications
|
All
|
|
47,793
|
|
|
43,097
|
|
|
87,490
|
|
|
81,454
|
|
||||
Automotive
|
All
|
|
18,541
|
|
|
25,294
|
|
|
36,732
|
|
|
45,788
|
|
||||
Technology
|
All
|
|
28,876
|
|
|
23,540
|
|
|
54,279
|
|
|
45,080
|
|
||||
Healthcare
|
All
|
|
25,954
|
|
|
35,426
|
|
|
49,161
|
|
|
68,002
|
|
||||
Financials
|
All
|
|
27,868
|
|
|
30,207
|
|
|
52,795
|
|
|
52,702
|
|
||||
Transportation and Travel/Lodging
|
All
|
|
27,050
|
|
|
18,776
|
|
|
44,085
|
|
|
33,664
|
|
||||
Other
|
All
|
|
27,553
|
|
|
39,176
|
|
|
75,828
|
|
|
77,705
|
|
||||
|
|
|
$
|
362,130
|
|
|
$
|
379,743
|
|
|
$
|
690,921
|
|
|
$
|
706,711
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||
Geographic Location
|
Reportable Segment
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States
|
All
|
|
$
|
284,659
|
|
|
$
|
295,268
|
|
|
$
|
547,676
|
|
|
$
|
551,792
|
|
Canada
|
All, excluding Media Services
|
|
24,564
|
|
|
33,086
|
|
|
46,942
|
|
|
59,465
|
|
||||
Other
|
All, excluding Media Services and Domestic Creative Agencies
|
|
52,907
|
|
|
51,389
|
|
|
96,303
|
|
|
95,454
|
|
||||
|
|
|
$
|
362,130
|
|
|
$
|
379,743
|
|
|
$
|
690,921
|
|
|
$
|
706,711
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
4,290
|
|
|
$
|
3,406
|
|
|
$
|
4,177
|
|
|
$
|
(26,010
|
)
|
Accretion on convertible preference shares
|
(3,242
|
)
|
|
(2,068
|
)
|
|
(5,625
|
)
|
|
(4,095
|
)
|
||||
Net income allocated to convertible preference shares
|
(273
|
)
|
|
(205
|
)
|
|
—
|
|
|
—
|
|
||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
775
|
|
|
$
|
1,133
|
|
|
$
|
(1,448
|
)
|
|
$
|
(30,105
|
)
|
|
|
|
|
|
|
|
|
||||||||
Adjustment to net income allocated to convertible preference shares
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Numerator for dilutive income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
775
|
|
|
$
|
1,134
|
|
|
$
|
(1,448
|
)
|
|
$
|
(30,105
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of common shares outstanding
|
71,915,832
|
|
|
57,439,823
|
|
|
66,118,749
|
|
|
56,924,208
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Impact of stock options and non-vested stock under employee stock incentive plans
|
108,857
|
|
|
363,049
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted average number of common shares outstanding
|
72,024,689
|
|
|
57,802,872
|
|
|
66,118,749
|
|
|
56,924,208
|
|
||||
Basic
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.53
|
)
|
Diluted
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.53
|
)
|
|
June 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Beginning Balance of contingent payments
|
$
|
82,598
|
|
|
$
|
119,086
|
|
Payments
|
(24,492
|
)
|
|
(54,947
|
)
|
||
Redemption value adjustments
(1)
|
(6,100
|
)
|
|
3,512
|
|
||
Additions - acquisitions and step up transactions
|
5,695
|
|
|
14,943
|
|
||
Other
|
—
|
|
|
4
|
|
||
Ending Balance of contingent payments
|
$
|
57,701
|
|
|
$
|
82,598
|
|
Fixed payments
|
542
|
|
|
1,097
|
|
||
|
$
|
58,243
|
|
|
$
|
83,695
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income (loss) attributable to fair value adjustments
|
$
|
2,073
|
|
|
$
|
(5,065
|
)
|
|
$
|
(5,570
|
)
|
|
$
|
(2,479
|
)
|
Stock-based compensation
|
(1,339
|
)
|
|
2,321
|
|
|
(530
|
)
|
|
4,682
|
|
||||
Redemption value adjustments
|
$
|
734
|
|
|
$
|
(2,744
|
)
|
|
$
|
(6,100
|
)
|
|
$
|
2,203
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
2019
|
|
2019
|
||||
Lease Cost:
|
|
|
|
||||
Operating lease cost
|
$
|
17,473
|
|
|
$
|
33,914
|
|
Variable lease cost
|
4,361
|
|
|
9,325
|
|
||
Sublease rental income
|
(2,590
|
)
|
|
(4,189
|
)
|
||
Total lease cost
|
$
|
19,244
|
|
|
$
|
39,050
|
|
Additional information:
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities for operating leases
|
|
|
|
||||
Operating cash flows
|
$
|
19,523
|
|
|
$
|
35,175
|
|
|
|
|
|
||||
Right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
2,195
|
|
|
$
|
259,013
|
|
Weighted average remaining lease term (in years) - Operating leases
|
7.0
|
|
|
7.0
|
|
||
Weighted average discount rate - Operating leases
|
8.6
|
|
|
8.6
|
|
|
Maturity Analysis
|
||
Remaining 2019
|
$
|
33,776
|
|
2020
|
66,425
|
|
|
2021
|
56,428
|
|
|
2022
|
45,942
|
|
|
2023
|
42,113
|
|
|
Thereafter
|
133,823
|
|
|
Total
|
378,507
|
|
|
Less: Present value discount
|
(99,004
|
)
|
|
Lease liability
|
$
|
279,503
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Revolving credit agreement
|
$
|
27,545
|
|
|
$
|
68,143
|
|
6.50% Notes due 2024
|
900,000
|
|
|
900,000
|
|
||
Debt issuance costs
|
(13,453
|
)
|
|
(14,036
|
)
|
||
|
$
|
914,092
|
|
|
$
|
954,107
|
|
|
Noncontrolling
Interests |
||
Balance, December 31, 2017
|
$
|
11,030
|
|
Income attributable to noncontrolling interests
|
11,785
|
|
|
Distributions made
|
(13,419
|
)
|
|
Other
(1)
|
(118
|
)
|
|
Balance, December 31, 2018
|
$
|
9,278
|
|
Income attributable to noncontrolling interests
|
3,472
|
|
|
Distributions made
|
(7,957
|
)
|
|
Other
(1)
|
25
|
|
|
Balance, June 30, 2019
|
$
|
4,818
|
|
(1)
|
Other consists of cumulative translation adjustments.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
4,290
|
|
|
$
|
3,406
|
|
|
$
|
4,177
|
|
|
$
|
(26,010
|
)
|
Transfers from the noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
Decrease in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of redeemable noncontrolling interests and noncontrolling interests
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|
(1,166
|
)
|
||||
Net transfers from noncontrolling interests
|
$
|
(97
|
)
|
|
$
|
—
|
|
|
$
|
(97
|
)
|
|
$
|
(1,166
|
)
|
Change from net loss attributable to MDC Partners Inc. and transfers to noncontrolling interests
|
$
|
4,193
|
|
|
$
|
3,406
|
|
|
$
|
4,080
|
|
|
$
|
(27,176
|
)
|
|
Six Months Ended June 30, 2019
|
|
Year Ended December 31, 2018
|
||||
Beginning Balance
|
$
|
51,546
|
|
|
$
|
62,886
|
|
Redemptions
|
(9,486
|
)
|
|
(11,943
|
)
|
||
Granted
|
—
|
|
|
—
|
|
||
Changes in redemption value
|
421
|
|
|
1,067
|
|
||
Currency translation adjustments
|
154
|
|
|
(464
|
)
|
||
Ending Balance
|
$
|
42,635
|
|
|
$
|
51,546
|
|
•
|
Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
|
•
|
Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
|
•
|
Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
|
•
|
Doner, previously within the Global Integrated Agencies reportable segment is now included within the Domestic Creative Agencies reportable segment.
|
•
|
HL Group Partners, previously within the Specialist Communications reportable segment, and Redscout, previously within the All Other category, are now included in the Yes & Company operating segment. The Yes & Company operating segment previously within the Media Services reportable segment is now included within the Domestic Creative Agencies reportable segment.
|
•
|
Attention, previously within the Forsman & Bodenfors operating segment has operationally merged into MDC Media Partners, which is included within the Media Services reportable segment.
|
•
|
The
Global Integrated Agencies
reportable segment is comprised of the Company’s
four
global, integrated operating segments (72andSunny, Anomaly, Crispin Porter + Bogusky, and Forsman & Bodenfors) serving multinational clients around the world. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of global clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Global Integrated Agencies reportable segment.
|
•
|
The
Domestic Creative Agencies
reportable segment is comprised of
seven
operating segments that are primarily national advertising agencies (Colle + McVoy, Doner, Laird + Partners, Mono Advertising, Union, Yamamoto, and Yes & Company) leveraging creative capabilities at their core. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of domestic client accounts and the methods used to provide services; and (iii) the extent to which they may be impacted by domestic economic and policy factors within North America. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long- term profitability is similar among the operating segments aggregated in the Domestic Creative Agencies reportable segment.
|
•
|
The
Specialist Communications
reportable segment is comprised of
four
operating segments that are each communications agencies (Allison & Partners, Hunter, KWT Global, and Veritas) with core service offerings in public relations and related communications services. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of client accounts and the methods used to provide services; (iii) the extent to which they may be impacted by domestic economic and policy factors within North America; and (iv) the regulatory environment regarding public relations and social media. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Specialist Communications reportable segment.
|
•
|
The
Media Services
reportable segment is comprised of a single operating segment known as MDC Media Partners. MDC Media Partners, which operates primarily in North America, performs media buying and planning as their core competency across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast).
|
•
|
All Other
consists of the Company’s remaining operating segments that provide a range of diverse marketing communication services, but generally do not have similar services offerings or financial characteristics as those aggregated in the reportable segments. The All Other category includes 6Degrees Communications, Concentric Partners, Gale Partners, Kenna, Kingsdale (through the date of sale on March 8, 2019), Instrument, Relevent, Team, Vitro, and Y Media Labs. The nature of the specialist services provided by these operating segments vary among each other and from those operating segments aggregated into the reportable segments. This results in these operating segments having current and long-term performance expectations inconsistent with those operating segments aggregated in the reportable segments. The operating segments within All Other provide a range of diverse marketing communication services, including application and website design and development, data and analytics, experiential marketing, customer research management, creative services, and branding.
|
•
|
Corporate
consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office. Additional expenses managed by the corporate office that are directly related to the operating segments are allocated to the appropriate reportable segment and the All Other category.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
154,368
|
|
|
$
|
158,163
|
|
|
$
|
284,087
|
|
|
$
|
287,686
|
|
Domestic Creative Agencies
|
65,193
|
|
|
72,971
|
|
|
132,201
|
|
|
139,625
|
|
||||
Specialist Communication
|
47,170
|
|
|
40,304
|
|
|
86,123
|
|
|
79,128
|
|
||||
Media Services
|
21,331
|
|
|
21,398
|
|
|
41,510
|
|
|
46,082
|
|
||||
All Other
|
74,068
|
|
|
86,907
|
|
|
147,000
|
|
|
154,190
|
|
||||
Total
|
$
|
362,130
|
|
|
$
|
379,743
|
|
|
$
|
690,921
|
|
|
$
|
706,711
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
20,720
|
|
|
$
|
18,352
|
|
|
$
|
24,491
|
|
|
$
|
4,760
|
|
Domestic Creative Agencies
|
8,730
|
|
|
5,077
|
|
|
14,207
|
|
|
7,955
|
|
||||
Specialist Communication
|
6,683
|
|
|
6,216
|
|
|
13,760
|
|
|
9,944
|
|
||||
Media Services
|
991
|
|
|
(1,719
|
)
|
|
(843
|
)
|
|
(1,738
|
)
|
||||
All Other
|
2,949
|
|
|
15,986
|
|
|
8,962
|
|
|
22,430
|
|
||||
Corporate
|
(16,631
|
)
|
|
(13,140
|
)
|
|
(21,454
|
)
|
|
(27,212
|
)
|
||||
Total
|
$
|
23,442
|
|
|
$
|
30,772
|
|
|
$
|
39,123
|
|
|
$
|
16,139
|
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense and finance charges, net
|
$
|
(16,413
|
)
|
|
$
|
(16,859
|
)
|
|
$
|
(33,174
|
)
|
|
$
|
(32,942
|
)
|
Foreign exchange gain (loss)
|
2,932
|
|
|
(6,549
|
)
|
|
8,374
|
|
|
(13,209
|
)
|
||||
Other, net
|
(746
|
)
|
|
592
|
|
|
(4,128
|
)
|
|
1,033
|
|
||||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates
|
9,215
|
|
|
7,956
|
|
|
10,195
|
|
|
(28,979
|
)
|
||||
Income tax expense (benefit)
|
2,088
|
|
|
1,977
|
|
|
2,835
|
|
|
(6,353
|
)
|
||||
Income (loss) before equity in earnings of non-consolidated affiliates
|
7,127
|
|
|
5,979
|
|
|
7,360
|
|
|
(22,626
|
)
|
||||
Equity in earnings (losses) of non-consolidated affiliates
|
206
|
|
|
(28
|
)
|
|
289
|
|
|
58
|
|
||||
Net income (loss)
|
7,333
|
|
|
5,951
|
|
|
7,649
|
|
|
(22,568
|
)
|
||||
Net income attributable to the noncontrolling interest
|
(3,043
|
)
|
|
(2,545
|
)
|
|
(3,472
|
)
|
|
(3,442
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
4,290
|
|
|
$
|
3,406
|
|
|
$
|
4,177
|
|
|
$
|
(26,010
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
4,437
|
|
|
$
|
4,743
|
|
|
$
|
8,502
|
|
|
$
|
12,152
|
|
Domestic Creative Agencies
|
1,547
|
|
|
1,281
|
|
|
2,786
|
|
|
2,574
|
|
||||
Specialist Communication
|
698
|
|
|
992
|
|
|
1,265
|
|
|
1,959
|
|
||||
Media Services
|
794
|
|
|
635
|
|
|
1,485
|
|
|
1,273
|
|
||||
All Other
|
2,966
|
|
|
3,892
|
|
|
5,025
|
|
|
5,736
|
|
||||
Corporate
|
221
|
|
|
160
|
|
|
438
|
|
|
384
|
|
||||
Total
|
$
|
10,663
|
|
|
$
|
11,703
|
|
|
$
|
19,501
|
|
|
$
|
24,078
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
1,232
|
|
|
$
|
2,475
|
|
|
$
|
4,999
|
|
|
$
|
4,935
|
|
Domestic Creative Agencies
|
522
|
|
|
1,097
|
|
|
986
|
|
|
1,507
|
|
||||
Specialist Communication
|
52
|
|
|
52
|
|
|
78
|
|
|
239
|
|
||||
Media Services
|
(16
|
)
|
|
74
|
|
|
(16
|
)
|
|
149
|
|
||||
All Other
|
652
|
|
|
684
|
|
|
940
|
|
|
1,341
|
|
||||
Corporate
|
1,192
|
|
|
1,221
|
|
|
(381
|
)
|
|
2,469
|
|
||||
Total
|
$
|
3,634
|
|
|
$
|
5,603
|
|
|
$
|
6,606
|
|
|
$
|
10,640
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
1,816
|
|
|
$
|
2,411
|
|
|
$
|
3,234
|
|
|
$
|
4,654
|
|
Domestic Creative Agencies
|
369
|
|
|
569
|
|
|
1,063
|
|
|
1,473
|
|
||||
Specialist Communication
|
231
|
|
|
2,208
|
|
|
482
|
|
|
2,443
|
|
||||
Media Services
|
126
|
|
|
131
|
|
|
167
|
|
|
315
|
|
||||
All Other
|
1,757
|
|
|
547
|
|
|
2,958
|
|
|
772
|
|
||||
Corporate
|
18
|
|
|
24
|
|
|
19
|
|
|
32
|
|
||||
Total
|
$
|
4,317
|
|
|
$
|
5,890
|
|
|
$
|
7,923
|
|
|
$
|
9,689
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
(Dollars in Thousands)
|
||||||||||||||
Global Integrated Agencies
|
$
|
154,368
|
|
|
$
|
158,163
|
|
|
$
|
284,087
|
|
|
$
|
287,686
|
|
Domestic Creative Agencies
|
65,193
|
|
|
72,971
|
|
|
132,201
|
|
|
139,625
|
|
||||
Specialist Communication
|
47,170
|
|
|
40,304
|
|
|
86,123
|
|
|
79,128
|
|
||||
Media Services
|
21,331
|
|
|
21,398
|
|
|
41,510
|
|
|
46,082
|
|
||||
All Other
|
74,068
|
|
|
86,907
|
|
|
147,000
|
|
|
154,190
|
|
||||
Total
|
$
|
362,130
|
|
|
$
|
379,743
|
|
|
$
|
690,921
|
|
|
$
|
706,711
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
20,720
|
|
|
$
|
18,352
|
|
|
$
|
24,491
|
|
|
$
|
4,760
|
|
Domestic Creative Agencies
|
8,730
|
|
|
5,077
|
|
|
14,207
|
|
|
7,955
|
|
||||
Specialist Communication
|
6,683
|
|
|
6,216
|
|
|
13,760
|
|
|
9,944
|
|
||||
Media Services
|
991
|
|
|
(1,719
|
)
|
|
(843
|
)
|
|
(1,738
|
)
|
||||
All Other
|
2,949
|
|
|
15,986
|
|
|
8,962
|
|
|
22,430
|
|
||||
Corporate
|
(16,631
|
)
|
|
(13,140
|
)
|
|
(21,454
|
)
|
|
(27,212
|
)
|
||||
Total
|
$
|
23,442
|
|
|
$
|
30,772
|
|
|
$
|
39,123
|
|
|
$
|
16,139
|
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense and finance charges, net
|
$
|
(16,413
|
)
|
|
$
|
(16,859
|
)
|
|
$
|
(33,174
|
)
|
|
$
|
(32,942
|
)
|
Foreign exchange gain (loss)
|
2,932
|
|
|
(6,549
|
)
|
|
8,374
|
|
|
(13,209
|
)
|
||||
Other, net
|
(746
|
)
|
|
592
|
|
|
(4,128
|
)
|
|
1,033
|
|
||||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates
|
9,215
|
|
|
7,956
|
|
|
10,195
|
|
|
(28,979
|
)
|
||||
Income tax expense (benefit)
|
2,088
|
|
|
1,977
|
|
|
2,835
|
|
|
(6,353
|
)
|
||||
Income (loss) before equity in earnings of non-consolidated affiliates
|
7,127
|
|
|
5,979
|
|
|
7,360
|
|
|
(22,626
|
)
|
||||
Equity in earnings (losses) of non-consolidated affiliates
|
206
|
|
|
(28
|
)
|
|
289
|
|
|
58
|
|
||||
Net income (loss)
|
7,333
|
|
|
5,951
|
|
|
7,649
|
|
|
(22,568
|
)
|
||||
Net income attributable to the noncontrolling interest
|
(3,043
|
)
|
|
(2,545
|
)
|
|
(3,472
|
)
|
|
(3,442
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
4,290
|
|
|
$
|
3,406
|
|
|
$
|
4,177
|
|
|
$
|
(26,010
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Depreciation and amortization:
|
(Dollars in Thousands)
|
||||||||||||||
Global Integrated Agencies
|
$
|
4,437
|
|
|
$
|
4,743
|
|
|
$
|
8,502
|
|
|
$
|
12,152
|
|
Domestic Creative Agencies
|
1,547
|
|
|
1,281
|
|
|
2,786
|
|
|
2,574
|
|
||||
Specialist Communication
|
698
|
|
|
992
|
|
|
1,265
|
|
|
1,959
|
|
||||
Media Services
|
794
|
|
|
635
|
|
|
1,485
|
|
|
1,273
|
|
||||
All Other
|
2,966
|
|
|
3,892
|
|
|
5,025
|
|
|
5,736
|
|
||||
Corporate
|
221
|
|
|
160
|
|
|
438
|
|
|
384
|
|
||||
Total
|
$
|
10,663
|
|
|
$
|
11,703
|
|
|
$
|
19,501
|
|
|
$
|
24,078
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
1,232
|
|
|
$
|
2,475
|
|
|
$
|
4,999
|
|
|
$
|
4,935
|
|
Domestic Creative Agencies
|
522
|
|
|
1,097
|
|
|
986
|
|
|
1,507
|
|
||||
Specialist Communication
|
52
|
|
|
52
|
|
|
78
|
|
|
239
|
|
||||
Media Services
|
(16
|
)
|
|
74
|
|
|
(16
|
)
|
|
149
|
|
||||
All Other
|
652
|
|
|
684
|
|
|
940
|
|
|
1,341
|
|
||||
Corporate
|
1,192
|
|
|
1,221
|
|
|
(381
|
)
|
|
2,469
|
|
||||
Total
|
$
|
3,634
|
|
|
$
|
5,603
|
|
|
$
|
6,606
|
|
|
$
|
10,640
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
1,816
|
|
|
$
|
2,411
|
|
|
$
|
3,234
|
|
|
$
|
4,654
|
|
Domestic Creative Agencies
|
369
|
|
|
569
|
|
|
1,063
|
|
|
1,473
|
|
||||
Specialist Communication
|
231
|
|
|
2,208
|
|
|
482
|
|
|
2,443
|
|
||||
Media Services
|
126
|
|
|
131
|
|
|
167
|
|
|
315
|
|
||||
All Other
|
1,757
|
|
|
547
|
|
|
2,958
|
|
|
772
|
|
||||
Corporate
|
18
|
|
|
24
|
|
|
19
|
|
|
32
|
|
||||
Total
|
$
|
4,317
|
|
|
$
|
5,890
|
|
|
$
|
7,923
|
|
|
$
|
9,689
|
|
|
Total
|
|
United States
|
|
Canada
|
|
Other
|
||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(Dollars in Thousands)
|
||||||||||||||||||||||||||
June 30, 2018
|
$
|
379,743
|
|
|
|
|
$
|
295,268
|
|
|
|
|
$
|
33,086
|
|
|
|
|
$
|
51,389
|
|
|
|
||||
Components of revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange impact
|
(4,176
|
)
|
|
(1.1
|
)%
|
|
—
|
|
|
—
|
%
|
|
(1,122
|
)
|
|
(3.4
|
)%
|
|
(3,054
|
)
|
|
(5.9
|
)%
|
||||
Non-GAAP acquisitions (dispositions), net
|
(4,218
|
)
|
|
(1.1
|
)%
|
|
496
|
|
|
0.2
|
%
|
|
(5,545
|
)
|
|
(16.8
|
)%
|
|
831
|
|
|
1.6
|
%
|
||||
Organic revenue growth (decline)
|
(9,219
|
)
|
|
(2.4
|
)%
|
|
(11,105
|
)
|
|
(3.8
|
)%
|
|
(1,855
|
)
|
|
(5.6
|
)%
|
|
3,741
|
|
|
7.3
|
%
|
||||
Total Change
|
$
|
(17,613
|
)
|
|
(4.6
|
)%
|
|
$
|
(10,609
|
)
|
|
(3.6
|
)%
|
|
$
|
(8,522
|
)
|
|
(25.8
|
)%
|
|
$
|
1,518
|
|
|
3.0
|
%
|
June 30, 2019
|
$
|
362,130
|
|
|
|
|
$
|
284,659
|
|
|
|
|
$
|
24,564
|
|
|
|
|
$
|
52,907
|
|
|
|
|
Specialist Communications
|
|
All Other
|
|
Total
|
||||||||
|
(Dollars in Thousands)
|
||||||||||||
GAAP revenue from 2018 and 2019 acquisitions
|
$
|
1,519
|
|
|
$
|
698
|
|
|
$
|
2,217
|
|
||
Contribution to non-GAAP organic revenue (growth) decline
|
(440
|
)
|
—
|
|
—
|
|
—
|
|
(440
|
)
|
|||
Prior year revenue from dispositions
|
—
|
|
|
(5,995
|
)
|
|
(5,995
|
)
|
|||||
Non-GAAP acquisitions (dispositions), net
|
$
|
1,079
|
|
|
$
|
(5,297
|
)
|
|
$
|
(4,218
|
)
|
|
2019
|
|
2018
|
||
United States
|
78.6
|
%
|
|
77.8
|
%
|
Canada
|
6.8
|
%
|
|
8.7
|
%
|
Other
|
14.6
|
%
|
|
13.5
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue:
|
|
$
|
362,130
|
|
|
|
|
$
|
379,743
|
|
|
|
|
$
|
(17,613
|
)
|
|
(4.6
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
240,482
|
|
|
66.4
|
%
|
|
253,390
|
|
|
66.7
|
%
|
|
(12,908
|
)
|
|
(5.1
|
)%
|
|||
Office and general expenses
|
|
71,132
|
|
|
19.6
|
%
|
|
70,898
|
|
|
18.7
|
%
|
|
234
|
|
|
0.3
|
%
|
|||
Depreciation and amortization
|
|
10,442
|
|
|
2.9
|
%
|
|
11,543
|
|
|
3.0
|
%
|
|
(1,101
|
)
|
|
(9.5
|
)%
|
|||
|
|
$
|
322,056
|
|
|
88.9
|
%
|
|
$
|
335,831
|
|
|
88.4
|
%
|
|
$
|
(13,775
|
)
|
|
(4.1
|
)%
|
Operating profit (loss)
|
|
$
|
40,074
|
|
|
11.1
|
%
|
|
$
|
43,912
|
|
|
11.6
|
%
|
|
$
|
(3,838
|
)
|
|
(8.7
|
)%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
60,040
|
|
|
16.6
|
%
|
|
$
|
52,590
|
|
|
13.8
|
%
|
|
$
|
7,450
|
|
|
14.2
|
%
|
Staff costs
(2)
|
|
204,442
|
|
|
56.5
|
%
|
|
224,582
|
|
|
59.1
|
%
|
|
(20,140
|
)
|
|
(9.0
|
)%
|
|||
Administrative
|
|
42,617
|
|
|
11.8
|
%
|
|
47,801
|
|
|
12.6
|
%
|
|
(5,184
|
)
|
|
(10.8
|
)%
|
|||
Deferred acquisition consideration
|
|
2,073
|
|
|
0.6
|
%
|
|
(5,067
|
)
|
|
(1.3
|
)%
|
|
7,140
|
|
|
NM
|
|
|||
Stock-based compensation
|
|
2,442
|
|
|
0.7
|
%
|
|
4,382
|
|
|
1.2
|
%
|
|
(1,940
|
)
|
|
(44.3
|
)%
|
|||
Depreciation and amortization
|
|
10,442
|
|
|
2.9
|
%
|
|
11,543
|
|
|
3.0
|
%
|
|
(1,101
|
)
|
|
(9.5
|
)%
|
|||
Total operating expenses
|
|
$
|
322,056
|
|
|
88.9
|
%
|
|
$
|
335,831
|
|
|
88.4
|
%
|
|
$
|
(13,775
|
)
|
|
(4.1
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue:
|
|
$
|
154,368
|
|
|
|
|
$
|
158,163
|
|
|
|
|
$
|
(3,795
|
)
|
|
(2.4
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
97,230
|
|
|
63.0
|
%
|
|
104,959
|
|
|
66.4
|
%
|
|
(7,729
|
)
|
|
(7.4
|
)%
|
|||
Office and general expenses
|
|
31,981
|
|
|
20.7
|
%
|
|
30,109
|
|
|
19.0
|
%
|
|
1,872
|
|
|
6.2
|
%
|
|||
Depreciation and amortization
|
|
4,437
|
|
|
2.9
|
%
|
|
4,743
|
|
|
3.0
|
%
|
|
(306
|
)
|
|
(6.4
|
)%
|
|||
|
|
$
|
133,648
|
|
|
86.6
|
%
|
|
$
|
139,811
|
|
|
88.4
|
%
|
|
$
|
(6,163
|
)
|
|
(4.4
|
)%
|
Operating profit
|
|
$
|
20,720
|
|
|
13.4
|
%
|
|
$
|
18,352
|
|
|
11.6
|
%
|
|
$
|
2,368
|
|
|
12.9
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
15,785
|
|
|
10.2
|
%
|
|
$
|
11,237
|
|
|
7.1
|
%
|
|
$
|
4,548
|
|
|
40.5
|
%
|
Staff costs
(2)
|
|
91,357
|
|
|
59.2
|
%
|
|
102,066
|
|
|
64.5
|
%
|
|
(10,709
|
)
|
|
(10.5
|
)%
|
|||
Administrative
|
|
19,026
|
|
|
12.3
|
%
|
|
21,899
|
|
|
13.8
|
%
|
|
(2,873
|
)
|
|
(13.1
|
)%
|
|||
Deferred acquisition consideration
|
|
1,811
|
|
|
1.2
|
%
|
|
(2,609
|
)
|
|
(1.6
|
)%
|
|
4,420
|
|
|
NM
|
|
|||
Stock-based compensation
|
|
1,232
|
|
|
0.8
|
%
|
|
2,475
|
|
|
1.6
|
%
|
|
(1,243
|
)
|
|
(50.2
|
)%
|
|||
Depreciation and amortization
|
|
4,437
|
|
|
2.9
|
%
|
|
4,743
|
|
|
3.0
|
%
|
|
(306
|
)
|
|
(6.4
|
)%
|
|||
Total operating expenses
|
|
$
|
133,648
|
|
|
86.6
|
%
|
|
$
|
139,811
|
|
|
88.4
|
%
|
|
$
|
(6,163
|
)
|
|
(4.4
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
65,193
|
|
|
|
|
$
|
72,971
|
|
|
|
|
$
|
(7,778
|
)
|
|
(10.7
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
41,782
|
|
|
64.1
|
%
|
|
49,830
|
|
|
68.3
|
%
|
|
(8,048
|
)
|
|
(16.2
|
)%
|
|||
Office and general expenses
|
|
13,134
|
|
|
20.1
|
%
|
|
16,783
|
|
|
23.0
|
%
|
|
(3,649
|
)
|
|
(21.7
|
)%
|
|||
Depreciation and amortization
|
|
1,547
|
|
|
2.4
|
%
|
|
1,281
|
|
|
1.8
|
%
|
|
266
|
|
|
20.8
|
%
|
|||
|
|
$
|
56,463
|
|
|
86.6
|
%
|
|
$
|
67,894
|
|
|
93.0
|
%
|
|
$
|
(11,431
|
)
|
|
(16.8
|
)%
|
Operating profit
|
|
$
|
8,730
|
|
|
13.4
|
%
|
|
$
|
5,077
|
|
|
7.0
|
%
|
|
$
|
3,653
|
|
|
72.0
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
9,863
|
|
|
15.1
|
%
|
|
$
|
12,267
|
|
|
16.8
|
%
|
|
$
|
(2,404
|
)
|
|
(19.6
|
)%
|
Staff costs
(2)
|
|
37,009
|
|
|
56.8
|
%
|
|
42,809
|
|
|
58.7
|
%
|
|
(5,800
|
)
|
|
(13.5
|
)%
|
|||
Administrative
|
|
7,688
|
|
|
11.8
|
%
|
|
9,207
|
|
|
12.6
|
%
|
|
(1,519
|
)
|
|
(16.5
|
)%
|
|||
Deferred acquisition consideration
|
|
(166
|
)
|
|
(0.3
|
)%
|
|
1,233
|
|
|
1.7
|
%
|
|
(1,399
|
)
|
|
NM
|
|
|||
Stock-based compensation
|
|
522
|
|
|
0.8
|
%
|
|
1,097
|
|
|
1.5
|
%
|
|
(575
|
)
|
|
(52.4
|
)%
|
|||
Depreciation and amortization
|
|
1,547
|
|
|
2.4
|
%
|
|
1,281
|
|
|
1.8
|
%
|
|
266
|
|
|
20.8
|
%
|
|||
Total operating expenses
|
|
$
|
56,463
|
|
|
86.6
|
%
|
|
$
|
67,894
|
|
|
93.0
|
%
|
|
$
|
(11,431
|
)
|
|
(16.8
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
47,170
|
|
|
|
|
$
|
40,304
|
|
|
|
|
$
|
6,866
|
|
|
17.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
32,112
|
|
|
68.1
|
%
|
|
25,613
|
|
|
63.5
|
%
|
|
6,499
|
|
|
25.4
|
%
|
|||
Office and general expenses
|
|
7,677
|
|
|
16.3
|
%
|
|
7,483
|
|
|
18.6
|
%
|
|
194
|
|
|
2.6
|
%
|
|||
Depreciation and amortization
|
|
698
|
|
|
1.5
|
%
|
|
992
|
|
|
2.5
|
%
|
|
(294
|
)
|
|
(29.6
|
)%
|
|||
|
|
$
|
40,487
|
|
|
85.8
|
%
|
|
$
|
34,088
|
|
|
84.6
|
%
|
|
$
|
6,399
|
|
|
18.8
|
%
|
Operating profit
|
|
$
|
6,683
|
|
|
14.2
|
%
|
|
$
|
6,216
|
|
|
15.4
|
%
|
|
$
|
467
|
|
|
7.5
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
13,017
|
|
|
27.6
|
%
|
|
$
|
8,970
|
|
|
22.3
|
%
|
|
$
|
4,047
|
|
|
45.1
|
%
|
Staff costs
(2)
|
|
20,977
|
|
|
44.5
|
%
|
|
18,769
|
|
|
46.6
|
%
|
|
2,208
|
|
|
11.8
|
%
|
|||
Administrative
|
|
4,998
|
|
|
10.6
|
%
|
|
5,048
|
|
|
12.5
|
%
|
|
(50
|
)
|
|
(1.0
|
)%
|
|||
Deferred acquisition consideration
|
|
745
|
|
|
1.6
|
%
|
|
257
|
|
|
0.6
|
%
|
|
488
|
|
|
NM
|
|
|||
Stock-based compensation
|
|
52
|
|
|
0.1
|
%
|
|
52
|
|
|
0.1
|
%
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
|
698
|
|
|
1.5
|
%
|
|
992
|
|
|
2.5
|
%
|
|
(294
|
)
|
|
(29.6
|
)%
|
|||
Total operating expenses
|
|
$
|
40,487
|
|
|
85.8
|
%
|
|
$
|
34,088
|
|
|
84.6
|
%
|
|
$
|
6,399
|
|
|
18.8
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
21,331
|
|
|
|
|
$
|
21,398
|
|
|
|
|
$
|
(67
|
)
|
|
(0.3
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
14,835
|
|
|
69.5
|
%
|
|
15,239
|
|
|
71.2
|
%
|
|
(404
|
)
|
|
(2.7
|
)%
|
|||
Office and general expenses
|
|
4,711
|
|
|
22.1
|
%
|
|
7,243
|
|
|
33.8
|
%
|
|
(2,532
|
)
|
|
(35.0
|
)%
|
|||
Depreciation and amortization
|
|
794
|
|
|
3.7
|
%
|
|
635
|
|
|
3.0
|
%
|
|
159
|
|
|
25.0
|
%
|
|||
|
|
$
|
20,340
|
|
|
95.4
|
%
|
|
$
|
23,117
|
|
|
108.0
|
%
|
|
$
|
(2,777
|
)
|
|
(12.0
|
)%
|
Operating income (loss)
|
|
$
|
991
|
|
|
4.6
|
%
|
|
$
|
(1,719
|
)
|
|
(8.0
|
)%
|
|
$
|
2,710
|
|
|
NM
|
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
74,068
|
|
|
|
|
$
|
86,907
|
|
|
|
|
$
|
(12,839
|
)
|
|
(14.8
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
54,522
|
|
|
73.6
|
%
|
|
57,749
|
|
|
66.4
|
%
|
|
(3,227
|
)
|
|
(5.6
|
)%
|
|||
Office and general expenses
|
|
13,631
|
|
|
18.4
|
%
|
|
9,280
|
|
|
10.7
|
%
|
|
4,351
|
|
|
46.9
|
%
|
|||
Depreciation and amortization
|
|
2,966
|
|
|
4.0
|
%
|
|
3,892
|
|
|
4.5
|
%
|
|
(926
|
)
|
|
(23.8
|
)%
|
|||
|
|
$
|
71,119
|
|
|
96.0
|
%
|
|
$
|
70,921
|
|
|
81.6
|
%
|
|
$
|
198
|
|
|
0.3
|
%
|
Operating profit
|
|
$
|
2,949
|
|
|
4.0
|
%
|
|
$
|
15,986
|
|
|
18.4
|
%
|
|
$
|
(13,037
|
)
|
|
(81.6
|
)%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
17,659
|
|
|
23.8
|
%
|
|
$
|
18,464
|
|
|
21.2
|
%
|
|
$
|
(805
|
)
|
|
(4.4
|
)%
|
Staff costs
(2)
|
|
42,390
|
|
|
57.2
|
%
|
|
44,309
|
|
|
51.0
|
%
|
|
(1,919
|
)
|
|
(4.3
|
)%
|
|||
Administrative
|
|
7,154
|
|
|
9.7
|
%
|
|
7,610
|
|
|
8.8
|
%
|
|
(456
|
)
|
|
(6.0
|
)%
|
|||
Deferred acquisition consideration
|
|
298
|
|
|
0.4
|
%
|
|
(4,038
|
)
|
|
(4.6
|
)%
|
|
4,336
|
|
|
NM
|
|
|||
Stock-based compensation
|
|
652
|
|
|
0.9
|
%
|
|
684
|
|
|
0.8
|
%
|
|
(32
|
)
|
|
(4.7
|
)%
|
|||
Depreciation and amortization
|
|
2,966
|
|
|
4.0
|
%
|
|
3,892
|
|
|
4.5
|
%
|
|
(926
|
)
|
|
(23.8
|
)%
|
|||
Total operating expenses
|
|
$
|
71,119
|
|
|
96.0
|
%
|
|
$
|
70,921
|
|
|
81.6
|
%
|
|
$
|
198
|
|
|
0.3
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
11,325
|
|
|
$
|
6,377
|
|
|
$
|
4,948
|
|
|
77.6
|
%
|
Administrative
|
|
3,893
|
|
|
5,382
|
|
|
(1,489
|
)
|
|
(27.7
|
)%
|
|||
Stock-based compensation
|
|
1,192
|
|
|
1,221
|
|
|
(29
|
)
|
|
(2.4
|
)%
|
|||
Depreciation and amortization
|
|
221
|
|
|
160
|
|
|
61
|
|
|
38.1
|
%
|
|||
Total operating expenses
|
|
$
|
16,631
|
|
|
$
|
13,140
|
|
|
$
|
3,491
|
|
|
26.6
|
%
|
(1)
|
Excludes stock-based compensation.
|
|
Total
|
|
United States
|
|
Canada
|
|
Other
|
||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(Dollars in Thousands)
|
||||||||||||||||||||||||||
June 30, 2018
|
$
|
706,711
|
|
|
|
|
$
|
551,792
|
|
|
|
|
$
|
59,465
|
|
|
|
|
$
|
95,454
|
|
|
|
||||
Components of revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange impact
|
(9,316
|
)
|
|
(1.3
|
)%
|
|
—
|
|
|
—
|
%
|
|
(2,375
|
)
|
|
(4.0
|
)%
|
|
(6,941
|
)
|
|
(7.3
|
)%
|
||||
Non-GAAP acquisitions (dispositions), net
|
5,635
|
|
|
0.8
|
%
|
|
11,234
|
|
|
2.0
|
%
|
|
(7,281
|
)
|
|
(12.2
|
)%
|
|
1,682
|
|
|
1.8
|
%
|
||||
Organic revenue growth (decline)
|
(12,109
|
)
|
|
(1.7
|
)%
|
|
(15,350
|
)
|
|
(2.8
|
)%
|
|
(2,867
|
)
|
|
(4.8
|
)%
|
|
6,108
|
|
|
6.4
|
%
|
||||
Total Change
|
$
|
(15,790
|
)
|
|
(2.2
|
)%
|
|
$
|
(4,116
|
)
|
|
(0.7
|
)%
|
|
$
|
(12,523
|
)
|
|
(21.1
|
)%
|
|
$
|
849
|
|
|
0.9
|
%
|
June 30, 2019
|
$
|
690,921
|
|
|
|
|
$
|
547,676
|
|
|
|
|
$
|
46,942
|
|
|
|
|
$
|
96,303
|
|
|
|
|
Specialist Communications
|
|
All Other
|
|
Total
|
||||||||
|
(Dollars in Thousands)
|
||||||||||||
GAAP revenue from 2018 and 2019 acquisitions
|
$
|
2,762
|
|
|
$
|
15,140
|
|
|
$
|
17,902
|
|
||
Contribution to non-GAAP organic revenue (growth) decline
|
(643
|
)
|
—
|
|
(3,805
|
)
|
—
|
|
(4,448
|
)
|
|||
Prior year revenue from dispositions
|
—
|
|
|
(7,819
|
)
|
|
(7,819
|
)
|
|||||
Non-GAAP acquisitions (dispositions), net
|
$
|
2,119
|
|
|
$
|
3,516
|
|
|
$
|
5,635
|
|
|
2019
|
|
2018
|
||
United States
|
79.3
|
%
|
|
78.1
|
%
|
Canada
|
6.8
|
%
|
|
8.4
|
%
|
Other
|
13.9
|
%
|
|
13.5
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
690,921
|
|
|
|
|
$
|
706,711
|
|
|
|
|
$
|
(15,790
|
)
|
|
(2.2
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
477,903
|
|
|
69.2
|
%
|
|
496,420
|
|
|
70.2
|
%
|
|
(18,517
|
)
|
|
(3.7
|
)%
|
|||
Office and general expenses
|
|
133,377
|
|
|
19.3
|
%
|
|
143,246
|
|
|
20.3
|
%
|
|
(9,869
|
)
|
|
(6.9
|
)%
|
|||
Depreciation and amortization
|
|
19,063
|
|
|
2.8
|
%
|
|
23,694
|
|
|
3.4
|
%
|
|
(4,631
|
)
|
|
(19.5
|
)%
|
|||
|
|
$
|
630,343
|
|
|
91.2
|
%
|
|
$
|
663,360
|
|
|
93.9
|
%
|
|
$
|
(33,017
|
)
|
|
(5.0
|
)%
|
Operating profit
|
|
$
|
60,578
|
|
|
8.8
|
%
|
|
$
|
43,351
|
|
|
6.1
|
%
|
|
$
|
17,227
|
|
|
39.7
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
116,492
|
|
|
16.9
|
%
|
|
$
|
101,102
|
|
|
14.3
|
%
|
|
$
|
15,390
|
|
|
15.2
|
%
|
Staff costs
(2)
|
|
406,000
|
|
|
58.8
|
%
|
|
437,655
|
|
|
61.9
|
%
|
|
(31,655
|
)
|
|
(7.2
|
)%
|
|||
Administrative
|
|
87,371
|
|
|
12.6
|
%
|
|
95,219
|
|
|
13.5
|
%
|
|
(7,848
|
)
|
|
(8.2
|
)%
|
|||
Deferred acquisition consideration
|
|
(5,570
|
)
|
|
(0.8
|
)%
|
|
(2,481
|
)
|
|
(0.4
|
)%
|
|
(3,089
|
)
|
|
NM
|
|
|||
Stock-based compensation
|
|
6,987
|
|
|
1.0
|
%
|
|
8,171
|
|
|
1.2
|
%
|
|
(1,184
|
)
|
|
(14.5
|
)%
|
|||
Depreciation and amortization
|
|
19,063
|
|
|
2.8
|
%
|
|
23,694
|
|
|
3.4
|
%
|
|
(4,631
|
)
|
|
(19.5
|
)%
|
|||
Total operating expenses
|
|
$
|
630,343
|
|
|
91.2
|
%
|
|
$
|
663,360
|
|
|
93.9
|
%
|
|
$
|
(33,017
|
)
|
|
(5.0
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
|
|||||||||||||||||||
Revenue
|
|
$
|
284,087
|
|
|
|
|
$
|
287,686
|
|
|
|
|
$
|
(3,599
|
)
|
|
(1.3
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
194,506
|
|
|
68.5
|
%
|
|
207,996
|
|
|
72.3
|
%
|
|
(13,490
|
)
|
|
(6.5
|
)%
|
|||
Office and general expenses
|
|
56,588
|
|
|
19.9
|
%
|
|
62,778
|
|
|
21.8
|
%
|
|
(6,190
|
)
|
|
(9.9
|
)%
|
|||
Depreciation and amortization
|
|
8,502
|
|
|
3.0
|
%
|
|
12,152
|
|
|
4.2
|
%
|
|
(3,650
|
)
|
|
(30.0
|
)%
|
|||
|
|
$
|
259,596
|
|
|
91.4
|
%
|
|
$
|
282,926
|
|
|
98.3
|
%
|
|
$
|
(23,330
|
)
|
|
(8.2
|
)%
|
Operating profit
|
|
$
|
24,491
|
|
|
8.6
|
%
|
|
$
|
4,760
|
|
|
1.7
|
%
|
|
$
|
19,731
|
|
|
414.5
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
30,281
|
|
|
10.7
|
%
|
|
$
|
17,738
|
|
|
6.2
|
%
|
|
$
|
12,543
|
|
|
70.7
|
%
|
Staff costs
(2)
|
|
180,600
|
|
|
63.6
|
%
|
|
204,465
|
|
|
71.1
|
%
|
|
(23,865
|
)
|
|
(11.7
|
)%
|
|||
Administrative
|
|
38,368
|
|
|
13.5
|
%
|
|
44,810
|
|
|
15.6
|
%
|
|
(6,442
|
)
|
|
(14.4
|
)%
|
|||
Deferred acquisition consideration
|
|
(3,154
|
)
|
|
(1.1
|
)%
|
|
(1,174
|
)
|
|
(0.4
|
)%
|
|
(1,980
|
)
|
|
NM
|
|
|||
Stock-based compensation
|
|
4,999
|
|
|
1.8
|
%
|
|
4,935
|
|
|
1.7
|
%
|
|
64
|
|
|
1.3
|
%
|
|||
Depreciation and amortization
|
|
8,502
|
|
|
3.0
|
%
|
|
12,152
|
|
|
4.2
|
%
|
|
(3,650
|
)
|
|
(30.0
|
)%
|
|||
Total operating expenses
|
|
$
|
259,596
|
|
|
91.4
|
%
|
|
$
|
282,926
|
|
|
98.3
|
%
|
|
$
|
(23,330
|
)
|
|
(8.2
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
132,201
|
|
|
|
|
$
|
139,625
|
|
|
|
|
$
|
(7,424
|
)
|
|
(5.3
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
89,506
|
|
|
67.7
|
%
|
|
98,424
|
|
|
70.5
|
%
|
|
(8,918
|
)
|
|
(9.1
|
)%
|
|||
Office and general expenses
|
|
25,702
|
|
|
19.4
|
%
|
|
30,672
|
|
|
22.0
|
%
|
|
(4,970
|
)
|
|
(16.2
|
)%
|
|||
Depreciation and amortization
|
|
2,786
|
|
|
2.1
|
%
|
|
2,574
|
|
|
1.8
|
%
|
|
212
|
|
|
8.2
|
%
|
|||
|
|
$
|
117,994
|
|
|
89.3
|
%
|
|
$
|
131,670
|
|
|
94.3
|
%
|
|
$
|
(13,676
|
)
|
|
(10.4
|
)%
|
Operating profit
|
|
$
|
14,207
|
|
|
10.7
|
%
|
|
$
|
7,955
|
|
|
5.7
|
%
|
|
$
|
6,252
|
|
|
78.6
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
24,550
|
|
|
18.6
|
%
|
|
$
|
23,139
|
|
|
16.6
|
%
|
|
$
|
1,411
|
|
|
6.1
|
%
|
Staff costs
(2)
|
|
74,879
|
|
|
56.6
|
%
|
|
85,209
|
|
|
61.0
|
%
|
|
(10,330
|
)
|
|
(12.1
|
)%
|
|||
Administrative
|
|
15,562
|
|
|
11.8
|
%
|
|
17,778
|
|
|
12.7
|
%
|
|
(2,216
|
)
|
|
(12.5
|
)%
|
|||
Deferred acquisition consideration
|
|
(769
|
)
|
|
(0.6
|
)%
|
|
1,463
|
|
|
1.0
|
%
|
|
(2,232
|
)
|
|
NM
|
|
|||
Stock-based compensation
|
|
986
|
|
|
0.7
|
%
|
|
1,507
|
|
|
1.1
|
%
|
|
(521
|
)
|
|
(34.6
|
)%
|
|||
Depreciation and amortization
|
|
2,786
|
|
|
2.1
|
%
|
|
2,574
|
|
|
1.8
|
%
|
|
212
|
|
|
8.2
|
%
|
|||
Total operating expenses
|
|
$
|
117,994
|
|
|
89.3
|
%
|
|
$
|
131,670
|
|
|
94.3
|
%
|
|
$
|
(13,676
|
)
|
|
(10.4
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
86,123
|
|
|
|
|
$
|
79,128
|
|
|
|
|
$
|
6,995
|
|
|
8.8
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
57,986
|
|
|
67.3
|
%
|
|
52,355
|
|
|
66.2
|
%
|
|
5,631
|
|
|
10.8
|
%
|
|||
Office and general expenses
|
|
13,112
|
|
|
15.2
|
%
|
|
14,870
|
|
|
18.8
|
%
|
|
(1,758
|
)
|
|
(11.8
|
)%
|
|||
Depreciation and amortization
|
|
1,265
|
|
|
1.5
|
%
|
|
1,959
|
|
|
2.5
|
%
|
|
(694
|
)
|
|
(35.4
|
)%
|
|||
|
|
$
|
72,363
|
|
|
84.0
|
%
|
|
$
|
69,184
|
|
|
87.4
|
%
|
|
$
|
3,179
|
|
|
4.6
|
%
|
Operating profit
|
|
$
|
13,760
|
|
|
16.0
|
%
|
|
$
|
9,944
|
|
|
12.6
|
%
|
|
$
|
3,816
|
|
|
38.4
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
20,842
|
|
|
24.2
|
%
|
|
$
|
18,448
|
|
|
23.3
|
%
|
|
$
|
2,394
|
|
|
13.0
|
%
|
Staff costs
(2)
|
|
41,147
|
|
|
47.8
|
%
|
|
37,732
|
|
|
47.7
|
%
|
|
3,415
|
|
|
9.1
|
%
|
|||
Administrative
|
|
10,080
|
|
|
11.7
|
%
|
|
10,041
|
|
|
12.7
|
%
|
|
39
|
|
|
0.4
|
%
|
|||
Deferred acquisition consideration
|
|
(1,049
|
)
|
|
(1.2
|
)%
|
|
765
|
|
|
1.0
|
%
|
|
(1,814
|
)
|
|
NM
|
|
|||
Stock-based compensation
|
|
78
|
|
|
0.1
|
%
|
|
239
|
|
|
0.3
|
%
|
|
(161
|
)
|
|
(67.3
|
)%
|
|||
Depreciation and amortization
|
|
1,265
|
|
|
1.5
|
%
|
|
1,959
|
|
|
2.5
|
%
|
|
(694
|
)
|
|
(35.4
|
)%
|
|||
Total operating expenses
|
|
$
|
72,363
|
|
|
84.0
|
%
|
|
$
|
69,184
|
|
|
87.4
|
%
|
|
$
|
3,179
|
|
|
4.6
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
7,645
|
|
|
18.4
|
%
|
|
$
|
5,455
|
|
|
11.8
|
%
|
|
$
|
2,190
|
|
|
40.2
|
%
|
Staff costs
(2)
|
|
25,185
|
|
|
60.7
|
%
|
|
32,380
|
|
|
70.3
|
%
|
|
(7,195
|
)
|
|
(22.2
|
)%
|
|||
Administrative
|
|
7,981
|
|
|
19.2
|
%
|
|
8,391
|
|
|
18.2
|
%
|
|
(410
|
)
|
|
(4.9
|
)%
|
|||
Deferred acquisition consideration
|
|
73
|
|
|
0.2
|
%
|
|
172
|
|
|
0.4
|
%
|
|
(99
|
)
|
|
(57.6
|
)%
|
|||
Stock-based compensation
|
|
(16
|
)
|
|
—
|
%
|
|
149
|
|
|
0.3
|
%
|
|
(165
|
)
|
|
NM
|
|
|||
Depreciation and amortization
|
|
1,485
|
|
|
3.6
|
%
|
|
1,273
|
|
|
2.8
|
%
|
|
212
|
|
|
16.7
|
%
|
|||
Total operating expenses
|
|
$
|
42,353
|
|
|
102.0
|
%
|
|
$
|
47,820
|
|
|
103.8
|
%
|
|
$
|
(5,467
|
)
|
|
(11.4
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
147,000
|
|
|
|
|
$
|
154,190
|
|
|
|
|
$
|
(7,190
|
)
|
|
(4.7
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
106,276
|
|
|
72.3
|
%
|
|
105,632
|
|
|
68.5
|
%
|
|
644
|
|
|
0.6
|
%
|
|||
Office and general expenses
|
|
26,737
|
|
|
18.2
|
%
|
|
20,392
|
|
|
13.2
|
%
|
|
6,345
|
|
|
31.1
|
%
|
|||
Depreciation and amortization
|
|
5,025
|
|
|
3.4
|
%
|
|
5,736
|
|
|
3.7
|
%
|
|
(711
|
)
|
|
(12.4
|
)%
|
|||
|
|
$
|
138,038
|
|
|
93.9
|
%
|
|
$
|
131,760
|
|
|
85.5
|
%
|
|
$
|
6,278
|
|
|
4.8
|
%
|
Operating profit
|
|
$
|
8,962
|
|
|
6.1
|
%
|
|
$
|
22,430
|
|
|
14.5
|
%
|
|
$
|
(13,468
|
)
|
|
(60.0
|
)%
|
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
33,174
|
|
|
22.6
|
%
|
|
$
|
36,322
|
|
|
23.6
|
%
|
|
$
|
(3,148
|
)
|
|
(8.7
|
)%
|
Staff costs
(2)
|
|
84,188
|
|
|
57.3
|
%
|
|
77,869
|
|
|
50.5
|
%
|
|
6,319
|
|
|
8.1
|
%
|
|||
Administrative
|
|
15,382
|
|
|
10.5
|
%
|
|
14,199
|
|
|
9.2
|
%
|
|
1,183
|
|
|
8.3
|
%
|
|||
Deferred acquisition consideration
|
|
(671
|
)
|
|
(0.5
|
)%
|
|
(3,707
|
)
|
|
(2.4
|
)%
|
|
3,036
|
|
|
81.9
|
%
|
|||
Stock-based compensation
|
|
940
|
|
|
0.6
|
%
|
|
1,341
|
|
|
0.9
|
%
|
|
(401
|
)
|
|
(29.9
|
)%
|
|||
Depreciation and amortization
|
|
5,025
|
|
|
3.4
|
%
|
|
5,736
|
|
|
3.7
|
%
|
|
(711
|
)
|
|
(12.4
|
)%
|
|||
Total operating expenses
|
|
$
|
138,038
|
|
|
93.9
|
%
|
|
$
|
131,760
|
|
|
85.5
|
%
|
|
$
|
6,278
|
|
|
4.8
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
2019
|
|
2018
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
13,851
|
|
|
$
|
11,742
|
|
|
$
|
2,109
|
|
|
18.0
|
%
|
Administrative
|
|
7,546
|
|
|
10,301
|
|
|
(2,755
|
)
|
|
(26.7
|
)%
|
|||
Stock-based compensation
|
|
(381
|
)
|
|
2,469
|
|
|
(2,850
|
)
|
|
NM
|
|
|||
Depreciation and amortization
|
|
438
|
|
|
384
|
|
|
54
|
|
|
14.1
|
%
|
|||
Other asset impairment
|
|
—
|
|
|
2,317
|
|
|
(2,317
|
)
|
|
(100.0
|
)%
|
|||
Total operating expenses
|
|
$
|
21,454
|
|
|
$
|
27,213
|
|
|
$
|
(5,759
|
)
|
|
(21.2
|
)%
|
(1)
|
Excludes stock-based compensation.
|
|
As of and for the six months ended June 30, 2019
|
|
As of and for the six months ended June 30, 2018
|
|
As of and for the year ended December 31, 2018
|
||||||
|
(In Thousands, Except for Long-Term Debt to
Shareholders’ Equity Ratio)
|
||||||||||
Cash and cash equivalents
|
$
|
27,304
|
|
|
$
|
24,999
|
|
|
$
|
30,873
|
|
Working capital (deficit)
|
$
|
(184,620
|
)
|
|
$
|
(176,959
|
)
|
|
$
|
(152,682
|
)
|
Cash provided by (used in) operating activities
|
$
|
(40,237
|
)
|
|
$
|
(61,713
|
)
|
|
$
|
17,280
|
|
Cash provided by (used in) investing activities
|
$
|
9,818
|
|
|
$
|
(36,121
|
)
|
|
$
|
(50,431
|
)
|
Cash provided by (used in) financing activities
|
$
|
25,712
|
|
|
$
|
76,343
|
|
|
$
|
21,434
|
|
Ratio of long-term debt to shareholders' deficit
|
-5.32
|
|
|
-6.52
|
|
|
-3.87
|
|
|
June 30, 2019
|
||
Total Senior Leverage Ratio
|
0.11
|
|
|
Maximum per covenant
|
2.00
|
|
|
|
|
|
|
Total Leverage Ratio
|
4.91
|
|
|
Maximum per covenant
|
6.25
|
|
|
|
|
|
|
Fixed Charges Ratio
|
2.45
|
|
|
Minimum per covenant
|
1.00
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation and amortization (in millions)
|
$
|
187,920
|
|
Minimum per covenant (in millions)
|
$
|
105,000
|
|
|
June 30, 2019
|
||||||||||||||||||||||
|
Global Integrated Agencies
|
|
Domestic Creative Agencies
|
|
Specialist Communication Agencies
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||||||
|
(Dollars in Thousands)
|
||||||||||||||||||||||
Beginning Balance of contingent payments
|
$
|
47,880
|
|
|
$
|
3,747
|
|
|
$
|
13,193
|
|
|
$
|
2,689
|
|
|
$
|
15,089
|
|
|
$
|
82,598
|
|
Payments
|
(20,773
|
)
|
|
(526
|
)
|
|
(2,031
|
)
|
|
(250
|
)
|
|
(912
|
)
|
|
(24,492
|
)
|
||||||
Additions - acquisitions and step up transactions
|
—
|
|
|
—
|
|
|
5,695
|
|
|
—
|
|
|
—
|
|
|
5,695
|
|
||||||
Redemption value adjustments
(1)
|
(3,154
|
)
|
|
(769
|
)
|
|
(1,049
|
)
|
|
73
|
|
|
(671
|
)
|
|
(5,570
|
)
|
||||||
Stock-based compensation
|
(1,711
|
)
|
|
26
|
|
|
—
|
|
|
—
|
|
|
1,155
|
|
|
(530
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Ending Balance of contingent payments
|
22,242
|
|
|
2,478
|
|
|
15,808
|
|
|
2,512
|
|
|
14,661
|
|
|
57,701
|
|
||||||
Fixed payments
|
263
|
|
|
279
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
542
|
|
||||||
|
$
|
22,505
|
|
|
$
|
2,757
|
|
|
$
|
15,808
|
|
|
$
|
2,512
|
|
|
$
|
14,661
|
|
|
$
|
58,243
|
|
(1)
|
Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments and stock-based compensation charges relating to acquisition payments that are tied to continued employment.
|
Consideration
(4)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 &
Thereafter
|
|
Total
|
|
||||||||||||
|
|
(Dollars in Thousands)
|
|
||||||||||||||||||||||
Cash
|
|
$
|
4,671
|
|
|
$
|
1,673
|
|
|
$
|
3,798
|
|
|
$
|
2,720
|
|
|
$
|
6,149
|
|
|
$
|
19,011
|
|
|
Shares
|
|
16
|
|
|
32
|
|
|
49
|
|
|
33
|
|
|
17
|
|
|
$
|
147
|
|
|
|||||
|
|
$
|
4,687
|
|
|
$
|
1,705
|
|
|
$
|
3,847
|
|
|
$
|
2,753
|
|
|
$
|
6,166
|
|
|
$
|
19,158
|
|
(1)
|
Operating income before depreciation and amortization to be received
(2)
|
|
$
|
2,001
|
|
|
$
|
80
|
|
|
$
|
1,768
|
|
|
$
|
—
|
|
|
$
|
569
|
|
|
$
|
4,418
|
|
|
Cumulative operating income before depreciation and amortization
(3)
|
|
$
|
2,001
|
|
|
$
|
2,081
|
|
|
$
|
3,849
|
|
|
$
|
3,849
|
|
|
$
|
4,418
|
|
|
|
(5)
|
(1)
|
This amount is in addition to (i) the
$19.9
million of options to purchase only exercisable upon termination not within the control of the Company, or death, and (ii) the
$3.6
million excess of the initial redemption value recorded in redeemable noncontrolling interests over the amount the Company would be required to pay to the holders should the Company acquire the remaining ownership interests.
|
(2)
|
This financial measure is presented because it is the basis of the calculation used in the underlying agreements relating to the put rights and is based on actual operating results. This amount represents additional amounts to be attributable to MDC Partners Inc., commencing in the year the put is exercised.
|
(3)
|
Cumulative operating income before depreciation and amortization represents the cumulative amounts to be received by the Company.
|
(4)
|
The timing of consideration to be paid varies by contract and does not necessarily correspond to the date of the exercise of the put.
|
(5)
|
Amounts are not presented as they would not be meaningful due to multiple periods included.
|
•
|
risks associated with severe effects of international, national and regional economic conditions;
|
•
|
the Company’s ability to attract new clients and retain existing clients;
|
•
|
the spending patterns and financial success of the Company’s clients;
|
•
|
the Company’s ability to retain and attract key employees;
|
•
|
the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to redeemable noncontrolling interests and deferred acquisition consideration;
|
•
|
the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities; and
|
•
|
foreign currency fluctuations.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Program
|
||||||||
4/1/2019 - 4/30/2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
5/1/2019 - 5/31/2019
|
|
5,602
|
|
|
2.61
|
|
|
—
|
|
|
—
|
|
||||
6/1/2019 - 6/30/2019
|
|
13,655
|
|
|
2.91
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
19,257
|
|
|
$
|
2.70
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Exhibit No.
|
|
Description
|
|
Articles of Amalgamation, dated January 1, 2004 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 10, 2004).
|
|
|
Articles of Continuance, dated June 28, 2004 (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-Q filed on August 4, 2004).
|
|
|
Articles of Amalgamation, dated July 1, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on July 30, 2010).
|
|
|
Articles of Amalgamation, dated May 1, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 2, 2011).
|
|
|
Articles of Amalgamation, dated January 1, 2013 (incorporated by reference to Exhibit 3.1.4 to the Company’s Form 10-K filed on March 10, 2014).
|
|
|
Articles of Amalgamation, dated April 1, 2013 (incorporated by reference to Exhibit 3.1.5 to the Company’s Form 10-K filed on March 10, 2014).
|
|
|
Articles of Amalgamation, dated July 1, 2013 (incorporated by reference to Exhibit 3.1.6 to the Company’s Form 10-K filed on March 10, 2014).
|
|
|
Articles of Amendment, dated March 7, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on March 7, 2017).
|
|
|
Articles of Amendment, dated March 14, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 15, 2019).
|
|
|
General By-law No. 1, as amended on April 29, 2005 (incorporated by reference to Exhibit 3.2 to the Company’s Form 10-K filed on March 16, 2007).
|
|
|
Agreement, dated April 19, 2019, by and between the Company and FrontFour Capital Group LLC, on behalf of itself and its affiliates (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on April 22, 2019).
|
|
|
Employment Agreement, dated as of May 6, 2019, by and between the Company and Frank Lanuto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 8, 2019).
|
|
|
Employment Agreement, dated as of May 6, 2019, by and between the Company and Jonathan Mirsky (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on May 8, 2019).
|
|
|
Employment Agreement, dated as of May 16, 2019, by and between the Company and Seth Gardner (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 23, 2019).
|
|
|
Separation and Release Agreement, dated as of May 9, 2019, by and between the Company and David Doft (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on May 9, 2019).
|
|
|
Separation and Release Agreement, dated as of May 6, 2019, by and between the Company and Mitchell Gendel (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed on May 9, 2019).
|
|
|
Agreement of Settlement and Release, dated as of June 3, 2019, by and between the Company and Stephanie Nerlich (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on June 6, 2019).
|
|
|
Amendment to Incentive/Retention Agreement, dated June 4, 2019, by and between the Company and David Ross (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on June 6, 2019).
|
|
|
Certification by Chief Executive Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Certification by Chief Financial Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Schedule of Advertising and Communications Companies.*
|
|
101
|
|
Interactive data file.*
|
MDC PARTNERS INC.
|
|
|
|
/s/ Frank Lanuto
|
|
Frank Lanuto
|
|
Chief Financial Officer and Authorized Signatory
|
|
|
|
August 7, 2019
|
1 Year MDC Partners Chart |
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