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Press Release

MDC Parters Reports Third Quarter 2005

TORONTO, Ontario (November 8, 2005) – MDC Partners Inc. (“MDC Partners”) today announced its financial results for the three and nine months ended September 30, 2005.

Consolidated revenues for the three months ended September 30, 2005 were $118.9 million, an increase of 45% compared to $82.1 million in the same period of 2004. Operating income was $6.9 million versus $5.9 million reported in the third quarter of 2004. Net loss from continuing operations for the three months ended September 30, 2005 was ($2.5) million versus ($0.9) million for the same period in 2004. Diluted loss per share from continuing operations for the third quarter of 2005 was ($0.11), compared to ($0.04) last year.

Consolidated EBITDA for the third quarter of 2005 was $15.4 million versus $10.8 million during the same period of 2004. MDC’s share of EBITDA increased 8% to $9.3 million in the third quarter of 2005 from $8.6 million in the third quarter of 2004.

Cash earnings per share for the three months ended September 30, 2005 was $0.27.

EBITDA, MDC’s share of EBITDA and cash earnings per share are non-GAAP measures. These amounts have been reconciled to GAAP results in Schedules 3-5 of this press release.

Consolidated revenues for the nine months ended September 30, 2005 were $316.8 million, an increase of 41% compared to $225.2 million in the same period of 2004. Operating income was $10.6 million versus $7.9 million reported in the same period of 2004, an increase of 34%. Net loss from continuing operations for the nine months ended September 30, 2005 was ($7.0) million versus income from continuing operations of $12.6 million for the same period in 2004. The loss from continuing operations during the nine months ended September 30, 2005 included other income of $0.8 million, compared to a gain on asset sales and settlement of debt of $14.9 million and an accrual recovery of $2.4 million in the first nine months of 2004. Excluding the impact of these items, the loss from continuing operations would have been ($6.5) million in the first nine months of 2005 versus income from continuing operations of $2.3 million in the same period of 2004. Diluted loss per share from continuing operations for the first nine months of 2005 was ($0.30), compared to diluted earnings per share of $0.55 reported last year.

Consolidated EBITDA for the first nine months of 2005 was $32.8 million versus $23.1 million during the same period of 2004. MDC’s share of EBITDA increased 7% to $18.4 million in the first nine months of 2005 from $17.2 million in the first nine months of 2004.

Cash earnings per share for the nine months ended September 30, 2005 was $0.70.

“I am very pleased with the organic revenue growth of 11.6% generated by the Marketing Communications group and the $50 million of net new business wins during the quarter, the largest reported in the Company’s history,” said Miles S. Nadal, Chairman & CEO of MDC Partners.

Segment Results

Revenue for the Marketing Communications group was $97.0 million for the third quarter of 2005 compared to $62.1 million in 2004, representing a year-over-year increase of 56%. This increase included organic revenue growth (1) of 11.6% for the quarter. O perating profit for Marketing Communications for the third quarter of 2005 increased by approximately 57 % to $ 13.8 million from $ 8.8 million. Marketing Communications revenue for the first nine months of 2005 increased 54% to $261.0 million from $169.9 million and operating profit for the same period increased 44% to $30.2 million from $21.0 million from the first nine months of 2004.

Revenues recorded by the Secure Products group for the third quarter of 2005 were $21.9 million, representing an increase of 9% compared to 2004. The Secure Products group posted an operating profit of $1.2 million, compared with an operating profit of $0.9 million in 2004. For the first nine months of 2005, Secure Products reported revenue of $55.8 million versus $55.3 million in the first nine months of 2004. Operating loss for the first nine months of 2005 was ($0.8) million compared to operating profit in the first nine months of 2004 of $1.8 million.

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(1) Organic revenue growth is a non-GAAP measure that refers to growth in revenues from sources other than acquisitions or foreign exchange impacts. For purposes of calculating organic revenue growth for the Marketing Communications group and the SMS segment, it was assumed that Crispin Porter + Bogusky was consolidated for the entire comparable reporting period. 
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Beginning with the third quarter, the Company has commenced reporting its businesses in five reporting segments plus Corporate. The Marketing Communications group is comprised of three of these segments: Strategic Marketing Services (“SMS”), Customer Relationship Management (“CRM”) and Specialized Communication Services (“SCS”). The Secure Products group is comprised of two reporting segments: Secure Cards and Secure Paper.

Additional details regarding the composition of these reporting segments will be disclosed during our third quarter conference call (see details below) and in our Form 10-Q for the period ended September 30, 2005.

Strategic Marketing Services

Revenue for the SMS segment was $59.7 million for the third quarter of 2005 compared to $30.8 million in 2004, representing a year-over-year increase of 94%. This increase included organic revenue growth of 7.3% for the quarter. O perating profit for SMS for the third quarter of 2005 increased by approximately 105 % to $ 9.5 million from $4.6 million. SMS revenue for the nine months ended September 2005 increased 88% to $153.8 million from $81.7 million and operating profit for the same period increased 67%, to $20.6 million, compared to $12.4 million for the first nine months of 2004.

Customer Relationship Management

Revenue for the CRM segment was $16.6 million for the third quarter of 2005 compared to $15.1 million in 2004, representing a year-over-year increase of 10%, all of which was organic growth. O perating profit for CRM for the third quarter of 2005 decreased by approximately 71 % to $0 .5 million from $ 1.7 million. CRM revenue for the nine months ended September 2005 increased 18% to $49.1 million from $41.7 million. Operating profit for the same period decreased 74% to $0.6 million from $2.3 million from the first nine months of 2004.

Specialized Communication Services

Revenue for the SCS segment was $20.6 million for the third quarter of 2005 compared to $16.2 million in 2004, representing a year-over-year increase of 27%, 24% of which was organic growth. O perating profit for SCS for the third quarter of 2005 increased by approximately 56% to $ 3.8 million from $2.4 million. SCS revenue for the nine months ended September 2005 increased 25% to $58.1 million from $46.5 million. Operating profit for the same period increased 41% to $9.0 million from $6.3 million from the first nine months of 2004.

Secure Cards

Revenues recorded by the Secure Cards business for the third quarter of 2005 were $7.8 million, representing an increase of 26% compared to 2004. The Secure Card business posted an operating loss of ($0.1) million, compared with a loss of ($0.9) million in 2004. For the first nine months of 2005, the Secure Card business reported revenue of $21.9 million versus $19.0 million in the first nine months of 2004. Operating loss for the first nine months of 2005 was ($1.3) million compared to operating loss in the first nine months of 2004 of ($2.0) million.

Secure Paper

Revenues recorded by the Secure Paper business for the third quarter of 2005 were $14.1 million, representing an increase of 1.8% compared to 2004. The Secure Paper business posted operating profit of $1.3 million, compared with an operating profit of $1.8 million in 2004. For the first nine months of 2005, Secure Paper reported revenue of $33.9 million versus $36.3 million in the first nine months of 2004. Operating profit for the first nine months of 2005 was $0.5 million compared to operating profit in the first nine months of 2004 of $3.8 million.

The Company will provide significant additional details on its business results on its conference call (see details below).

“We are pleased with the progress that our businesses have made during the quarter following significant management and infrastructure changes implemented during the first half of the year. In addition, we believe that our new reporting structure will enhance our shareholders’ understanding of our business segments,” said Steven Berns, President and Chief Financial Officer.

Conference Call

Management will host a conference call today at 8:30 a.m. (EST) to discuss our third quarter results. The conference call will be accessible by dialing 416-640-4127 or toll free 800-814-4853 . An investor presentation has been posted to our website www.mdc-partners.com and will be referred to during the conference call.


Click here to view Financial Results

About MDC Partners Inc.

MDC Partners is a leading provider of marketing communications services, and secure transaction products and services, to clients in the United States, Canada, Australia and the United Kingdom. Through its partnership of entrepreneurial firms, its Marketing Communications group provides advertising, specialized communication and consulting services to leading brands. The Secure Products group provides security products and services in three primary areas including electronic transaction products, secure ticketing products and stamps. MDC Partners Class A shares are publicly traded on the NASDAQ under the symbol “MDCA” and on the Toronto Stock Exchange under the symbol “MDZ.SV.A”