Toronto, Ontario, April 14, 2005 – MDC Partners Inc. (“MDC Partners”) today announced its financial results for the year and fourth quarter ended December 31, 2004. Consolidated revenues for 2004 were $316.8 million, an increase of 14% compared to $278.8 million in 2003. Operating profit was $2.8 million versus a loss of $6.0 million reported in 2003. Net income from continuing operations in 2004 was $3.8 million versus $13.7 million in 2003. The 2004 net income from continuing operations included a pre-tax net gain on an asset sale of $14.8 million, compared to a pre-tax net gain on asset sales of $43.8 million in 2003. Net loss after discontinued operations was $2.2 million in 2004 compared with net income of $12.4 million in 2003. Diluted earnings per share from continuing operations for 2004 was $0.18, compared to $0.77 reported last year.
“We are pleased with the progress we made in 2004 to continue to build our businesses,” said Miles S. Nadal, Chairman, President & CEO of MDC Partners. “Our Partner companies did great work for clients in 2004, helping to grow their brands. We have started 2005 in great stride with a clear focus on organic growth while continuing to add prolific businesses like the Zyman Group.”
For the fourth quarter, consolidated revenues were $91.6 million compared with $64.9 million reported for 2003. Operating loss was $3.6 million compared to operating profit of $2.3 million achieved during the same quarter of 2003. Net loss from continuing operations for the three months ended December 31, 2004 was $7.8 million compared to a net loss of $7.5 million for the same period in 2003. Diluted loss per share from continuing operations for the quarter was ($0.35) compared to diluted loss per share of ($0.39) in 2003.
Assuming that 100% of the results of operations of those entities which are required to be equity accounted for under US GAAP have been combined on a line by line basis with the other consolidated businesses, Marketing Communications’ combined revenue was $296.9 million for 2004 compared to $200.3 million in 2003, representing a year-over-year increase of $96.6 million, or 48%. This revenue growth is primarily the result of the acquisition of several businesses by the Company. Combined operating profit for 2004 improved by approximately 39 % to $ 38.3 million from $ 27.6 million, year over year, while operating margins were 13 % for 2004 as compared to 14 % in 2003.
We believe that discussing “Combined” results provides a better understanding of our results of operation because it allows for a more meaningful analysis of the financial results of our underlying business operations. For purposes of this release, except as otherwise indicated, 100% of the results of operations of those material entities which are required to be equity accounted for under US GAAP have been combined on a line by line basis with the other consolidated businesses of the Marketing Communications operating segment, and this alternative presentation of operating results has been described as “Combined”. These “Combined” results do not constitute a financial measure prepared in accordance with US GAAP and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other titled measures determined in accordance with US GAAP. A reconciliation of “Combined” results of operations of the Marketing Communications operating segment to the US GAAP reported results of operations has been provided by the Company in the tables included in this release.
Revenues recorded by Secure Products International for 2004 were $69.7 million, representing a decrease of $44.2 million, or 39%, compared to 2003. The decrease was primarily due to the divestiture of Custom Direct, Inc. (“CDI”). The Secure Products International Group contributed operating profit of $0.5 million, an improvement of $9.4 million from the 2003 operating loss of $8.9 million.
“Although we have made significant improvements to date, we continue to improve our infrastructure at both corporate and our operating units to ensure that we attain best-in- class EBITDA margins”, said Steven Berns, Vice Chairman and Executive Vice President.”
The Company will provide significant additional details on its 2004 business results, as well as guidance on 2005 financial performance, on its conference call (see details below).
Management will host a conference call today at 4:30 p.m. (ET) to discuss the results and will be accessible by dialing 416-640-4127 or Toll Free 1-800-814-4853. An investor presentation has been posted to our websitewww.mdc-partners.com and will be referred to during the conference call.
About MDC Partners
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 and specialized communication 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 Toronto Stock Exchange under the symbol “MDZ.SV.A” and on the NASDAQ under the symbol “MDCAE” (expected to revert back to MDCA upon the filing of the 2004 Form 10-K).