The Stagwell Marketing Group Reports Strong Adjusted EBITDA Growth for the Three Months Ended March 31, 2021, in the Face of Another COVID-Impacted Quarter

GAAP Revenue decline of 1.8%, with Net Revenue growth of 4.8% Over First Quarter 2020, First Quarter 2021 Adjusted EBITDA up 10.2% over First Quarter 2020

Adjusting for Acquisitions and the Election Cycle, GAAP Revenue growth of 9.1%, Net Revenue growth of 5.4% and Adjusted EBITDA growth of 40.7%

FIRST QUARTER HIGHLIGHTS (AS REPORTED):

  • GAAP Revenue of $181.2 million as compared to $184.5 million in the first quarter of 2020, a decrease of 1.8%.
    • Declines in Digital - Content of $12.7 million and Communications, Public Affairs and Advocacy of $8.9 million; offset by growth in Digital - Marketing of $16.1 million and Research – Corporate of $4.3 million.
  • Net revenue of $158.1 million as compared to $150.8 million in the first quarter of 2020, an increase of 4.8%.
    • Double-digit growth across nearly all non-COVID impacted segments (e.g., Digital – Marketing, Research – Corporate, Communications, Public Affairs and Advocacy, and All Other) totaling $21.6 million that was partially offset by declines in COVID impacted segments (e.g., Digital – Content and Research – Technology) reporting aggregate declines of $14.4 million.
  • Net income of $4.6 million as compared to $12.5 million in the first quarter of 2020, a decrease of 63.2%.
  • Adjusted EBITDA of $23.8 million as compared to $21.6 million in the first quarter of 2020, an increase of 10.2%.
    • Adjusted EBITDA Margin of 13.2%, as compared to 11.7% in the first quarter of 2020.
  • Cash provided by operating activities of $5.8 million as compared to $8.0 million in the first quarter of 2020, a decrease of $2.2 million, or 27.5%.

ADJUSTED FIRST QUARTER HIGHLIGHTS:

Adjusting for acquisitions (by adding back pre-acquisitions results) and comparing our Communications, Public Affairs, and Advocacy segment to the results from 2019 (a political off-cycle year). These adjusted results are as follows:

  • GAAP Revenue of $181.2 million as compared to $166.2 million, an increase of 9.1%.
  • Net revenue of $158.1 million as compared to $150.0 million, an increase of 5.4%.
    • Double-digit growth across nearly all segments totaling $22.5 million that was partially offset by declines in COVID impacted travel and entertainment segments (e.g., Digital – Content and Research – Technology) reporting aggregate declines of $14.4 million.
  • Adjusted EBITDA was $23.8 million as compared to $16.9 million, an increase of 40.7%.
    • Adjusted EBITDA Margin on GAAP Revenue was 13.2%, which was an increase of 3.0%.
    • Adjusted EBITDA Margin on Net Revenue was 15.1%, which was an increase of 3.8%.

Stagwell Media LP, which has entered into a definitive transaction agreement to combine its businesses with MDC Partners MDCA, announced financial results for its holding company Stagwell Marketing Group LLC ("Stagwell" or the "Company") for the three months ended March 31, 2021.

Stagwell Partner Jay Leveton stated, "Despite this being a non-political year and a very challenging environment for our travel and entertainment focused businesses, Stagwell delivered continued net revenue and Adjusted EBITDA growth in the first quarter. We expect the recovery of travel and entertainment to begin in earnest in Q2 with the successful rollout of the vaccines in the United States. The rest of the portfolio showed strong double-digit revenue and Adjusted EBITDA growth as our digital transformation & digital marketing, research for corporate and communications, public affairs, and advocacy offerings continue to resonate in the marketplace. We expect that momentum to continue through the remainder of 2021."

"Stagwell achieved double-digit Adjusted EBITDA growth on an as reported basis in the first quarter of 2021 compared to first quarter of 2020. However, when comparing our Communications, Public Affairs, and Advocacy segment's first quarter 2021 results against the first quarter of 2019, the most recent off-cycle period, and include pre-acquisition results, Stagwell reported 41% Adjusted EBITDA growth," remarked Stagwell Chief Financial Officer Ryan Greene. "Adjusted EBITDA was in line with our internal expectations and consistent with our regular quarterly cadence and the seasonality in our business, which is always stronger in the back half of the calendar year given some of our services are driven by shopping, travel and off-cycle election work."

Three Months Ended March 31, 2021 Results

Stagwell GAAP revenue declined $3.3 million, or 1.8%, to $181.2 million. This included organic revenue decline of $12.8 million, or 6.9%. Inorganic revenue was $9.7 million, and we recorded a foreign exchange impact on GAAP revenue of $0.1 million. Stagwell GAAP revenue includes third-party direct costs, which are expenses incurred with third-party vendors when Stagwell acts as the principal when performing services for its clients. Third-party direct costs were $23.2 million as compared to $33.7 million for the first quarter of 2020, which represents a decrease of $10.5 million or 31.3%, that was primarily due to decrease pass through costs related to political work recognized in the first quarter of 2020 that were not recognized in the first quarter of 2021.

Net revenue, after deducting third-party direct costs, was $158.1 million as compared to $150.8 million for the first quarter of 2020, which represents an increase of $7.2 million or 4.8%. This included an organic revenue decline of $1.9 million, or 1.3%. The decline was almost entirely attributable to a $13.4 million decline in our Digital – Content segment that includes our global travel marketing brand. However, this decline was largely offset by increases across all of our other segments totaling $11.4 million, which were led by our digital transformation, performance marketing and market research businesses. Inorganic revenue was $9.3 million where we continued to make certain strategic investments in digital transformation and strategic corporate communication businesses. We also recorded a foreign exchange impact on net revenue of $0.1 million.

Net income was $4.6 million as compared to net income of $12.5 million in the first quarter of 2020, a decrease of $7.9 million, or 63.2%. The decrease was due to increases in certain operating and non-operating expenses less the net revenue increase noted above. Our operating expenses increased $12.0 million, which consisted of $5.5 million of costs incurred to support net revenue growth, $3.9 million of non-cash deferred acquisition consideration expense, and $2.6 million of transaction expenses. Additionally, our non-operating expenses increased by $3.1 million, or 181.4%, which was due to foreign exchange gains recognized in the first quarter of 2020 that were not recognized in the first quarter of 2021.

Adjusted EBITDA was $23.8 million as compared to $21.6 million in the first quarter of 2020, an increase of $2.2 million, or 10.2%, driven by strong performance in Stagwell's Digital – Marketing and Research – Corporate segments. In addition, Adjusted EBITDA margin was 13.2%, up from 11.7% in the first quarter of 2020.

Live Webcast

Management will host a live webcast on Wednesday, May 5, 2021, at 9:00 a.m. (ET) to discuss its first quarter results. Registration for the webcast can be completed by visiting the following website: https://kvgo.com/openexchange-inc/stagwell-group-earnings-call. A live audio webcast will be available online at www.stagwellgroup.com. During the live webcast, investors will be able to submit questions via chat for the live Q&A session.

A replay of the webcast will be available for on-demand listening shortly after the completion of the webcast, at the same web link.

About Stagwell Marketing Group

The Stagwell Marketing Group is the first and only independent, digital-first, and fully-integrated organization of size & scale servicing brands across the continuum of marketing services. Collaborative by design, Stagwell is not weighed down by legacy points of view and its people are united in their desire to innovate, evolve, grow and deliver superior results for their clients. Stagwell's high growth brands include experts in four categories: digital transformation and marketing, research and insights, marketing communications, and content and media. Stagwell Media LP ("Stagwell Media), is a private equity fund that owns all interests in Stagwell Marketing Group LLC through a wholly owned holding company named Stagwell Marketing Group Holdings LLC. Stagwell Media, Stagwell Marketing Group LLC and its businesses are managed by The Stagwell Group, a registered investment advisor. The address of Stagwell is 1808 Eye Street, Floor 6, Washington, D.C., 20006. As of the date hereof, Stagwell Media and its affiliates beneficially own 50,000 series 6 preference shares (representing 100% of the outstanding Series 6 preference shares) and 14,425,714 Class A shares (representing 19.8% of the outstanding Class A shares) of MDC.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. The forward-looking statements included in this press release have been prepared by, and are the responsibility of, Stagwell management. The independent auditors of Stagwell, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained within, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the forward-looking statements. Statements in this presentation that are not historical facts, and statements about the Company's beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates ​of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as "estimates," "expects," "contemplates," ​"will," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "may," "should," and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined below. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.​

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:​

  • risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients, including as a result of the novel coronavirus pandemic ("COVID-19");​
  • the effects of the outbreak of COVID-19, including the measures to reduce its spread, and the impact on the economy and demand for our services, which may precipitate or exacerbate other risks and uncertainties;​
  • developments involving the proposed transaction with MDC to enter into a business combination with the Stagwell Marketing Group, LLC (the "Proposed Transaction"), ​the anticipated benefits of the Proposed Transaction; the likelihood of the Proposed Transaction being completed; the anticipated outcome of the Proposed Transaction; the tax impact of the Proposed Transaction on MDC and shareholders of MDC; the timing of the shareholder meeting to approve the Proposed Transaction (the "Special Meeting"); the shareholder approvals required for the Proposed Transaction; regulatory and stock exchange approval of the Proposed Transaction; and the timing of the implementation of the Proposed Transaction;​
  • the Company's ability to attract new clients and retain existing clients;​
  • reduction in client spending and changes in client advertising, marketing and corporate communications requirements;​
  • financial failure of the Company's clients;​
  • the Company's ability to retain and attract key employees;​
  • the Company's ability to achieve the full amount of its stated cost saving initiatives;​
  • the Company's implementation of strategic initiatives;​
  • 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 those relating 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.​

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in MDC's initial Form S-4, filed with the Securities and Exchange Commission (the "SEC") on February 8, 2021, Amendment No.1 filed on March 29, 2021, Amendment No.2 filed on April 22, 2021, and Amendment No.3 filed on April 30, 2021, all of which are accessible on the SEC's website at www.sec.gov.

Cautionary Statement Regarding Estimated Results

The quarterly results presented in these materials for the 2021 and 2020 period are based on calculations or figures prepared internally. Therefore, the results presented in this press release for the three months ended March 31, 2021, including the non-GAAP reconciliation tables are estimates only, subject to revision and accordingly should not be relied upon and are not indicative of the results for the full year. For more information regarding factors that could cause actual results to differ from those described above, please see "Cautionary Statement Regarding Forward-Looking Statements".

Non-GAAP Financial Measures

Stagwell has included in this press release certain financial results that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures include the following:

Net Revenue: "Net Revenue" is GAAP Revenue adjusted to exclude certain third-party direct costs when the Company acts as principal for the services rendered in the client arrangement.

Inorganic Revenue: "Inorganic Revenue" consists of (i) for acquisitions during the current year, the revenue effect from such acquisitions as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods.​

Organic Revenue​: Organic revenue is calculated by subtracting both the foreign exchange and acquisition (disposition) components from total revenue. "Organic revenue growth" and "organic revenue decline" refers to the positive or negative changes in revenue that were not attributable to the effects of foreign exchange or acquired run rate revenue from acquisitions. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the Company's Brands that have been held throughout each of the comparable periods presented, and (b) inorganic revenue.

Adjusted EBITDA: Adjusted EBITDA is a non-GAAP financial measure that represents net income adjusted for (a) interest expense, (b) provision for income taxes, (c) depreciation and amortization expense, (d) other income (expenses), (e) equity in earnings (losses) of unconsolidated affiliates, (f) deferred acquisition consideration adjustments, and (g) other items, net. Other items, net includes items such as acquisition-related expenses, other non-recurring items and other restructuring costs.

Included in the Company's press release and supplemental management presentation are tables reconciling Stagwell's GAAP results to arrive at certain of these non-GAAP financial measures.

No Offer or Solicitation

This communication does not constitute an offer to buy or exchange, or the solicitation of an offer to sell or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This communication is not a substitute for any prospectus, proxy statement or any other document that MDC or a newly-formed company ("New MDC") may file with the SEC in connection with the Proposed Transaction. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.

No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act of 1933, as amended. The Proposed Transaction and distribution of this document may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No offering of securities will be made directly or indirectly, in or into any jurisdiction where to do so would be inconsistent with the laws of such jurisdiction.

Additional Information and Where to Find It

In connection with the Proposed Transaction, MDC and New MDC have filed with the SEC a registration statement on Form S-4 (the "Form S-4") on February 8, 2021, as amended on March 29, 2021, April 22, 2021 and April 30, 2021, that includes a proxy statement of MDC (together with the Form S-4, the "Proxy Statement/Prospectus"). This communication is not a substitute for the Proxy Statement/Prospectus or any other document MDC may file with the SEC in connection with the Proposed Transaction. When available, MDC will mail the Proxy Statement/Prospectus to its shareholders in connection with the votes to approve certain matters in connection with the Proposed Transaction.

INVESTORS AND SECURITYHOLDERS OF MDC ARE URGED TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION IN ITS/THEIR ENTIRETY (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) OR ANY DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain, free of charge, copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC, at the SEC's website at www.sec.gov. In addition, investors and securityholders are able to obtain free copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC and from MDC's website at http://www.mdc-partners.com.

The URLs in this announcement are intended to be inactive textual references only. They are not intended to be active hyperlinks to websites. The information on such websites, even if it might be accessible through a hyperlink resulting from the URLs or referenced herein, is not and shall not be deemed to be incorporated into this announcement. No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on such websites.

Participants in the Solicitation

MDC, New MDC and their respective directors and executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from MDC's shareholders with respect to the approvals required to complete the Proposed Transaction. More detailed information regarding the identity of these potential participants, and any direct or indirect interests they may have in the Proposed Transaction, by security holdings or otherwise, is set forth in the Proxy Statement/Prospectus filed with the SEC. Information regarding MDC's directors and executive officers is set forth in the definitive proxy statement on Schedule 14A filed by MDC with the SEC on May 26, 2020 and in the Annual Report on Form 10-K filed by MDC with the SEC on March 16, 2021. Additional information regarding the interests of participants in the solicitation of proxies in respect of the Special Meeting is included in the Proxy Statement/Prospectus filed with the SEC. These documents are available to the shareholders of MDC free of charge from the SEC's website at www.sec.gov and from MDC's website at www.mdc-partners.com.

You must not construe the contents of this document as legal, tax, regulatory, financial, accounting or other advice, and you are urged to consult with your own advisors with respect to legal, tax, regulatory, financial, accounting and other consequences of the Proposed Transaction, the suitability of the Proposed Transaction for you and other relevant matters concerning the Proposed Transaction.

SCHEDULE 1

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended March 31,

(in thousands)

 

2021

 

2020

Net Revenue(1)

$

158,074

$

150,833

Third-party direct costs

 

23,168

 

33,710

Revenue

 

181,242

 

184,543

 

 

 

 

 

Operating expenses:

 

 

 

 

Cost of services sold

 

111,999

 

120,758

Office and general expenses

 

52,278

 

43,272

Depreciation and amortization

 

10,950

 

9,756

Total operating expenses

 

175,227

 

173,786

 

 

 

 

 

Operating income

 

6,015

 

10,757

 

 

 

 

 

Other expenses, net:

 

 

 

 

Interest expense, net

 

(1,351)

 

(911)

Other income, net

 

608

 

3,027

Income before taxes and equity in earnings of unconsolidated affiliates

 

5,272

 

12,873

Provision for income taxes

 

(673)

 

(459)

Income before equity in earnings of unconsolidated affiliates

 

4,599

 

12,414

Equity in earnings of unconsolidated affiliates

 

4

 

79

Net income

 

4,603

 

12,493

Less: Net income attributable to noncontrolling interests

 

1,153

 

1,138

Less: Net loss attributable to redeemable noncontrolling interests

 

(915)

 

(692)

Net income attributable to Stagwell Media LP

$

4,365

$

12,047

(1)

 

Net Revenue: GAAP Revenue adjusted to exclude certain third-party direct costs when we act as a principal for the services rendered in the client arrangement.

Note: Actuals may not foot due to rounding.

SCHEDULE 2

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED REVENUE RECONCILIATION

 

GAAP REVENUE

Three Months Ended

(in thousands, except percentages)

Revenue $

 

% Change

March 31, 2020

$

184,543

Organic revenue (1)

(12,813)

 

 

(6.9)%

 

Inorganic revenue

9,660

 

 

5.2%

 

Foreign exchange impact

(148)

(0.1)%

 

Total change

(3,301)

(1.8)%

 

March 31, 2021

$

181,242

NET REVENUE (2)

Three Months Ended

(in thousands, except percentages)

Revenue $

 

% Change

March 31, 2020

$

150,833

 

 

 

Organic revenue (1)

(1,949)

 

 

(1.3)%

 

Inorganic revenue

9,338

 

 

6.2%

 

Foreign exchange impact

(148)

 

 

(0.1)%

 

Total change

7,241

 

 

4.8%

 

March 31, 2021

$

158,074

 

 

 

(1)

 

"Organic revenue growth" and "organic revenue decline" refer to the positive or negative results, respectively, of subtracting both the foreign exchange and inorganic components from total revenue growth. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the Company's Brands that have been held throughout each of the comparable periods presented, and (b) "inorganic revenue".

(2)

 

Net Revenue: GAAP Revenue adjusted to exclude certain third-party costs when we act as a principal for the services rendered in the client arrangement.

Note: Actuals may not foot due to rounding.

SCHEDULE 3

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED MANAGEMENT ADJUSTED RESULTS

 

MANAGEMENT ADJUSTED RESULTS – GAAP REVENUE

Pro Forma

Consolidated

Company

Adjustments

Management

Adjusted

Consolidated

Company

Communications, Public Affairs and Advocacy

(in thousands)

Three Months Ended

March 31, 2020 – Pro

Forma

Three Months Ended

March 31, 2019 – Pro

Forma

 

 

 

 

 

March 31, 2020 – Management Adjusted

$ 194,061

$ (54,422)

$ 26,523

$ 166,162

 

 

 

 

 

Organic revenue (1)

(12,671)

11,122

16,777

15,228

Foreign exchange impact

(148)

-

-

(148)

Total change

(12,819)

11,122

16,777

15,080

 

 

 

 

 

March 31, 2021

$ 181,242

$ (43,300)

43,300

$ 181,242

MANAGEMENT ADJUSTED RESULTS – NET REVENUE (2)

Pro Forma

Consolidated

Company

Adjustments

Management

Adjusted

Consolidated

Company

Communications, Public Affairs and Advocacy

(in thousands)

Three Months Ended

March 31, 2020 – Pro

Forma

Three Months Ended

March 31, 2019 – Pro

Forma

 

 

 

 

 

March 31, 2020 – Management Adjusted

$ 160,029

$ (28,568)

$ 18,534

$ 149,995

 

 

 

 

 

Organic revenue (1)

(1,807)

(512)

10,546

8,227

Foreign exchange impact

(148)

-

-

(148)

Total change

(1,955)

(512)

10,546

8,079

 

 

 

 

 

March 31, 2021

$ 158,074

$ (29,080)

29,080

$ 158,074

MANAGEMENT ADJUSTED RESULTS – ADJUSTED EBITDA (2)

Pro Forma

Consolidated

Company

Adjustments

Management

Adjusted

Consolidated

Company

Communications, Public Affairs and Advocacy

(in thousands)

Three Months Ended

March 31, 2020 – Pro

Forma

Three Months Ended

March 31, 2019 – Pro

Forma

 

 

 

 

 

March 31, 2020 – Management Adjusted

$ 23,474

$ (10,482)

$ 3,954

$ 16,946

Total change

368

10,482

(3,954)

6,896

March 31, 2021

$ 23,842

$ -

$ -

$ 23,842

 

 

 

 

 

(1) 

 

"Organic revenue growth" and "organic revenue decline" refer to the positive or negative results, respectively, of subtracting both the foreign exchange and inorganic components from total revenue growth. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the Company's Brands that have been held throughout each of the comparable periods presented, and (b) "inorganic revenue".

(2)

 

Net Revenue: Pro Forma GAAP Revenue adjusted to exclude certain third-party costs when we act as a principal for the services rendered in the client arrangement.

Note: Actuals may not foot due to rounding.

SCHEDULE 4

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands)

 

March 31,

2021

(Unaudited)

 

December 31,

2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash, cash equivalents and restricted cash

$

53,784

$

92,457

Accounts receivable, net

 

166,492

 

225,733

Expenditures billable to clients

 

16,445

 

11,063

Other current assets

 

37,890

 

36,433

Total current assets

 

274,611

 

365,686

Investments

 

2,456

 

14,256

Property and equipment, net

 

36,677

 

35,614

Goodwill

 

351,571

 

351,725

Intangible assets, net

 

178,096

 

186,035

Right-of-use assets – operating leases

 

52,642

 

57,752

Other assets

 

2,768

 

2,787

Total assets

$

898,821

$

1,013,855

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

79,479

$

147,826

Accruals and other liabilities

 

86,400

 

89,562

Current maturities of long-term debt

 

745

 

994

Advanced billings

 

67,444

 

66,418

Current portion of operating lease liabilities

 

19,299

 

19,579

Current portion of deferred acquisition consideration

 

5,610

 

12,579

Total current liabilities

 

258,977

 

336,958

Long-term debt, net

 

183,698

 

198,024

Long-term portion of deferred acquisition consideration

 

9,075

 

5,268

Lease liabilities – operating leases

 

48,134

 

52,606

Deferred tax liabilities, net

 

15,901

 

16,050

Other liabilities

 

7,775

 

5,802

Total liabilities

 

523,560

 

614,708

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest

 

89

 

604

 

 

 

 

 

Member's equity

 

345,122

 

358,756

Noncontrolling interest

 

30,050

 

39,787

Total equity

 

375,172

 

398,543

Total liabilities, redeemable noncontrolling interest and equity

$

898,821

$

$ 1,013,855

SCHEDULE 5

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED SUMMARY CASH FLOW DATA

 

 

 

Three Months Ended March 31,

(in thousands)

 

2021

 

2020

Net cash provided by operating activities

$

5,771

$

7,968

Net cash used in investing activities

 

(3,311)

 

(4,358)

Net cash (used in) provided by financing activities

 

(41,142)

 

80,019

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

9

 

989

Net increase in cash, cash equivalents and restricted cash

 

(38,673)

 

84,618

Cash, cash equivalents and restricted cash at beginning of period

 

92,457

 

63,860

Cash, cash equivalents and restricted cash at end of period

$

53,784

$

148,478

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Cash interest paid

$

(2,361)

$

(1,871)

Income taxes paid

 

(928)

 

(2,105)

Non-cash investing and financing activities:

 

 

 

 

Acquisitions of business

 

-

 

(23,720)

Unrealized gain on investments

 

-

 

1,376

Contributions by Stagwell Media LP

 

10,268

 

18,920

Distributions to Stagwell Media LP

 

(13,000)

 

-

Payment of deferred acquisition consideration

 

(7,080)

 

-

SCHEDULE 6

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

 

 

Three Months Ended March 31,

(in thousands)

 

2021

 

2020

Net income

$

4,603

$

12,493

Equity in earnings of unconsolidated affiliates

 

(4)

 

(79)

Provision for income taxes

 

673

 

459

Other income, net

 

(608)

 

(3,027)

Interest expense, net

 

1,351

 

911

Depreciation and amortization

 

10,950

 

9,756

Deferred acquisition consideration adjustments

 

3,936

 

-

Other items, net

 

2,941

 

1,118

Adjusted EBITDA

$

23,842

$

21,631

Note: Actuals may not foot due to rounding.

SCHEDULE 7

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF COMPONENTS OF NON-GAAP MEASURES

 

 

2020

 

2021

(in thousands)

Q1

Q2

Q3

Q4

YTD

 

Q1

INORGANIC GAAP REVENUE

 

 

 

 

 

 

 

GAAP Revenue

$ 184,543

$ 162,330

$ 228,097

$ 313,062

$ 888,032

 

$ 181,242

Less: Organic GAAP revenue for the period

(154,822)

(140,923)

(216,959)

(299,785)

812,488

 

(171,435)

Foreign exchange impact

(847)

188

760

478

579

 

(147)

Inorganic GAAP Revenue

$ 28,874

$ 21,595

$ 11,898

$ 13,755

$ 76,123

 

$ 9,660

 

 

 

 

 

 

 

 

INORGANIC NET REVENUE

 

 

 

 

 

 

 

GAAP revenue

$ 184,543

$ 162,330

$ 228,097

$ 313,062

$ 888,032

 

$ 181,242

Third-party direct costs

(33,710)

(31,971)

(75,238)

(113,882)

(254,801)

 

(23,168)

Net revenue

150,833

130,359

152,859

199,180

633,231

 

158,074

Less: Organic Net revenue for the period

(125,733)

(112,795)

(142,289)

(186,472)

(567,289)

 

(148,589)

Foreign exchange impact

(847)

188

760

478

579

 

(147)

Inorganic Net Revenue

$ 24,253

$ 17,752

$ 11,330

$ 13,186

$ 66,521

 

$ 9,338

 

 

 

 

 

 

 

 

OTHER ITEMS, NET

 

 

Acquisition-related expenses ​

$ 657​

$ 478​

$ 461​

$ 9,393 ​

$ 10,988

 

$ 2,646

Other non-recurring items​

- ​

- ​

- ​

- ​

- ​

 

295

Other restructuring costs​

470​

865​

94​

1,489 ​

2,918 ​

 

-

Total other items, net

$ 1,127​

$ 1,343

$ 555​

$ 10,882

$ 13,906 ​

 

$ 2,941

 

 

 

 

 

 

 

 

CASH INTEREST, NET & OTHER

 

 

 

 

 

 

 

Cash interest paid​

$ 1,871 ​

$ 2,619 ​

$ 2,798 ​

$ 1,999 ​

$ 9,287 ​

 

$ 2,361

Interest income​

317 ​

225 ​

232 ​

234 ​

1,008 ​

 

200

Total cash interest, net & other

$ 2,188

$ 2,844

$ 3,030

$ 2,233

$ 10,295

 

$ 2,561

 

 

 

 

 

 

 

 

CAPITAL EXPENDITURES, NET

 

 

 

 

 

 

 

Capital expenditures

$ 2,663

$ 2,654

$ 3,660

$ 3,122

$ 12,099

 

$ 3,311

 

 

 

 

 

 

 

 

MISCELLANEOUS OTHER DISCLOSURES

 

 

 

 

 

 

 

Net income attributable to noncontrolling interest​

$ 1,138 ​

$ 1,671 ​

$ 4,522​

$ 10,900 ​

$ 18,231 ​

 

$ 1,153

Net loss attributable to redeemable noncontrolling interest​

(692)​

(1,097)​

(908)​

(429)​

(3,126)​

 

(915)

Cash taxes​

2,105 ​

(795)​

2,308 ​

7,096 ​

10,714

 

928

Note: Actuals may not foot due to rounding.

SCHEDULE 8

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF CONSOLIDATED PRO FORMA RESULTS

 

 

Three Months Ended March 31, 2020

(in thousands)

Historical Consolidated

Company

2020 Acquisitions(1)

Pro Forma

Consolidated

Company

GAAP REVENUE

 

 

 

Digital - Marketing

$ 50,548

$ 7,335

$ 57,883

Digital – Content

40,701

-

40,701

Research - Technology

16,310

-

16,310

Research - Corporate

12,314

-

12,314

Communications, Public Affairs and Advocacy

52,239

2,183

54,422

All Other

12,431

-

12,431

Total

$ 184,543

$ 9,518

$ 194,061

 

 

 

 

 

Three Months Ended March 31, 2020

(in thousands)

Historical Consolidated

Company

2020 Acquisitions(1)

Pro Forma

Consolidated

Company

NET REVENUE

 

 

 

Digital - Marketing

$ 50,541

$ 7,334

$ 57,875

Digital – Content

36,139

-

36,139

Research - Technology

16,186

-

16,186

Research - Corporate

12,300

-

12,300

Communications, Public Affairs and Advocacy

26,706

1,862

28,568

All Other

8,961

-

8,961

Total

$ 150,833

$ 9,197

$ 160,029

 

 

 

 

 

Three Months Ended March 31, 2020

(in thousands)

Historical Consolidated

Company

2020 Acquisitions(1)

Pro Forma

Consolidated

Company

ADJUSTED EBITDA

 

 

 

Digital - Marketing

$ 5,971

$ 1,456

$ 7,427

Digital – Content

988

-

988

Research – Technology

3,788

-

3,788

Research – Corporate

1,180

-

1,180

Communications, Public Affairs and Advocacy

10,095

387

10,482

All Other

(184)

-

(184)

Corporate

(207)

-

(207)

Total

$ 21,631

$ 1,843

$ 23,474

 

 

 

 

(1)

 

Represents results of our acquired businesses for the respective period prior to acquisition by the Company.

Note: Actuals may not foot due to rounding.

SCHEDULE 9

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF CONSOLIDATED PRO FORMA RESULTS

 

 

Three Months Ended March 31, 2019

(in thousands)

Historical

Consolidated

Company

2019

Acquisitions(1)

2020

Acquisitions(1)

Pro Forma

Consolidated

Company

GAAP REVENUE

 

 

 

 

Digital - Marketing

$ 49,855

$ 5,488

$ 6,536

$ 61,879

Digital - Content

23,183

30,773

-

53,956

Research - Technology

13,728

-

-

13,728

Research - Corporate

12,562

-

-

12,562

Communications, Public Affairs and Advocacy

22,520

-

4,003

26,523

All Other

8,368

-

-

8,368

Total

$ 130,216

$ 36,261

$ 10,539

$ 177,016

 

 

 

 

 

 

Three Months Ended March 31, 2019

(in thousands)

Historical

Consolidated

Company

2019

Acquisitions(1)

2020

Acquisitions(1)

Pro Forma

Consolidated

Company

NET REVENUE

 

 

 

 

Digital - Marketing

$ 49,446

$ 5,336

$ 6,536

$ 61,318

Digital - Content

23,183

23,769

-

46,952

Research - Technology

13,649

-

-

13,649

Research - Corporate

12,506

-

-

12,506

Communications, Public Affairs and Advocacy

14,947

-

3,587

18,534

All Other

8,366

-

-

8,366

Total

$ 122,097

$ 29,105

$ 10,123

$ 161,325

 

 

 

 

 

 

Three Months Ended March 31, 2019

(in thousands)

Historical

Consolidated

Company

2019

Acquisitions(1)

2020

Acquisitions(1)

Pro Forma

Consolidated

Company

ADJUSTED EBITDA

 

 

 

 

Digital - Marketing

$ 6,917

$ 1,073

$ 1,026

$ 9,016

Digital - Content

2,213

2,014

-

4,227

Research - Technology

3,064

-

-

3,064

Research - Corporate

1,699

-

-

1,699

Communications, Public Affairs and Advocacy

3,029

-

926

3,954

All Other

257

-

-

257

Corporate

344

-

-

344

Total

$ 17,523

$ 3,087

$ 1,952

$ 22,561

 

 

 

 

 

(1)

 

Represents results of our acquired businesses for the respective period prior to acquisition by the Company.

Note: Actuals may not foot due to rounding.

 

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