MDC's 'Solid Start' Of 5.6% Q1 2017 Organic Growth

MDC Partners is entering 2017 with renewed revenue and earnings momentum, reporting organic growth grew 5.6% in Q1 2017. Revenue was $344.7 million, an increase of 11.5% from $309 million year-over-year.

Net new business wins totaled $25.6 million in the first quarter, aided by eBay and MillerCoors. "We are off to a solid start," says Scott Kauffman, chairman/CEO, MDC Partners. "We are excited about what the remainder of the year holds."

The network's performance was driven by 8.9% organic growth in the U.S., which is responsible for 80% of its revenue. International's organic growth, by comparison, was sluggish at -11.1% due to timing of projects and the previously announced client loss of Samsung.

Canada continues to be a "challenging market" reporting -7.6% organic growth.

MDC reports there is "broad strength across the company." The network's best-performing categories were communications, food & beverage, and automotive. MDC has diversified its client roster with the top 10 clients responsible for only 22% of its revenue in Q1 2017, down from 23% in 2016.



MDC's balance sheet continues to improve, particularly compared to prior quarters. Net cash used in operating activities declined from -$122.40 million in 2016 to -$30.7 million. And net loss attributable to MDC Partners common shareholders was -$11.1 million versus a loss of -$23.3 million last year.

MDC is bullish on its future as marketers continue to express dissatisfaction over legacy agencies. Our "competitive advantage" and "nimbleness" enables us to capitalize on this rapidly changing landscape, says Kauffman.

This is driving new business opportunities that line us up for continued market share gains. "Clients are still spending behind their brands," he points out. And MDC is regularly winning more pieces of these accounts.

These clients just want different services than what they traditionally have received, he adds. Brands are increasingly focusing on data and the insights that comes from that data and how that informs the creative process. "We make sure we meet all of the expanding needs of the CMO," says Kauffman.

These results beat expectations by $9.38 million, according to analysts. Looking forward, MDC expects to achieve its full-year financial targets, including 4% organic revenue growth.

Next story loading loading..