MDC Partners' 2017 full-year revenue increased 9.2% to $1.51 billion, with organic growth of 7%.
Fourth-quarter reported revenue was up 3.2% to $402.7 million, with organic revenue growth of 3.3%. However, while Q4 earnings per share of $0.22 aligned with analyst projections, Q4 reported revenue missed their expectations by $5.91 million.
MDC Partners is pleased with what chairman/chief executive officer Scott Kaufffman calls an "industry-leading performance," albeit from a much smaller revenue base than the major holding companies.
New business wins in Q4 2017 added $10.2 million to the network's top line; for the full-year, net new business wins totaled $87.4 million, nearly in line with 2016.
Kauffman says this traction is driven largely by CPG brands, such as Hershey's, General Mills, Coca-Cola, Del Monte and Dean Foods, seeking agencies to disrupt the traditional advertising approach. He adds, "We are increasingly go-to partner for tech players," noting 72andSunny recently landed Uber.
International accounts now comprise 14% of the network's business, up from 11% in 2016, aided by clients such as IKEA, Electrolux, and eBay.
MDC "significantly strengthened" its financial position this year by reducing its remaining acquisition-related obligations to a six-and-a-half-year low, said CFO David Doft. "We believe this should drive more significant cash generation beginning in 2018, and we remain firmly committed to strengthening our balance sheet as we execute on our strategic plan," he added.
Kauffman may be a vocal critic of Trump, but Trump's new tax law is helping MDC's balance sheet.
Fourth-quarter and full year 2017 net income attributable to MDC Partners common shareholders included a net benefit of $100.5 million as a result of the enactment of the Tax Cuts and Jobs Act of 2017.
Looking ahead, MDC says it is planning for another year of market share gains while prioritizing strategic growth investments. "We are doing a lot behind the scenes," such as real-estate consolidation and building up digital capabilities, says Doft. He cites an "onerous regulatory environment" in the near term that will add more than $2 million in professional fees, but Doft says this will "settle down in 2019."
Kauffman adds: "This success validates our ongoing investments in talent and global infrastructure. We think data is a key value creator, central to everything we are doing here."
MDC is in a "favorable position," as more brands look for change agents and media agency reviews proliferate, says Kauffman. "We don't need an organizational overhaul in order to compete," he says. "The active pitch environment only means more at-bat opportunities for us."
These results were well-received by analysts bolstering MDC's stock price, up from the $9.45 morning opening to close after the market at $9.70. That is a sharp contrast to its rivals, whose stocks declined this week after equities researcher and veteran Madison Avenue economist Brian Wieser downgraded his recommendation for the stocks of three of the industry’s biggest agency holding companies -- WPP, Publicis and Interpublic -- from a “buy” to a “hold” rating.