MDC Partners Stock Up Despite Revenue Drop

Investors are seemingly pleased with Chairman/CEO Mark Penn's turnaround plans at MDC Partners after Wednesday's morning call with financial analysts sent the stock up 4% during mid-day trading to $2.39. 

The company is seemingly on a precipice, trying to manage challenges, while simultaneously taking advantage of opportunities. On the downside, revenue dropped 4.6% to $362.1 million during the second quarter, and organic revenue decreased 2.4%. 

On the plus side, net new business rebounded from a decline of $11.7 million in the first quarter of the year to an increase of $43 million in the second quarter “as agencies took advantage of the continued strength of our pipeline,” Penn said.

"We began aggressively executing against a comprehensive two-year plan that will create a more nimble organization and return this business to consistent revenue growth," Penn added. "The plan is built around agency cooperation and network collaboration, with digital-first thinking and media and creative integration across agencies." 



Penn noted the recent move to align MDC Media Partners with GALE is just one example of "many initiatives" the firm is pursuing to create a more cohesive network. "We believe this plan will create a more efficient organization that delivers consistent financial returns and allows partner agencies to thrive in a rapidly changing and increasingly competitive marketplace."

As MDC rights the ship, the company seeks to manage costs, while attempting to take steps to optimize its business for growth.

Adjusted EBITDA was up 8% versus the prior year, while margins improved over 150 basis points year-over-year.

Revenue for the first six months of 2019 was $690.9 million -- down 2.2% versus the same period a year ago. Organic revenue was down 1.7% during that period.

Net loss attributable to MDC Partners common shareholders for the first six months of 2019 was $1.4 million -- a significant improvement over the net loss of $30.1 million for the first six months of 2018 thanks to staff reductions, deferred acquisition costs and favorable foreign exchange rates. 

MDC is cautiously upbeat about its future, expecting a modest 0% to 2% growth in organic revenue for the remaining half of the year.



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