MDC Partners Reports Solid Q4 And Year End Results, Carried By Client Wins

mdcpartMDC Partners had a record-high number of client wins in 2014, includeing Diageo's Johnnie Walker, Unilever’s Magnum Ice Cream and InBev’s Corona in Brazil. As a result, its Q4 revenue increased 17.5% YoY (from $289.2 million to $339.9 million). Organic revenue also increased $12.5%, with new business wins totaling $56.7 million.

FY 2014 revenue increased 15.2% ($1.06 billion to $1.22 billion) with new business wins totaling $162.7 million, a 27.9% jump on 2013’s $127.2 million total. Read the release.

Yet CFO David Doft cautioned that a strengthening of the US dollar in 2014 caused a currency headwind, which will impact the firm’s financials moving into 2015.

“While many aspects of the current environment favor continued investment in marketing by brands … we are also mindful of the uncertainty and the timing of the ramp of some of the recent new business wins as well as the volatility of foreign currency movements,” he said.

Investors asked if MDC takes a position on media, like some of its holding company competitors.

“There is a small portion [of media buying] that continues to take a principal position, but not in a way that some of our competitors do where they’re actually pre-buying media,” said Doft. “The contracts do provide for a small amount of gross revenue accounting. It’s pretty minimal impact and it’s not the core component in growth strategy behind our media business, which is more of a fully transparent approach.”

Doft added the firm’s media business continues to perform strongly and “grew organically well in excess of MDC overall in 2014.”

During the call, investors also asked about any noticeable shifts in clients’ advertising budgets throughout 2014.

“We’re seeing clients shift dollars to smaller, more nimble firms, which is a trend that has been accelerating for six years,” said CEO Miles Nadal. “We’re seeing more dollars go toward online activity, specifically mobile, data science and analytics, and programmatic is obviously growing very rapidly.”

He claimed clients maintain or increase times during tough economic times, and he anticipates that trend continuing.

Even so, MDC Partners is predicting a more modest 2015 financial outlook than its 2014 results, with revenues projected to increase in the 6.5% to 8.5% range.

Nadal also anticipates more M&A activity.

“It’s reasonable to expect that MDC will add, on average, three to five percent a year of revenue growth through acquisitions in key areas such as media, digital, analytics, consumer insights, strategic communications and data science,” Nadal said.

 

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