Management Presentation Second Quarter 2017 Results August 7, 2017 - PowerPoint PPT Presentation

Management Presentation Second Quarter 2017 Results August 7, 2017

FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation, including our “2017 Financial Outlook”, contains forward-looking statements. The Company’s representatives may also make forward-looking statements orally from time to time. Statements in this presentation that are not historical facts, including statements about the Company’s beliefs and expectations, earnings guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute 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 severe effects of international, national and regional economic conditions; • the Company’s ability to attract new clients and retain existing clients; • the spending patterns and financial success of the Company’s clients; • the Company’s ability to retain and attract key employees; • 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 compliment and expand the Company’s business capabilities; • foreign currency fluctuations; and • risks associated with the one Canadian securities class action litigation claim. The Company’s business strategy includes ongoing efforts to engage in acquisitions of ownership interests in entities in the marketing communications services industry. The Company intends to finance these acquisitions by using available cash from operations and through incurrence of bridge or other debt financing, either of which may increase the Company’s leverage ratios, or by issuing equity, which may have a dilutive impact on existing shareholders proportionate ownership. At any given time the Company may be engaged in a number of discussions that may result in one or more acquisitions. These opportunities require confidentiality and may involve negotiations that require quick responses by the Company. Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transactions, the announcement of any such transaction may lead to increased volatility in the trading price of the Company’s securities. Investors should carefully consider these risk factors and the additional risk factors outlined in more detail in the Annual Report on Form 10-K under the caption “Risk Factors” and in the Company’s other SEC filings. 1

SECOND QUARTER 2017 SUMMARY  Solid business fundamentals continuing into the second quarter  Organic growth approx. 5x peer average, including steady strength in the U.S., reacceleration Internationally, and broad gains across client industry verticals  Adjusted EBITDA margin impacted by increased billable pass-through costs, revenue recognition timing, investment in emerging growth initiatives, and costs related to robust new business activity; margin up modestly on a net basis  Forward visibility bolstered by new business success and pipeline, and growing relationships with our largest clients Strong cash generation, including seasonal benefit from working capital   Significant acquisition-related payments reduces our deferred consideration and minority interest to the lowest level in over five years  Updated 2017 financial guidance to approximately 7% organic revenue growth and approximately 60 basis points increase in Adjusted EBITDA margin; on track to achieve 2017 profit targets Note: See appendix for definitions of non-GAAP measures 2

SECOND QUARTER 2017 FINANCIAL HIGHLIGHTS  Revenue increased 15.9% to $390.5 million from $337.0 million  Organic revenue growth of 11.7%, including a 360 basis points benefit from increased billable pass-through costs  Net income attributable to MDC Partners common shareholders increased to $9.3 million from $0.8 million last year 1  Adjusted EBITDA increased 12.2% to $47.0 million from $41.9 million, with margins of 12.0% versus 12.4% a year ago Net new business wins of $26.0 million  1 Revised due to the correction of prior period financial statements relating to the Company’s deferred tax liability and income tax expense. Note: See appendix for definitions of non-GAAP measures 3

FIRST HALF 2017 FINANCIAL HIGHLIGHTS  Revenue increased 13.8% to $735.2 million from $646.1 million  Organic revenue growth of 8.7%, including a 210 basis points benefit from increased billable pass-through costs  Net loss attributable to MDC Partners common shareholders improved to ($1.7) million ($22.8) million last year 1  Adjusted EBITDA increased 10.8% to $82.8 million from $74.7 million, with margins of 11.3% versus 11.6% a year ago Net new business wins of $51.6 million  1 Revised due to the correction of prior period financial statements relating to the Company’s deferred tax liability and income tax expense. Note: See appendix for definitions of non-GAAP measures 4

CONSOLIDATED REVENUE AND EARNINGS (US$ in millions, except percentages) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 (1) 2017 (1) 2016 (1) % Change % Change Revenue $ 390.5 $ 337.0 15.9 % $ 735.2 $ 646.1 13.8 % Operating expenses Cost of services sold 267.8 228.8 17.0 % 505.4 440.3 14.8 % Office and general expenses 85.6 72.7 % 173.4 150.5 % 17.7 15.2 Depreciation and amortization 10.8 11.4 % 21.7 22.7 % (5.9) (4.4) Operating profit 26.4 24.1 9.6 % 34.8 32.6 6.6 % Other, net 6.6 0.0 9.2 15.5 Interest expense and finance charges (15.7) (17.2) (32.5) (32.7) Loss on redemption of notes - - - (33.3) Interest income 0.2 0.2 0.4 0.4 Income tax (expense) benefit (4.6) (4.7) (8.6) (3.1) Equity in earnings (losses) of non-consolidated affiliates 0.6 (0.3) 0.5 (0.1) Net income (loss) 13.5 2.1 3.8 (20.7) Net income attributable to non-controlling interests (2.2) (1.3) (3.1) (2.1) Accretion on convertible preference shares (1.9) - (2.4) - Net income (loss) attributable to MDC Partners Inc. common shareholders $ 9.3 $ 0.8 $ (1.7) $ (22.8) 1 Revised due to the correction of prior period financial statements relating to the Company’s deferred tax liability and income tax expense. Note: Actuals may not foot due to rounding. 5

REVENUE SUMMARY (US$ in millions, except percentages) Three Months Ended Six Months Ended Revenue $ % Change Revenue $ % Change June 30, 2016 $337.0 $646.1 Foreign Exchange (5.1) (1.5%) (7.0) (1.1%) Non-GAAP Acquisitions (Dispositions), net (1) 19.3 5.7% 39.6 6.1% Organic Revenue Growth (Decline) 39.3 11.7% 56.5 8.7% Total Change 53.5 15.9% 89.1 13.8% June 30, 2017 $390.5 $735.2  Organic revenue growth of 11.7% in Q2, favorably impacted by 360 basis points from increased billable pass-through costs incurred on clients’ behalf 1 Non-GAAP Acquisitions (Dispositions), net consists of $19.9 million of Acquisitions and $0.7 million of Dispositions for the three months ended June 30, 2017. Note: Actuals may not foot due to rounding. 6

REVENUE BY GEOGRAPHY (US$ in millions, except percentages) Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 Total Total Organic Revenue Total Total Organic Revenue Revenue Growth Growth (Decline) Revenue Growth Growth (Decline) United States $304.5 11.5% 11.5% $579.1 10.3% 10.3% Canada 30.6 (9.0%) (2.5%) 57.1 (8.0%) (4.8%) North America 335.0 9.3% 10.0% 636.2 8.3% 8.7% Other 55.5 82.3% 28.5% 99.0 68.2% 9.4% Total $390.5 15.9% 11.7% $735.2 13.8% 8.7% Organic growth: +11.5% in the U.S. and +28.5% outside of North America  Canada organic decline entirely due to decreased billable pass-through revenue  Note: Actuals may not foot due to rounding 7

REVENUE BY CLIENT INDUSTRY Q2 2017 Mix Year-over-Year Growth by Category Q2 2017 2017 YTD Above 10% Communications, Food Communications, Food & Beverage, Financials & Beverage, Financials, Automotive 0% to 10% Consumer Products, Consumer Products, Automotive, Retail, Healthcare, Healthcare, Retail, Transportation & Travel Transportation & Travel Below 0% Technology Technology Best performing sectors: Communications, Food & Beverage, Financials   Top 10 clients increased to 24.6% of revenue vs 23.6% a year ago (largest <5%) Strong existing client growth: top 25 clients increased at faster rate than total  * Excludes discontinued operations Note: Actuals may not foot due to rounding. Year-over-year category growth shown on a reported basis. 8