MDC Partners Inc Net Debt / EBITDA jumped on 4.1x from 5.5x to 9.6x in 2016 and Debt jumped on 26.2%
27.02.2017 • About MDC Partners Inc (
$MDZ.A) • By InTwits
MDC Partners Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 6.8% in 2016, 9.4% in 2015, 11.0% in 2014, 0.5% in 2013, 2.8% in 2012
- MDC Partners Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 7.8%.
- CAPEX is quite volatile: 62.6 in 2016, 127 in 2015, 303 in 2014, 198 in 2013, 171 in 2012
- The company has business model with average profitability: ROIC is at 10.1%
- It operates with high leverage: Net Debt/EBITDA is 9.6x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
MDC Partners Inc ($MDZ.A) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,063 | 1,062 | 1,224 | 1,326 | 1,386 | 4.5% |
| Gross Profit | 329 | 358 | 425 | 447 | 450 | 0.7% |
| SG&A | 300 | 356 | 290 | 322 | 306 | -5.0% |
| EBITDA | 30 | 5 | 135 | 124 | 95 | -23.7% |
| Net Income | -85 | -149 | -24 | -37 | -48 | |
Balance Sheet
|
|---|
| Cash | 60 | 102 | 120 | 61 | 28 | -54.6% |
| Short Term Debt | 2 | 1 | 1 | 1 | 0 | -75.7% |
| Long Term Debt | 430 | 665 | 743 | 741 | 936 | 26.3% |
Cash flow
|
|---|
| Capex | 20 | 20 | 26 | 24 | 29 | 24.8% |
Ratios
|
|---|
| Revenue growth | 13.1% | -0.1% | 15.2% | 8.4% | 4.5% | |
| EBITDA growth | -42.5% | -83.2% | 2,595.2% | -7.8% | -23.7% | |
| Gross Margin | 31.0% | 33.6% | 34.7% | 33.7% | 32.4% | -1.2% |
| EBITDA Margin | 2.8% | 0.5% | 11.0% | 9.4% | 6.8% | -2.5% |
| Net Income Margin | -8.0% | -14.0% | -2.0% | -2.8% | -3.5% | -0.6% |
| SG&A, % of revenue | 28.2% | 33.5% | 23.7% | 24.3% | 22.1% | -2.2% |
| CAPEX, % of revenue | 1.9% | 1.8% | 2.2% | 1.8% | 2.1% | 0.3% |
| ROIC | -3.1% | -6.3% | 14.2% | 13.7% | 10.1% | -3.6% |
| Net Debt/EBITDA | 12.4x | 112.6x | 4.6x | 5.5x | 9.6x | 4.1x |
MDC Partners Inc ($MDZ.A) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 309 | 337 | 349 | 390 | 2.3% | 0.1% | 6.3% | 8.8% |
| EBITDA | 20 | 36 | 1 | 39 | 13.0% | -39.3% | -98.2% | 234.4% |
| Net Income | -23 | 1 | -34 | 8 | | -96.0% | | |
Balance Sheet
|
|---|
| Cash | 22 | 16 | 22 | 28 | 24.0% | -53.9% | 37.9% | -54.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | -22.0% | -29.9% | -48.8% | -75.7% |
| Long Term Debt | 897 | 987 | 951 | 936 | 17.7% | 33.1% | 15.1% | 26.3% |
Ratios
|
|---|
| Gross Margin | 31.6% | 32.1% | 32.5% | 33.4% | 1.2% | -1.0% | -2.6% | -2.2% |
| EBITDA Margin | 6.4% | 10.5% | 0.2% | 10.0% | 0.6% | -6.8% | -11.0% | 6.7% |
| Net Income Margin | -7.5% | 0.3% | -9.6% | 2.0% | 3.1% | -8.4% | -7.0% | 9.3% |
Revenue and profitability
The company's Revenue increased on 4.5%. Revenue growth showed acceleration in 16Q4 - it increased 8.8% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 12.9 pp from -3.9% to 8.9% in 2016.
Gross Margin decreased slightly on 1.2 pp from 33.7% to 32.4% in 2016. SG&A as a % of Revenue decreased on 2.2 pp from 24.3% to 22.1% in 2016.
Net Income marign decreased slightly on 0.64 pp from -2.8% to -3.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 2.1%. CAPEX/Revenue showed almost no change from 2013 to 2016. For the last three years the average CAPEX/Revenue was 2.0%.
Leverage (Debt)
Company's Net Debt / EBITDA is 9.6x and Debt / EBITDA is 9.9x. Net Debt / EBITDA jumped on 4.1x from 5.5x to 9.6x in 2016. Debt jumped on 26.2% while cash dropped on 54.6%.
Management team
Scott L Kauffman is a MDC Partners Inc's CEO. Scott L Kauffman is a founder and has spent 3 years at the company. MDC Partners Inc's CFO is David B Doft. David B Doft has 11 years tenure at the company.
Appendix 1: Peers in Communications
Below we provide MDC Partners Inc benchmarking against other companies in Communications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| AcuityAds Holding Inc ($AT) | | | | 51.6% | 91.4% |
| Shopify Inc ($SH) | | 111.9% | 109.0% | 95.4% | 89.7% |
| Gaming Nation Inc ($FAN) | | | | | 46.6% |
| Tucows Inc ($TC) | | 13.3% | 13.6% | 17.1% | 9.8% |
| Points International Ltd ($PTS) | | 45.1% | 26.0% | 16.2% | 8.6% |
| |
|---|
| Median (25 companies) | 13.1% | 4.4% | 1.1% | 3.2% | 2.1% |
|---|
| MDC Partners Inc ($MDZ.A) | | -0.1% | 15.2% | 8.4% | 4.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($WAN) | 90.5% | 93.2% | 94.3% | 95.6% | |
| NeuLion Inc ($NLN) | 53.6% | 63.8% | 70.2% | 81.1% | 81.6% |
| TeraGo Inc ($TGO) | 62.9% | 61.8% | 59.8% | 77.2% | 77.2% |
| ICTV Brands Inc ($ITV) | 67.4% | 71.9% | 69.6% | 68.1% | |
| Platinum Communications Corp ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (22 companies) | 46.4% | 43.3% | 49.1% | 48.2% | 44.6% |
|---|
| MDC Partners Inc ($MDZ.A) | 31.0% | 33.6% | 34.7% | 33.7% | 32.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($BCE) | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% |
| Rogers Communications Inc ($RCI.A) | 37.3% | 38.4% | 37.9% | 36.9% | 32.5% |
| Quebecor Inc ($QBR.B) | 27.5% | 36.3% | 35.5% | 34.2% | 35.5% |
| TELUS Corp ($T) | 35.3% | 35.2% | 35.1% | 34.1% | 33.0% |
| ZoomerMedia Ltd ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| |
|---|
| Median (29 companies) | 19.1% | 13.7% | 8.8% | 10.4% | 8.2% |
|---|
| MDC Partners Inc ($MDZ.A) | 2.8% | 0.5% | 11.0% | 9.4% | 6.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($T) | 17.9% | 17.8% | 19.8% | 20.2% | 21.5% |
| Rogers Communications Inc ($RCI.A) | 17.2% | 17.6% | 18.4% | 18.2% | 17.2% |
| Quebecor Inc ($QBR.B) | 16.7% | 15.4% | 17.9% | 17.5% | 17.6% |
| BCE Inc ($BCE) | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% |
| TeraGo Inc ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (28 companies) | 2.8% | 3.2% | 2.4% | 3.1% | 3.6% |
|---|
| MDC Partners Inc ($MDZ.A) | 1.9% | 1.8% | 2.2% | 1.8% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
| BCE Inc ($BCE) | 14.1% | 12.6% | 12.6% | 12.3% | 12.6% |
| Quebecor Inc ($QBR.B) | 7.9% | 9.6% | 8.4% | 8.4% | 10.1% |
| TELUS Corp ($T) | 12.4% | 13.0% | 13.0% | 11.5% | 9.6% |
| Rogers Communications Inc ($RCI.A) | 17.8% | 16.1% | 12.3% | 10.7% | 8.4% |
| |
|---|
| Median (28 companies) | 9.9% | 8.2% | 7.1% | 2.0% | -0.1% |
|---|
| MDC Partners Inc ($MDZ.A) | -3.1% | -6.3% | 14.2% | 13.7% | 10.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($IT) | | | | 9.4x | |
| Quebecor Inc ($QBR.B) | 3.7x | 3.9x | 4.2x | 4.8x | 4.3x |
| Rogers Communications Inc ($RCI.A) | 2.3x | 2.4x | 3.2x | 3.6x | 3.8x |
| Newfoundland Capital Corp Ltd ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| TELUS Corp ($T) | 1.7x | 1.9x | 2.2x | 2.8x | 3.0x |
| |
|---|
| Median (20 companies) | 1.4x | 1.2x | 1.5x | 1.5x | 1.7x |
|---|
| MDC Partners Inc ($MDZ.A) | 12.4x | 112.6x | 4.6x | 5.5x | 9.6x |
