MDC Q1 revenue up 10% but with $42m net loss

NEW YORK: MDC Partners' strategic marketing services unit, which contains its PR agencies, reported revenue of $183.8 million in the first quarter of 2013, representing 11.7% organic growth compared with the same period of the previous year.

NEW YORK: MDC Partners' strategic marketing services unit, which contains its PR agencies, reported revenue of $183.8 million in the first quarter of 2013, representing 11.7% organic growth compared with the same period of the previous year.

The holding company, which owns majority stakes in Allison+Partners, HL Group, Attention, and Kwittken & Company, among others, reported 10.1% overall organic revenue growth in the quarter to $267 million.

The company saw a net loss of $42.2 million in the quarter, versus a loss of $24.8 million in Q1 2012. It also reported an operating profit of $10.4 million in the three-month period ending March 31, compared with an operating loss of $10.8 million in the same period of the previous year.

David Doft, CFO of MDC, said the net loss was driven by a $55 million-plus charge related to the recent refinancing of the company's balance sheet, as well as other non-cash charges.

Strategic marketing has historically been the faster-growing segment within the company, Doft said, noting that this was the fourth consecutive quarter in which the unit saw double-digit organic growth.

“If you look back five years ago, we were fairly underweight in PR. We felt there was a big opportunity in PR and viewed it as a bit of a back door into social media and how it was changing brands' interactions with consumers,” Doft said.

MDC said Q1 2013 was the strongest first quarter in company history. Net new business wins in the period totaled $53.1 million, a 7% increase from Q1 2012.

MDC expects revenue growth of between 7% and 9% in 2013, chairman and CEO Miles Nadal said in a statement.

MDC does not plan to make additional acquisitions anytime soon and will instead focus on organic growth opportunities, Doft added.

Last year, MDC reported $236 million in first quarter revenue, representing 5.4% overall organic growth compared with the prior year. The strategic marketing unit posted 8.7% organic revenue growth to $160.4 million.

Organic revenue represents change in constant currency without measuring the impact of acquisitions or disposals.

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