MDC Partners is off to a solid start this year “in a time of continued disruption in the advertising industry,” said newly promoted chairman and CEO Mark Penn during the company’s first-quarter earnings call this morning.
That start included a 0.9% drop in year-over-year organic revenue and a slight rise in overall revenue, which went from $327 million to $328.8 million.
Penn spoke of his two-year plan to turn the troubled holding company around, with chief financial officer David Doft citing lower costs in creating a leaner marketing machine. For example, MDC sold its Kingsdale Advisors division and reduced or eliminated several professional fees and bonuses like those that would have gone to former CEO Scott Kauffman.
Because of those efforts, Doft said, the net loss attributable to MDC Partners common shareholders was considerably lower this year, at $2.5 million, than it was in the first quarter of 2018, when they lost a collective $31.4 million.
“We are implementing a two-year plan designed to transform MDC to the model of a modern marketing services company, combining top creative talent with leading data, research, strategy, digital and media offerings,” said Penn in his opening remarks. Doft credited “reductions in staff, real estate and corporate expense” with driving a 175% quarterly increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). Doft added, “We see continued opportunity for efficiency in 2019 and remain focused on optimizing our profit margin while reinvigorating the business.”
Total new business during the quarter was minus $11.7 million due to “client losses at one [unnamed] core agency” within the MDC network, according to the company, but was otherwise positive to the tune of $21.9 million.
According to the statement, the company projects 0-2% growth in organic revenue for fiscal year 2019.
Penn could count the call as a small victory, as MDC’s stock price rose more than 8% by the end of the day.