Stagwell Advertising and marketing Group LLC Reviews Standalone Outcomes For The Three And Six Months Ended June 30, 2021 | Information

Results show significant growth including a 29.1% increase in GAAP revenue to $209.6m and a 39.5% increase in net revenue to $181.8m for Q2 2021 vs Q2 2020.

After adjusting for acquisitions, foreign exchange effects, and the election cycle, GAAP revenue for the quarter grew 43.9% with net revenue growth of 42.0%.

Second quarter net income increased to $18.7 million, representing 285.1% growth over Q2 2020.

Adjusted EBITDA increased 91.5% in Q2 2021 vs Q2 2020.

STAGWELL MARKETING GROUP HIGHLIGHTS: 2nd QUARTER AND YTD JUNE 30, 2021

2nd Quarter 2021:

  • GAAP revenue was $209.6 million, representing growth of $47.2 million, or 29.1%, compared to Q2 2020 of $162.3 million.
    • GAAP revenue organic growth was $38.7 million, or 23.8%.
    • Adjusting for acquisitions, foreign exchange effects, and the election cycle, GAAP revenue organic growth for the quarter is 43.9%.
  • Net revenue was $181.8 million, representing growth of $51.5 million, or 39.5%, compared to Q2 2020 of $130.4 million.
    • Net revenue organic growth was $43.0 million, or 33.0%.
    • Adjusting for acquisitions, foreign exchange effects, and the election cycle, net revenue organic growth for the quarter is 42.0%.
  • Net income was $18.7 million, representing growth of $13.8 million, or 285.1%, compared to the prior year period.
  • Adjusted EBITDA was $38.7 million, representing growth of $18.5 million, or 91.5%, compared to the prior year period.

Year to Date June 30, 2021:

  • GAAP revenue was $390.8 million, representing growth of $43.9 million, or 12.7%, compared to YTD 2020 of $346.9 million.
    • GAAP revenue organic growth was $25.9 million, or 7.5%.
    • Adjusting for acquisitions, foreign exchange effects, and the election cycle, GAAP revenue organic growth for the quarter is 24.0%.
  • Net revenue was $339.9 million, representing growth of $58.7 million, or 20.9%, compared to YTD 2020 of $281.2 million.
    • Net revenue organic growth was $40.8 million, or 14.5%.
    • Adjusting for acquisitions, foreign exchange effects, and the election cycle, net revenue organic growth for the quarter is 26.1%.
  • Net income was $23.3 million, representing growth of $5.9 million, or 34.2%, compared to the prior year period.
  • Adjusted EBITDA was $62.6 million, representing growth of $20.7 million, or 49.5%, compared to the prior year period.
  • Cash provided by operating activities of $39.2 million, a decrease of $7.6 million, or 16.2%, principally due to increased working capital requirement resulting from revenue growth.

WASHINGTON, Aug. 4, 2021 /PRNewswire/ — Stagwell Marketing Group, which formally merged with MDC Partners to form Stagwell Inc. (Nasdaq: STGW) on August 2, announced standalone financial results for Stagwell Marketing Group LLC (“Stagwell” or the “Company”) for the three and six months ended June 30, 2021.

Current Stagwell Inc. President and former Stagwell Group Partner Jay Leveton stated, “The standalone Stagwell Marketing Group quarterly results show industry-leading, double digit net revenue growth across every one of our business segments. As the impact of the pandemic recedes, marketers are investing in research and data analytics to better understand changes among their stakeholders and improve how they connect with them through digital channels — areas where Stagwell companies excel. We have excellent momentum as we launch Stagwell Inc.”

Current Stagwell Inc. COO and former Stagwell Group CFO Ryan Greene commented, “In the second quarter of 2021, due to its digital first nature, Stagwell’s net revenue grew robustly at 39.5% and EBITDA increased 91.5% as did net income, by 285.1% year over year. At a time when legacy holding companies are working to recover to 2019 pre-pandemic revenue levels, Stagwell’s GAAP revenue this past quarter is more than 20% higher and EBITDA is over 40% higher versus Q2 2019.”

Second Quarter and Year-to-Date 2021 Stagwell Marketing Group Standalone Financial Results

GAAP revenue for the second quarter of 2021 increased $47.2 million, or 29.1%, to $209.6 million. This included organic revenue growth of $38.7 million, or 23.8%. Inorganic revenue was $7.5 million and we reported a foreign exchange impact on GAAP revenue of approximately $1.0 million. Our GAAP revenue includes third-party direct costs, which are expenses incurred with third-party vendors when Stagwell acts as the principal when performing services for its clients. Third-party direct costs were $27.7 million as compared to $32.0 million for the second quarter of 2020, which represents a decrease of 13.3%.

Net revenue for the second quarter of 2021, after deducting third-party direct costs, was $181.8 million compared to $130.4 million for the same period in 2020. This represents an increase of $51.5 million or 39.5%. This included organic revenue growth of $43.0 million, or 33.0%. The organic revenue increase was primarily attributable to double-digit organic growth across nearly all non-political segments. Inorganic revenue of $7.5 million included acquisitions that expanded our digital transformation and digital platform management offerings. We also recorded a foreign exchange impact on net revenue of $1.0 million.

Net income for the second quarter of 2021 was $18.7 million as compared to net income of $4.8 million in the second quarter of 2020, an increase of $13.8 million, or 285.1%. Our operating expenses increased $30.5 million, which related to additional people and client delivery expenses incurred in support of the revenue growth noted above plus additional costs connected to acquired brands. Additionally, general expenses increased $11.4 million across a number of brands and our non-operating expenses increased by $2.9 million, which primarily related to increased provision for income taxes.

Adjusted EBITDA for the second quarter of 2021 was $38.7 million compared to $20.2 million in the second quarter of 2020, an increase of $18.5 million, or 91.5%. The increase was driven by the strong revenue performance that was partially offset by the increase in operating expenses noted above. Our Adjusted EBITDA margin was 18.5% on GAAP revenue and 21.3% on net revenue, up from 12.5% and 15.5% respectively in the second quarter of 2020.

GAAP revenue for the first six months of 2021 increased $43.9 million, or 12.7%, to $390.8 million. This included organic revenue growth of $25.9 million, or 7.5%. Inorganic revenue was $17.1 million, and we recorded a foreign exchange impact on GAAP revenue of $0.9 million. The organic revenue growth was primarily attributable to a $26.2 million increase in organic revenues from our Digital – Marketing segment that were partially offset by an organic revenue decline of $18.6 million from our Communications, Public Affairs and Advocacy and Digital – Content segments. All remaining segments reported organic revenue growth of $18.4 million. Inorganic revenue totaled $17.1 million and included $15.0 million from investments that expanded our digital transformation offerings and $2.2 million from investments that expanded our strategic corporate communications offering.  Third-party direct costs were $50.9 million as compared to $65.7 million for the first six months of 2020, which represents a decrease of 22.5%.

Net revenue for the first six months of 2021, after deducting third-party direct costs, was $339.9 million as compared to $281.2 million for the first six months of 2020, which represents an increase of $58.7 million or 20.9%. This included organic revenue growth of $40.8 million, or 14.5%. All segments except for Digital – Content, which remained impacted by travel restrictions put in place in response to COVID, reported double digit organic growth. Inorganic revenue was $17.1 million and included $15.0 million from investments that expanded our digital transformation offerings and $2.1 million from investments that expanded our strategic corporate communications offering. We also recorded a foreign exchange impact on net revenue of $0.9 million.

Net income for the first six months of 2021 was $23.3 million as compared to net income of $17.3 million in the first six months of 2020, an increase of $5.9 million, or 34.2%. Our operating expenses increased $31.9 million, which related to additional operating expenses incurred by our existing brands in support of the revenue growth noted above plus additional costs connected to acquired brands. General expenses increased $20.4 million across several brands and our non-operating expenses (net of other income) increased by $6.1 million, which primarily related to increased provision for income taxes of 3.4 million and a decrease in other income reported in prior period not repeated in the current period of $2.2 million.

Adjusted EBITDA for the first six months of 2021 was $62.6 million as compared to $41.8 million in the first six months of 2020, an increase of $20.7 million, or 49.5%. Again, the increase was driven by the strong revenue performance that was partially offset by the increase in operating expenses noted above. In addition, the adjusted EBITDA margin was 16.0% on GAAP revenue and 18.4% on net revenue, up from 12.1% and 14.9% respectively in the first six months of 2020.

Stagwell Inc. Conference Call

Management will host a video webcast and conference call on Wednesday, August 4, 2021, at 8:30 a.m. (ET) to discuss standalone results for Stagwell Marketing Group LLC and MDC Partners Inc. for the three and six months ended June 30, 2021.The video webcast will be accessible at https://kvgo.com/openexchange-inc/mdca-stagwell-earnings-call. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call and available for ninety days at www.stagwellglobal.com.

About Stagwell Marketing Group

The Stagwell Marketing Group is the first and only independent, digital-first, and fully-integrated organization of size & scale servicing brands across the continuum of marketing services. Collaborative by design, Stagwell is not weighed down by legacy points of view and its people are united in their desire to innovate, evolve, grow and deliver superior results for their clients. Stagwell’s high growth brands include experts in four categories: digital transformation and marketing, research and insights, marketing communications, and content and media. Stagwell Media LP (“Stagwell Media), is a private equity fund that owns all interests in Stagwell Marketing Group LLC through a wholly owned holding company named Stagwell Marketing Group Holdings LLC. Stagwell Media, Stagwell Marketing Group LLC and its businesses are managed by The Stagwell Group, a registered investment advisor. The address of Stagwell is 1808 Eye Street, Floor 6, Washington, D.C., 20006.

As of the date hereof, Stagwell Agency Holdings and its affiliates, including Stagwell Media, and joint actors beneficially own 50,000 Series 6 preferred shares (representing 100% of the outstanding Series 6 preferred shares), 14,425,714 Class A common shares (representing 18.7% of the outstanding Class A common shares) and 179,970,051 voting-only Class C common shares (representing 100% of the outstanding voting-only Class C common shares) of Stagwell Inc., collectively representing 75.6% of the issued and outstanding voting shares of Stagwell Inc., as calculated on an as-converted basis.

Non-GAAP Financial Measures

Stagwell has included in this press release certain financial results that the Securities and Exchange Commission defines as “non-GAAP financial measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s results. Such non-GAAP financial measures include the following:

Net Revenue: “Net Revenue” is GAAP Revenue adjusted to exclude certain third-party direct costs when the Company acts as principal for the services rendered in the client arrangement.

Inorganic Revenue: “Inorganic Revenue” consists of (i) for acquisitions during the current year, the revenue effect from such acquisitions as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods.

Organic Revenue: Organic revenue is calculated by subtracting both the foreign exchange and acquisition (disposition) components from total revenue. “Organic revenue growth” and “organic revenue decline” refers to the positive or negative changes in revenue that were not attributable to the effects of foreign exchange or acquired run rate revenue from acquisitions. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the Company’s Brands that have been held throughout each of the comparable periods presented, and (b) inorganic revenue.

Adjusted EBITDA: Adjusted EBITDA is a non-GAAP financial measure that represents net income adjusted for (a) interest expense, (b) provision for income taxes, (c) depreciation and amortization expense, (d) other income (expenses), (e) equity in earnings (losses) of unconsolidated affiliates, (f) deferred acquisition consideration adjustments, and (g) other items, net. Other items, net includes items such as acquisition-related expenses, other non-recurring items and other restructuring costs.

Included in the Company’s press release and supplemental management presentation are tables reconciling Stagwell’s GAAP results to arrive at certain of these non-GAAP financial measures.

This press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading “Financial Outlook” and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify 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 in this section.  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 international, national and regional unfavorable economic conditions that could affect the Company or its clients, including as a result of the novel coronavirus pandemic (“COVID-19”);
  • the effects of the outbreak of COVID-19, including the measures to reduce its spread, and the impact on the economy and demand for our services, which may precipitate or exacerbate other risks and uncertainties;
  • an inability to realize expected benefits of the redomiciliation of the Company from the federal jurisdiction of Canada to the State of Delaware (the “Redomiciliation”) and the subsequent combination of the Company’s business with the business of the subsidiaries of Stagwell Media LP (“Stagwell”) that own and operate a portfolio of marketing services companies (the “Business Combination” and, together with the Redomiciliation, the “Transactions”) or the occurrence of difficulties in connection with the Transactions;
  • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
  • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
  • the impact of uncertainty associated with the Transactions on the Company’s businesses;
  • direct or indirect costs associated with the Transactions, which could be greater than expected;
  • risks associated with severe effects of international, national and regional economic conditions;
  • the risk of parties challenging the Transactions or the impact of the Transactions on the Company’s debt arrangements;
  • the Company’s ability to attract new clients and retain existing clients;
  • reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
  • financial failure of the Company’s clients;
  • the Company’s ability to retain and attract key employees;
  • the Company’s ability to achieve the full amount of its stated cost saving initiatives;
  • the Company’s implementation of strategic initiatives;
  • 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 complement and expand the Company’s business capabilities; and
  • foreign currency fluctuations. 

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in MDC’s initial Form S-4, filed with the Securities and Exchange Commission (the “SEC”) on February 8, 2021, Amendment No.1 filed on March 29, 2021, Amendment No.2 filed on April 22, 2021, Amendment No.3 filed on April 30, 2021, and the Prospectus Supplement filed July 8, 2021, all of which are accessible on the SEC’s website at www.sec.gov.

SCHEDULE 1

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

2021

2020

2021

2020

Net Revenue

$

181,845

$

130,356

$

339,918

$

281,192

Third-party vendor costs

27,715

31,974

50,884

65,681

Revenue

$

209,560

$

162,330

$

390,802

$

346,873

Operating expenses:

Cost of services sold

122,074

103,296

234,073

224,054

Office and general expenses

52,674

41,243

104,952

84,515

Depreciation and amortization

10,381

10,108

21,331

19,864

Total operating expenses

185,129

154,647

360,356

328,433

Operating income

24,431

7,683

30,446

18,440

Other expenses, net:

Interest expense, net

(1,935)

(1,976)

(3,286)

(2,887)

Other expense, net

(486)

(691)

122

2,336

Income before taxes and equity in earnings (losses) of unconsolidated affiliates

22,010

5,016

27,282

17,889

Provision for income taxes

(3,348)

(134)

(4,021)

(593)

Income before equity in earnings (losses) of unconsolidated affiliates

18,662

4,882

23,261

17,296

Equity in earnings (losses) of unconsolidated affiliates

(3)

(37)

1

42

Net income

18,659

4,845

23,262

17,338

Less: Net income attributable to noncontrolling interests

1,470

1,671

2,623

2,809

Less: Net (loss) income attributable to redeemable noncontrolling interests

(156)

(1,097)

(1,071)

(1,789)

Net income attributable to Member

$

17,345

$

4,271

$

21,710

$

16,318

(1)

Net Revenue: GAAP Revenue adjusted to exclude certain third-party direct costs when we act as a principal for the services rendered in the client arrangement.

Note: Actuals may not foot due to rounding.

 

SCHEDULE 2

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED REVENUE RECONCILIATION

 (in thousands)

Quarter on Quarter Change

Year to Date

(2nd Quarter)

(2nd Quarter)

GAAP REVENUE

Revenue

% Change

Revenue

%

Change

June 30, 2020

$

162,330

$

346,873

Organic Revenue

38,712

23.8%

25,899

7.5%

Inorganic Revenue(1)

7,477

4.6%

17,136

4.9%

Foreign exchange impact

1,041

0.6%

894

0.3%

Total Change

47,230

29.1%

43,929

12.7%

June 30, 2021

$

209,560

$

390,802

Quarter on Quarter Change

Year to Date

(2nd Quarter)

(2nd Quarter)

NET REVENUE(1)

Revenue

% Change

Revenue

%

Change

June 30, 2020

$

130,356

$

281,192

Organic Revenue

43,011

33.0%

40,771

14.5%

Inorganic Revenue(1)

7,437

5.7%

17,061

6.1%

Foreign exchange impact

1,041

0.8%

894

0.3%

Total Change

51,489

39.5%

58,726

20.9%

June 30, 2021

$

181,845

$

339,918

(1)

“Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and inorganic components from total revenue growth. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the Company’s Brands that have been held throughout each of the comparable periods presented, and (b) “inorganic revenue”.

(2)

Net Revenue: GAAP Revenue adjusted to exclude certain third-party costs when we act as a principal for the services rendered in the client arrangement.

Note: Actuals may not foot due to rounding.

 

SCHEDULE 3

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED MANAGEMENT ADJUSTED RESULTS

Communications, Public Affairs and Advocacy (“CPAA”)

Normalization Adjustment

Revenue As

Reported plus the

difference between

current period reported

and Average of CPAA

Periods Reported

As Reported

For the three months ending

June 30,

Reporting Periods Calculations

GAAP

REVENUE

Average of

CPAA Periods

Reported

Difference between current

period reported and Average

As Reported

2019

2020

% Change

i

ii

iii

iv = (ii + iii) / 2

v = ii – iv

vi = v + i

June 30, 2020

$162,330

$25,681

$52,423

$ 39,052

$(13,371)

$148,959

Organic Revenue

38,712

26,742

(3,843)

65,453

43.9%

Inorganic Revenue(1)

7,477

7,477

5.0%

Foreign exchange impact

1,041

1,041

0.7%

Total Change

47,230

26,742

(3,843)

73,971

49.7%

June 30, 2021

$209,560

$52,423

$48,580

$ 50,501

$13,371

$222,930

As Reported

For the three months ending

June 30,

Reporting Periods Calculations

Net Revenue As

Reported plus the

difference between

current period reported

and Average of CPAA

Periods Reported

Net Revenue

Average of CPAA Periods Reported

Difference between current period reported and Average

As Reported

2019

2020

% Change

i

ii

iii

iv = (ii + iii) / 2

v = ii – iv

vi = v + i

June 30, 2020

$130,356

$16,354

$26,045

$ 21,200

$(4,846)

$125,511

Organic Revenue

43,011

9,691

4,964

52,702

42.0%

Inorganic Revenue(1)

7,437

7,437

5.9%

Foreign exchange impact

1,041

1,041

0.8%

Total Change

51,489

9,691

4,964

61,180

48.7%

June 30, 2021

$181,845

$26,045

$31,009

$ 28,527

$4,846

$186,691

Communications, Public Affairs and Advocacy (“CPAA”) Normalization Adjustment

GAAP Revenue As

Reported plus the

difference between

current period reported

and Average of CPAA

Periods Reported

As Reported

Reporting Periods Calculations

GAAP

REVENUE

For the six months ending

June 30,

Average of

CPAA Periods

Reported

Difference between current

period reported and Average

As Reported

2019

2020

% Change

i

ii

iii

iv = (ii + iii) / 2

v = ii – iv

vi = v + i

June 30, 2020

$346,873

$53,567

$104,662

$ 79,115

$(25,548)

$321,325

Organic Revenue

25,899

51,095

(14,966)

76,994

24.0%

Inorganic Revenue(1)

17,136

2,183

17,136

5.3%

Foreign exchange impact

894

894

0.3%

Total Change

43,929

51,095

(12,783)

95,024

29.6%

June 30, 2021

$390,802

$104,662

$91,879

$ 98,270

$25,548

$416,349

As Reported

For the six months ending

June 30,

Reporting Periods Calculations

Net Revenue As

Reported plus the

difference between

current period reported

and Average of CPAA

Periods Reported

Net Revenue

Average of

CPAA Periods

Reported

Difference between current

period reported and Average

As Reported

2019

2020

% Change

i

ii

iii

iv = (ii + iii) / 2

v = ii – iv

vi = v + i

June 30, 2020

$281,192

$31,302

$60,088

$ 45,695

$(14,393)

$266,799

Organic Revenue

40,771

28,786

(9,463)

69,558

26.1%

Inorganic Revenue(1)

17,061

2,127

17,061

6.4%

Foreign exchange impact

894

894

0.3%

Total Change

58,726

28,786

(7,337)

87,513

32.8%

June 30, 2021

$339,918

$60,088

$52,751

$ 56,420

$14,393

$354,312

(1)

“Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and inorganic components from total revenue growth. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the Company’s Brands that have been held throughout each of the comparable periods presented, and (b) “inorganic revenue”.

(2)

Net Revenue: Pro Forma GAAP Revenue adjusted to exclude certain third-party costs when we act as a principal for the services rendered in the client arrangement.

Note: Actuals may not foot due to rounding.

 

SCHEDULE 4

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2021

(Unaudited)

December

31, 2020

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

$

73,450

$

92,457

Accounts receivable, net

196,821

225,733

Expenditures billable to clients

15,909

11,063

Other current assets

37,701

36,433

Total current assets

323,881

365,686

Investments

1,865

14,256

Property and equipment, net

37,842

35,614

Goodwill

352,469

351,725

Intangible assets, net

171,130

186,035

Right-of-use assets – operating leases

53,997

57,752

Other assets

2,578

2,787

Total assets

$

943,762

$

1,013,855

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

108,734

$

147,826

Accruals and other liabilities

87,620

89,562

Current maturities of long-term debt

497

994

Advanced billings

70,049

66,418

Current portion of operating lease liabilities

19,280

19,579

Current portion of deferred acquisition consideration

8,767

12,579

Total current liabilities

294,947

336,958

Long-term debt, net

184,319

198,024

Long-term portion of deferred acquisition consideration

7,516

5,268

Long-term portion of operating lease liabilities

49,435

52,606

Deferred tax liabilities, net

16,232

16,050

Other liabilities

7,345

5,802

Total liabilities

559,794

614,708

Commitments and contingencies

Redeemable noncontrolling interest

2,626

604

Member’s equity

350,395

358,756

Noncontrolling interest

30,947

39,787

Total equity

381,342

398,543

Total liabilities, redeemable noncontrolling interest and equity

$

943,762

$

1,013,855

 

SCHEDULE 5

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED SUMMARY CASH FLOW DATA

Six Months Ended June 30

(in thousands, except percentages)

2021

2020

Net cash provided by operating activities

$39,218

$46,813

Net cash used in investing activities

(7,288)

(7,908)

Net cash used in financing activities

(52,710)

(23,653)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

1,773

380

Net (decrease) increase in cash, cash equivalents and restricted cash

(19,007)

15,632

Cash, cash equivalents and restricted cash at the beginning of the period

92,457

63,860

Cash, cash equivalents and restricted cash at the end of the period

$73,450

$79,492

Supplemental cash flow information:

Cash interest paid

(4,649)

(4,490)

Income taxes paid

(3,047)

(1,310)

Non-cash investing and financing activities:

Acquisitions of business

(23,720)

Net unrealized gain (loss) on investments

(4,999)

Contributions by Member

12,122

83,242

Distributions to Member

(13,000)

Payment of deferred acquisition consideration

(7,080)

(64,322)

 

SCHEDULE 6

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

For the three months ended

June 30,

For the six months ended

June 30,

2021

2020

2021

2020

Net Income

$18,659

$4,845

$23,262

$17,338

Interest expense, net

1,935

1,976

3,286

2,887

Provision for income taxes

3,348

134

4,021

593

Depreciation and amortization

10,381

10,108

21,331

19,864

EBITDA

34,323

17,063

51,900

40,682

Management Adjustments

Other (expense) income, net

833

688

224

(2,336)

Equity in losses of unconsolidated affiliate

3

37

(1)

(42)

Acquisition-related expenses

1,297

440

3,942

1,135

Deferred acquisition consideration expenses

2,098

1,144

6,034

1,121

Other non-recurring items

161

461

Other restructuring costs

846

1,289

Adjusted EBITDA

$38,715

$20,218

$62,560

$41,849

Note: Actuals may not foot due to rounding.

 

SCHEDULE 7

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF COMPONENTS OF NON-GAAP MEASURES

2020

2021

YTD Q2

YTD Q2

Q2

Q3

Q4

Full

Year

Q1

Q2

2020

2021

Inorganic GAAP Revenue

GAAP Revenue

162,330

228,097

313,062

888,032

181,242

209,560

346,873

390,802

Organic revenue for the period

(140,923)

(216,959)

(299,785)

(812,488)

(171,435)

(203,124)

(295,745)

(374,559)

Foreign exchange impact

188

760

478

579

(147)

1,041

(659)

894

Inorganic GAAP Revenue

21,595

11,898

13,755

76,123

9,660

7,477

50,469

17,137

Inorganic Net Revenue

GAAP Revenue

162,330

228,097

313,062

888,032

181,242

209,560

346,873

390,802

Third party direct costs

(31,971)

(75,238)

(113,882)

(254,801)

(23,168)

(27,715)

(65,681)

(50,884)

Net revenue

130,359

152,859

199,180

633,231

158,074

181,845

281,192

339,918

Organic revenue for the period

(112,795)

(142,291)

(186,473)

(567,292)

(148,588)

(175,409)

(238,528)

(334,778)

Foreign exchange impact

188

760

478

579

(147)

1,041

(659)

894

Inorganic Net Revenue

17,752

11,328

13,185

66,518

9,338

7,477

42,005

16,815

Note: Actuals may not foot due to rounding.

 

 

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SOURCE Stagwell Inc.