Management Presentation Second Quarter 2019 Results August 7, 2019 - PowerPoint PPT Presentation

Management Presentation Second Quarter 2019 Results August 7, 2019

FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation contains forward-looking statements. Statements in this presentation that are not historical facts, including without limitation 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. 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 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 complement and expand the Company’s business capabilities, and the potential impact of one or more asset sales; and • foreign currency fluctuations. Investors should carefully consider these risk factors and the additional risk factors outlined in more detail in the Company’s 2018 Annual Report on Form 10-K under the caption “Risk Factors”, and in the Company’s other SEC filings. 2

SUMMARY • Net new business rebounded strongly to $43.0 million as agencies took advantage of the continued strength of MDC's pipeline • Aided by ongoing cost-reduction initiatives, MDC delivers strong year-over-year growth in Adjusted EBITDA and 150 basis point improvement in Adjusted EBITDA Margin in 2Q 2019 • 2Q 2019 revenue declines expected, driven by a combination of cycling through previous losses and the proactive move to exit two UK offices; Company expects improved revenue growth for the remainder of 2019 • MDC actively executing against two year strategic plan, designed to organize MDC's offerings, capitalize on its strengths, and enhance Company's go-to-market strategy and enable a return to revenue growth and consistent financial returns ◦ Move to align MDC Media Partners and Gale Partners under common leadership marks the first in a series of actions aimed at bringing together the best talent across MDC into collaborative networks to elevate offering for the benefit of all clients • FY 2019 Outlook - Company is providing additional commentary with respect to “Covenant EBITDA” as defined under the senior secured credit facility; Expects to complete FY2019 with approximately $175 million to $185 million of Covenant EBITDA, consistent with prior guidance Note: See appendix for definitions of non-GAAP measures 3

----- DRAFT ----- SECOND QUARTER 2019 FINANCIAL HIGHLIGHTS • Revenue of $362.1 million versus $379.7 million a year ago • Organic revenue decrease 2.4%, including a 200 basis point benefit from billable pass through costs • Net income attributable to MDC Partners Inc. common shareholders of $0.8 million in the second quarter of 2019 versus income of $1.1 million a year ago. Net loss attributable to MDC Partners common shareholders for the last twelve months (LTM) of $103.7 million as of June 30, 2019 versus $103.3 million loss as of March 31, 2019. • Adjusted EBITDA of $46.4 million versus $43.0 million a year ago, an increase of 7.9% • Adjusted EBITDA Margin of 12.8%, an increase of 150 basis points compared to prior year quarter. • Covenant EBITDA (LTM) of $187.9 million versus $183.8 million for the first quarter of 2019, an increase of 2.2%. • Net new business wins of $43.0 million Note: See appendix for definitions of non-GAAP measures 4

----- DRAFT ----- SIX MONTHS 2019 FINANCIAL HIGHLIGHTS • Revenue of $690.9 million versus $706.7 million a year ago • Organic revenue decreased 1.7%, including a 209 basis point benefit from billable pass through costs • Net loss attributable to MDC Partners Inc. common shareholders of $1.4 million for the first six months of 2019 versus a loss of $30.1 million a year ago • Adjusted EBITDA of $67.9 million versus $50.8 million a year ago, an increase of 33.7% • Adjusted EBITDA Margin improvement of 260 basis points to 9.8% versus 7.2% a year ago • Net new business wins of $31.3 million Note: See appendix for definitions of non-GAAP measures 5

CONSOLIDATED REVENUE AND EARNINGS (US$ in millions, except percentages) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 % Change 2019 2018 % Change $ 362.1 $ 379.7 (4.6) % $ 690.9 $ 706.7 (2.2) % Revenue: Operating Expenses: Cost of services sold 240.7 253.4 (5.0) % 477.9 496.4 (3.7) % Office and general expenses 87.3 83.9 4.1 % 154.4 167.8 (8.0) % Depreciation and amortization 10.7 11.7 (8.9) % 19.5 24.1 (19.0) % — (100.0) % Other asset impairment — — — 2.3 23.4 30.8 (24.1) % 39.1 16.1 142.4 % Operating income Interest expense and finance charges, net (16.4) (16.9) (33.2) (32.9) Foreign exchange gain (loss) 2.9 (6.5) 8.4 (13.2) Other, net (0.7) 0.6 (4.1) 1.0 Income tax expense (benefit) 2.1 2.0 2.8 (6.4) Equity in earnings (losses) of non-consolidated affiliates 0.2 — 0.3 0.1 7.3 6.0 7.7 (22.6) Net income (loss) Net income attributable to the noncontrolling interest (3.0) (2.5) (3.5) (3.4) Accretion on and net income allocated to convertible preference shares (3.5) (2.3) (5.6) (4.1) Net income (loss) attributable to MDC Partners $ 0.8 $ 1.1 $ (1.4) $ (30.1) Inc. common shareholders 6

REVENUE SUMMARY (US$ in millions, except percentages) Three Months Ended Six Months Ended Revenue $ % Change Revenue $ % Change June 30, 2018 $ 379.7 $ 706.7 Organic revenue growth (decline) (9.2) (2.4)% (12.1) (1.7)% Non-GAAP acquisitions (dispositions), net (4.2) (1.1)% 5.6 0.8% Foreign exchange impact (4.2) (1.1)% (9.3) (1.3)% (17.6) (4.6)% (15.8) (2.2)% Total Change $ 362.1 $ 690.9 June 30, 2019 Organic revenue decline of 2.4%, including a 200 basis points benefit from increased billable pass-through costs incurred on clients’ behalf from certain of our partner firms acting as principal. Non-GAAP acquisitions (dispositions), net largely due to impact of the divestiture of Kingsdale 7

REVENUE BY GEOGRAPHY AND SEGMENT (US$ in millions, except percentages) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Total Total Organic Revenue Total Total Organic Revenue Revenue Growth Growth (Decline) Revenue Growth Growth (Decline) United States $ 284.7 (3.6)% (3.8)% $ 547.7 (0.7)% (2.8)% Canada 24.6 (25.8)% (5.6)% 46.9 (21.1)% (4.8)% 309.3 (5.8)% (3.9)% 594.6 (2.7)% (3.0)% North America Other 52.9 3.0% 7.3% 96.3 0.9% 6.4% Total $ 362.1 (4.6)% (2.4)% $ 690.9 (2.2)% (1.7)% Global Integrated Agencies $ 154.4 (2.4)% (0.6)% $ 284.1 (1.3)% 1.0% Domestic Creative Agencies 65.2 (10.7)% (10.1)% 132.2 (5.3)% (4.7)% Specialist Communication 47.2 17.0% 15.1% 86.1 8.8% 7.0% Media Services 21.3 (0.3)% (0.3)% 41.5 (9.9)% (9.9)% All Other 74.1 (14.8)% (8.0)% 147.0 (4.7)% (6.1)% Total $ 362.1 (4.6)% (2.4)% $ 690.9 (2.2)% (1.7)% 1 Due to changes in the composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments.The changes were as follows: 1) Doner, previously within the Global Integrated Agencies category is now aggregated into the Domestic Creative Agencies reportable segment, 2) Yes and Co, previously within the Media Services category, was included within the Domestic Creative Agencies reportable segment, and 3) HL Design and Redscout, previously within Specialist Communications and All Other category, respectively are included in Yes & Company. Note: Actuals may not foot due to rounding 8

REVENUE BY CLIENT INDUSTRY Q2 2019 Mix Year-over-Year Growth by Category Top 10 clients increased to 24% of revenue versus 23% a year ago (largest <5.1%) 9