MDC Partners released its latest earnings report after closing bell tonight, posting losses of 47 cents per share on $309 million in revenue, representing a 2.3% year over year increase. Analysts had been expecting the embattled firm to post losses of 10 cents per share on $323.5 million in revenue for the first quarter.
MDC Partners stock plunges after miss
MDC Partners’ adjusted EBITDA improved 5.3% to $32.8 million from last year’s $31.2 million, while the adjusted EBITDA margin expanded 30 basis points to 10.6%. The firm’s adjusted EBITDA available for general capital purposes rose 23.8% to $12.7 million. The firm said it had $19.8 million in net new business wins.
The firm also refinanced its debt by issuing $900 million in 6.5% Senior Notes with an extended maturity and savings of 25 basis points and by extending its $325 million revolving credit facility with another reduction of 25 basis points in the rate.
MDC management continues to expect full-year revenue of $1.4 billion to $1.44 billion and adjusted EBITDA of $225 million to $235 million. They reduced their outlook for adjusted EBITDA available for general capital purposes from the previous range of $135 million to $145 million to between $130 illion and $140 million.
Shares of MDC Partners plunged 5.02% to $18.75 in after-hours trades following tonight’s earnings report.
MDC Partners under fire
On the earnings call, investors and analysts will likely be looking for more information pertaining to the recent attack posed by short-seller Gotham City Research. Daniel Yu, who heads up Gotham, believes the firm is worth less than $1 per share and called it “like Valeant Pharmaceuticals, but with understated debts.” In a report last week, Gotham accused MDC Partners of looking like “an exceptionally poor company, bleeding cash & issuing debt.”
A spokesperson for MDC emailed ValueWalk last week to remind Wall Street that the firm was in a pre-earnings quiet period and thus could not comment on Gotham’s accusations or defend itself at that time. The spokesperson also said management is confident in their financial reporting and accounting practices and that they planned to defend the firm “against the false and misleading accusations of this short seller report,” which they said was “solely focused on destroying the value we are creating for our shareholders for their own personal gain.”