Business Wire | May 5, 2021 07:00AM EDT

The Stagwell Marketing Group Reports Strong Adjusted EBITDA Growth for the Three Months Ended March 31, 2021, in the Face of Another COVID-Impacted Quarter

May 05, 2021

WASHINGTON--(BUSINESS WIRE)--May 05, 2021--Stagwell Media LP, which has entered into a definitive transaction agreement to combine its businesses with MDC Partners (Nasdaq: MDCA), announced financial results for its holding company Stagwell Marketing Group LLC ("Stagwell" or the "Company") for the three months ended March 31, 2021.

Stagwell Partner Jay Leveton stated, "Despite this being a non-political year and a very challenging environment for our travel and entertainment focused businesses, Stagwell delivered continued net revenue and Adjusted EBITDA growth in the first quarter. We expect the recovery of travel and entertainment to begin in earnest in Q2 with the successful rollout of the vaccines in the United States. The rest of the portfolio showed strong double-digit revenue and Adjusted EBITDA growth as our digital transformation & digital marketing, research for corporate and communications, public affairs, and advocacy offerings continue to resonate in the marketplace. We expect that momentum to continue through the remainder of 2021."

"Stagwell achieved double-digit Adjusted EBITDA growth on an as reported basis in the first quarter of 2021 compared to first quarter of 2020. However, when comparing our Communications, Public Affairs, and Advocacy segment's first quarter 2021 results against the first quarter of 2019, the most recent off-cycle period, and include pre-acquisition results, Stagwell reported 41% Adjusted EBITDA growth," remarked Stagwell Chief Financial Officer Ryan Greene. "Adjusted EBITDA was in line with our internal expectations and consistent with our regular quarterly cadence and the seasonality in our business, which is always stronger in the back half of the calendar year given some of our services are driven by shopping, travel and off-cycle election work."

Three Months Ended March 31, 2021 Results

Stagwell GAAP revenue declined $3.3 million, or 1.8%, to $181.2 million. This included organic revenue decline of $12.8 million, or 6.9%. Inorganic revenue was $9.7 million, and we recorded a foreign exchange impact on GAAP revenue of $0.1 million. Stagwell 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 $23.2 million as compared to $33.7 million for the first quarter of 2020, which represents a decrease of $10.5 million or 31.3%, that was primarily due to decrease pass through costs related to political work recognized in the first quarter of 2020 that were not recognized in the first quarter of 2021.

Net revenue, after deducting third-party direct costs, was $158.1 million as compared to $150.8 million for the first quarter of 2020, which represents an increase of $7.2 million or 4.8%. This included an organic revenue decline of $1.9 million, or 1.3%. The decline was almost entirely attributable to a $13.4 million decline in our Digital - Content segment that includes our global travel marketing brand. However, this decline was largely offset by increases across all of our other segments totaling $11.4 million, which were led by our digital transformation, performance marketing and market research businesses. Inorganic revenue was $9.3 million where we continued to make certain strategic investments in digital transformation and strategic corporate communication businesses. We also recorded a foreign exchange impact on net revenue of $0.1 million.

Net income was $4.6 million as compared to net income of $12.5 million in the first quarter of 2020, a decrease of $7.9 million, or 63.2%. The decrease was due to increases in certain operating and non-operating expenses less the net revenue increase noted above. Our operating expenses increased $12.0 million, which consisted of $5.5 million of costs incurred to support net revenue growth, $3.9 million of non-cash deferred acquisition consideration expense, and $2.6 million of transaction expenses. Additionally, our non-operating expenses increased by $3.1 million, or 181.4%, which was due to foreign exchange gains recognized in the first quarter of 2020 that were not recognized in the first quarter of 2021.

Adjusted EBITDA was $23.8 million as compared to $21.6 million in the first quarter of 2020, an increase of $2.2 million, or 10.2%, driven by strong performance in Stagwell's Digital - Marketing and Research - Corporate segments. In addition, Adjusted EBITDA margin was 13.2%, up from 11.7% in the first quarter of 2020.

Live Webcast

Management will host a live webcast on Wednesday, May 5, 2021, at 9:00 a.m. (ET) to discuss its first quarter results. Registration for the webcast can be completed by visiting the following website: https://kvgo.com/openexchange-inc/stagwell-group-earnings-call. A live audio webcast will be available online at www.stagwellgroup.com. During the live webcast, investors will be able to submit questions via chat for the live Q&A session.

A replay of the webcast will be available for on-demand listening shortly after the completion of the webcast, at the same web link.

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 Media and its affiliates beneficially own 50,000 series 6 preference shares (representing 100% of the outstanding Series 6 preference shares) and 14,425,714 Class A shares (representing 19.8% of the outstanding Class A shares) of MDC.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. The forward-looking statements included in this press release have been prepared by, and are the responsibility of, Stagwell management. The independent auditors of Stagwell, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained within, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the forward-looking statements. Statements in this presentation that are not historical facts, 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 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 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;? * developments involving the proposed transaction with MDC to enter into a business combination with the Stagwell Marketing Group, LLC (the "Proposed Transaction"), ?the anticipated benefits of the Proposed Transaction; the likelihood of the Proposed Transaction being completed; the anticipated outcome of the Proposed Transaction; the tax impact of the Proposed Transaction on MDC and shareholders of MDC; the timing of the shareholder meeting to approve the Proposed Transaction (the "Special Meeting"); the shareholder approvals required for the Proposed Transaction; regulatory and stock exchange approval of the Proposed Transaction; and the timing of the implementation of the Proposed Transaction;? * 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, and Amendment No.3 filed on April 30, 2021, all of which are accessible on the SEC's website at www.sec.gov.

Cautionary Statement Regarding Estimated Results

The quarterly results presented in these materials for the 2021 and 2020 period are based on calculations or figures prepared internally. Therefore, the results presented in this press release for the three months ended March 31, 2021, including the non-GAAP reconciliation tables are estimates only, subject to revision and accordingly should not be relied upon and are not indicative of the results for the full year. For more information regarding factors that could cause actual results to differ from those described above, please see "Cautionary Statement Regarding Forward-Looking Statements".

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.

No Offer or Solicitation

This communication does not constitute an offer to buy or exchange, or the solicitation of an offer to sell or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This communication is not a substitute for any prospectus, proxy statement or any other document that MDC or a newly-formed company ("New MDC") may file with the SEC in connection with the Proposed Transaction. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.

No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act of 1933, as amended. The Proposed Transaction and distribution of this document may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No offering of securities will be made directly or indirectly, in or into any jurisdiction where to do so would be inconsistent with the laws of such jurisdiction.

Additional Information and Where to Find It

In connection with the Proposed Transaction, MDC and New MDC have filed with the SEC a registration statement on Form S-4 (the "Form S-4") on February 8, 2021, as amended on March 29, 2021, April 22, 2021 and April 30, 2021, that includes a proxy statement of MDC (together with the Form S-4, the "Proxy Statement/Prospectus"). This communication is not a substitute for the Proxy Statement/Prospectus or any other document MDC may file with the SEC in connection with the Proposed Transaction. When available, MDC will mail the Proxy Statement/Prospectus to its shareholders in connection with the votes to approve certain matters in connection with the Proposed Transaction.

INVESTORS AND SECURITYHOLDERS OF MDC ARE URGED TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION IN ITS/THEIR ENTIRETY (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) OR ANY DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain, free of charge, copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC, at the SEC's website at www.sec.gov. In addition, investors and securityholders are able to obtain free copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC and from MDC's website at http://www.mdc-partners.com.

The URLs in this announcement are intended to be inactive textual references only. They are not intended to be active hyperlinks to websites. The information on such websites, even if it might be accessible through a hyperlink resulting from the URLs or referenced herein, is not and shall not be deemed to be incorporated into this announcement. No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on such websites.

Participants in the Solicitation

MDC, New MDC and their respective directors and executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from MDC's shareholders with respect to the approvals required to complete the Proposed Transaction. More detailed information regarding the identity of these potential participants, and any direct or indirect interests they may have in the Proposed Transaction, by security holdings or otherwise, is set forth in the Proxy Statement/Prospectus filed with the SEC. Information regarding MDC's directors and executive officers is set forth in the definitive proxy statement on Schedule 14A filed by MDC with the SEC on May 26, 2020 and in the Annual Report on Form 10-K filed by MDC with the SEC on March 16, 2021. Additional information regarding the interests of participants in the solicitation of proxies in respect of the Special Meeting is included in the Proxy Statement/Prospectus filed with the SEC. These documents are available to the shareholders of MDC free of charge from the SEC's website at www.sec.gov and from MDC's website at www.mdc-partners.com.

You must not construe the contents of this document as legal, tax, regulatory, financial, accounting or other advice, and you are urged to consult with your own advisors with respect to legal, tax, regulatory, financial, accounting and other consequences of the Proposed Transaction, the suitability of the Proposed Transaction for you and other relevant matters concerning the Proposed Transaction.

SCHEDULE 1

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

(in thousands) 2021 2020

Net Revenue^(1) $ 158,074 $ 150,833

Third-party direct costs 23,168 33,710

Revenue 181,242 184,543



Operating expenses:

Cost of services sold 111,999 120,758

Office and general expenses 52,278 43,272

Depreciation and amortization 10,950 9,756

Total operating expenses 175,227 173,786



Operating income 6,015 10,757



Other expenses, net:

Interest expense, net (1,351) (911)

Other income, net 608 3,027

Income before taxes and equity in earnings of 5,272 12,873unconsolidated affiliates

Provision for income taxes (673) (459)

Income before equity in earnings of unconsolidated 4,599 12,414affiliates

Equity in earnings of unconsolidated affiliates 4 79

Net income 4,603 12,493

Less: Net income attributable to noncontrolling 1,153 1,138interests

Less: Net loss attributable to redeemable noncontrolling (915) (692)interests

Net income attributable to Stagwell Media LP $ 4,365 $ 12,047

(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. Net Revenue: GAAP Revenue adjusted to exclude certain third-party direct(1) 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

GAAP REVENUE

Three Months Ended

(in thousands, except percentages)

Revenue $

% Change

March 31, 2020

$

184,543

Organic revenue (1)

(12,813)

(6.9)%

Inorganic revenue

9,660

5.2%

Foreign exchange impact

(148)

(0.1)%

Total change

(3,301)

(1.8)%

March 31, 2021

$

181,242

SCHEDULE 2

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED REVENUE RECONCILIATION

GAAP REVENUE Three Months Ended

(in thousands, except percentages) Revenue $ % Change

March 31, 2020 $ 184,543

Organic revenue ^(1) (12,813) (6.9)%

Inorganic revenue 9,660 5.2%

Foreign exchange impact (148) (0.1)%

Total change (3,301) (1.8)%

March 31, 2021 $ 181,242

NET REVENUE(2)

Three Months Ended

(in thousands, except percentages)

Revenue $

% Change

March 31, 2020

$

150,833

Organic revenue (1)

(1,949)

(1.3)%

Inorganic revenue

9,338

6.2%

Foreign exchange impact

(148)

(0.1)%

Total change

7,241

4.8%

March 31, 2021

$

158,074

NET REVENUE ^(2) Three Months Ended

(in thousands, except percentages) Revenue $ % Change

March 31, 2020 $ 150,833

Organic revenue ^(1) (1,949) (1.3)%

Inorganic revenue 9,338 6.2%

Foreign exchange impact (148) (0.1)%

Total change 7,241 4.8%

March 31, 2021 $ 158,074

(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. "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(1) 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".

Net Revenue: GAAP Revenue adjusted to exclude certain third-party costs(2) 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

MANAGEMENT ADJUSTED RESULTS - GAAP REVENUE

Pro Forma

Consolidated

Company

Adjustments

Management

Adjusted

Consolidated

Company

Communications, Public Affairs and Advocacy

(in thousands)

Three Months Ended

March 31, 2020 - Pro

Forma

Three Months Ended

March 31, 2019 - Pro

Forma

March 31, 2020 - Management Adjusted

$ 194,061

$ (54,422)

$ 26,523

$ 166,162

Organic revenue (1)

(12,671)

11,122

16,777

15,228

Foreign exchange impact

(148)

-

-

(148)

Total change

(12,819)

11,122

16,777

15,080

March 31, 2021

$ 181,242

$ (43,300)

43,300

$ 181,242

SCHEDULE 3

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED MANAGEMENT ADJUSTED RESULTS

AdjustmentsMANAGEMENT ADJUSTEDRESULTS - GAAP REVENUE Communications, Public Management Pro Forma Affairs and Advocacy Adjusted Consolidated Three Months Three Months Ended Ended Consolidated Company(in thousands) March 31, March 31, Company 2020 - Pro 2019 - Pro

Forma Forma



March 31, 2020 - $ 194,061 $ (54,422) $ 26,523 $ 166,162Management Adjusted



Organic revenue ^(1) (12,671) 11,122 16,777 15,228

Foreign exchange impact (148) - - (148)

Total change (12,819) 11,122 16,777 15,080



March 31, 2021 $ 181,242 $ (43,300) 43,300 $ 181,242

MANAGEMENT ADJUSTED RESULTS - NET REVENUE(2)

Pro Forma

Consolidated

Company

Adjustments

Management

Adjusted

Consolidated

Company

Communications, Public Affairs and Advocacy

(in thousands)

Three Months Ended

March 31, 2020 - Pro

Forma

Three Months Ended

March 31, 2019 - Pro

Forma

March 31, 2020 - Management Adjusted

$ 160,029

$ (28,568)

$ 18,534

$ 149,995

Organic revenue (1)

(1,807)

(512)

10,546

8,227

Foreign exchange impact

(148)

-

-

(148)

Total change

(1,955)

(512)

10,546

8,079

March 31, 2021

$ 158,074

$ (29,080)

29,080

$ 158,074

AdjustmentsMANAGEMENT ADJUSTED RESULTS- NET REVENUE ^(2) Communications, Public Management Pro Forma Affairs and Advocacy Adjusted Consolidated Three Months Three Months Ended Ended Consolidated Company(in thousands) March 31, March 31, Company 2020 - Pro 2019 - Pro

Forma Forma



March 31, 2020 - Management $ 160,029 $ (28,568) $ 18,534 $ 149,995Adjusted



Organic revenue ^(1) (1,807) (512) 10,546 8,227

Foreign exchange impact (148) - - (148)

Total change (1,955) (512) 10,546 8,079



March 31, 2021 $ 158,074 $ (29,080) 29,080 $ 158,074

MANAGEMENT ADJUSTED RESULTS - ADJUSTED EBITDA(2)

Pro Forma

Consolidated

Company

Adjustments

Management

Adjusted

Consolidated

Company

Communications, Public Affairs and Advocacy

(in thousands)

Three Months Ended

March 31, 2020 - Pro

Forma

Three Months Ended

March 31, 2019 - Pro

Forma

March 31, 2020 - Management Adjusted

$ 23,474

$ (10,482)

$ 3,954

$ 16,946

Total change

368

10,482

(3,954)

6,896

March 31, 2021

$ 23,842

$ -

$ -

$ 23,842

AdjustmentsMANAGEMENT ADJUSTED RESULTS- ADJUSTED EBITDA ^(2) Communications, Public Management Pro Forma Affairs and Advocacy Adjusted Consolidated Three Months Three Months Ended Ended Consolidated Company(in thousands) March 31, March 31, Company 2020 - Pro 2019 - Pro

Forma Forma



March 31, 2020 - Management $ 23,474 $ (10,482) $ 3,954 $ 16,946Adjusted

Total change 368 10,482 (3,954) 6,896

March 31, 2021 $ 23,842 $ - $ - $ 23,842



(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. "Organic revenue growth" and "organic revenue decline" refer to the positive or negative results, respectively, of subtracting both the(1) 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".

Net Revenue: Pro Forma GAAP Revenue adjusted to exclude certain(2) 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)

March 31,

2021

(Unaudited)

December 31,

2020

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

$

53,784

$

92,457

Accounts receivable, net

166,492

225,733

Expenditures billable to clients

16,445

11,063

Other current assets

37,890

36,433

Total current assets

274,611

365,686

Investments

2,456

14,256

Property and equipment, net

36,677

35,614

Goodwill

351,571

351,725

Intangible assets, net

178,096

186,035

Right-of-use assets - operating leases

52,642

57,752

Other assets

2,768

2,787

Total assets

$

898,821

$

1,013,855

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

79,479

$

147,826

Accruals and other liabilities

86,400

89,562

Current maturities of long-term debt

745

994

Advanced billings

67,444

66,418

Current portion of operating lease liabilities

19,299

19,579

Current portion of deferred acquisition consideration

5,610

12,579

Total current liabilities

258,977

336,958

Long-term debt, net

183,698

198,024

Long-term portion of deferred acquisition consideration

9,075

5,268

Lease liabilities - operating leases

48,134

52,606

Deferred tax liabilities, net

15,901

16,050

Other liabilities

7,775

5,802

Total liabilities

523,560

614,708

Commitments and contingencies

Redeemable noncontrolling interest

89

604

Member's equity

345,122

358,756

Noncontrolling interest

30,050

39,787

Total equity

375,172

398,543

Total liabilities, redeemable noncontrolling interest and equity

$

898,821

$

$ 1,013,855

SCHEDULE 4

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,(in thousands) 2021 2020 (Unaudited)

ASSETS

Current assets:

Cash, cash equivalents and restricted cash $ 53,784 $ 92,457

Accounts receivable, net 166,492 225,733

Expenditures billable to clients 16,445 11,063

Other current assets 37,890 36,433

Total current assets 274,611 365,686

Investments 2,456 14,256

Property and equipment, net 36,677 35,614

Goodwill 351,571 351,725

Intangible assets, net 178,096 186,035

Right-of-use assets - operating leases 52,642 57,752

Other assets 2,768 2,787

Total assets $ 898,821 $ 1,013,855



LIABILITIES AND EQUITY

Current liabilities:

Accounts payable $ 79,479 $ 147,826

Accruals and other liabilities 86,400 89,562

Current maturities of long-term debt 745 994

Advanced billings 67,444 66,418

Current portion of operating lease liabilities 19,299 19,579

Current portion of deferred acquisition 5,610 12,579consideration

Total current liabilities 258,977 336,958

Long-term debt, net 183,698 198,024

Long-term portion of deferred acquisition 9,075 5,268consideration

Lease liabilities - operating leases 48,134 52,606

Deferred tax liabilities, net 15,901 16,050

Other liabilities 7,775 5,802

Total liabilities 523,560 614,708



Commitments and contingencies



Redeemable noncontrolling interest 89 604



Member's equity 345,122 358,756

Noncontrolling interest 30,050 39,787

Total equity 375,172 398,543

Total liabilities, redeemable noncontrolling $ 898,821 $ $interest and equity 1,013,855

SCHEDULE 5

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED SUMMARY CASH FLOW DATA

Three Months Ended March 31,

(in thousands)

2021

2020

Net cash provided by operating activities

$

5,771

$

7,968

Net cash used in investing activities

(3,311)

(4,358)

Net cash (used in) provided by financing activities

(41,142)

80,019

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

9

989

Net increase in cash, cash equivalents and restricted cash

(38,673)

84,618

Cash, cash equivalents and restricted cash at beginning of period

92,457

63,860

Cash, cash equivalents and restricted cash at end of period

$

53,784

$

148,478

Supplemental cash flow information:

Cash interest paid

$

(2,361)

$

(1,871)

Income taxes paid

(928)

(2,105)

Non-cash investing and financing activities:

Acquisitions of business

-

(23,720)

Unrealized gain on investments

-

1,376

Contributions by Stagwell Media LP

10,268

18,920

Distributions to Stagwell Media LP

(13,000)

-

Payment of deferred acquisition consideration

(7,080)

-

SCHEDULE 5

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED SUMMARY CASH FLOW DATA

Three Months Ended March 31,

(in thousands) 2021 2020

Net cash provided by operating activities $ 5,771 $ 7,968

Net cash used in investing activities (3,311) (4,358)

Net cash (used in) provided by financing activities (41,142) 80,019

Effect of exchange rate changes on cash, cash 9 989equivalents and restricted cash

Net increase in cash, cash equivalents and restricted (38,673) 84,618cash

Cash, cash equivalents and restricted cash at beginning 92,457 63,860of period

Cash, cash equivalents and restricted cash at end of $ 53,784 $ 148,478period



Supplemental cash flow information:

Cash interest paid $ (2,361) $ (1,871)

Income taxes paid (928) (2,105)

Non-cash investing and financing activities:

Acquisitions of business - (23,720)

Unrealized gain on investments - 1,376

Contributions by Stagwell Media LP 10,268 18,920

Distributions to Stagwell Media LP (13,000) -

Payment of deferred acquisition consideration (7,080) -

SCHEDULE 6

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

Three Months Ended March 31,

(in thousands)

2021

2020

Net income

$

4,603

$

12,493

Equity in earnings of unconsolidated affiliates

(4)

(79)

Provision for income taxes

673

459

Other income, net

(608)

(3,027)

Interest expense, net

1,351

911

Depreciation and amortization

10,950

9,756

Deferred acquisition consideration adjustments

3,936

-

Other items, net

2,941

1,118

Adjusted EBITDA

$

23,842

$

21,631

Note: Actuals may not foot due to rounding.

SCHEDULE 6

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

Three Months Ended March 31,

(in thousands) 2021 2020

Net income $ 4,603 $ 12,493

Equity in earnings of unconsolidated affiliates (4) (79)

Provision for income taxes 673 459

Other income, net (608) (3,027)

Interest expense, net 1,351 911

Depreciation and amortization 10,950 9,756

Deferred acquisition consideration adjustments 3,936 -

Other items, net 2,941 1,118

Adjusted EBITDA $ 23,842 $ 21,631

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

(in thousands) Q1 Q2 Q3 Q4 YTD Q1

INORGANIC GAAP REVENUE

GAAP Revenue $ 184,543 $ 162,330 $ 228,097 $ 313,062 $ 888,032 $ 181,242

Less: Organic GAAPrevenue for the (154,822) (140,923) (216,959) (299,785) 812,488 (171,435)period

Foreign exchange (847) 188 760 478 579 (147)impact

Inorganic GAAP $ 28,874 $ 21,595 $ 11,898 $ 13,755 $ 76,123 $ 9,660Revenue



INORGANIC NET REVENUE

GAAP revenue $ 184,543 $ 162,330 $ 228,097 $ 313,062 $ 888,032 $ 181,242

Third-party direct (33,710) (31,971) (75,238) (113,882) (254,801) (23,168)costs

Net revenue 150,833 130,359 152,859 199,180 633,231 158,074

Less: Organic Netrevenue for the (125,733) (112,795) (142,289) (186,472) (567,289) (148,589)period

Foreign exchange (847) 188 760 478 579 (147)impact

Inorganic Net $ 24,253 $ 17,752 $ 11,330 $ 13,186 $ 66,521 $ 9,338Revenue



OTHER ITEMS, NET? ? ? ? ? ?

Acquisition-related $ 657? $ 478? $ 461? $ 9,393 ? $ 10,988 $ 2,646expenses ?

Other non-recurring - ? - ? - ? - ? - ? 295items?

Other restructuring 470? 865? 94? 1,489 ? 2,918 ? -costs?

Total other items, $ 1,127? $ 1,343 $ 555? $ 10,882 $ 13,906 $ 2,941net? ?



CASH INTEREST, NET & OTHER?

Cash interest paid? $ 1,871 ? $ 2,619 ? $ 2,798 ? $ 1,999 ? $ 9,287 ? $ 2,361

Interest income? 317 ? 225 ? 232 ? 234 ? 1,008 ? 200

Total cash $ 10,295interest, net & $ 2,188 ? $ 2,844 ? $ 3,030 ? $ 2,233 ? ? $ 2,561other?



CAPITAL EXPENDITURES, NET?

Capital $ 2,663 ? $ 2,654 ? $ 3,660 ? $ 3,122 ? $ 12,099 $ 3,311expenditures? ?



MISCELLANEOUS OTHER DISCLOSURES?

Net incomeattributable to $ 1,138 ? $ 1,671 ? $ 4,522? $ 10,900 $ 18,231 $ 1,153noncontrolling ? ?interest?

Net lossattributable toredeemable (692)? (1,097)? (908)? (429)? (3,126)? (915)noncontrollinginterest?

Cash taxes? 2,105 ? (795)? 2,308 ? 7,096 ? 10,714 928

Note: Actuals may not foot due to rounding.

SCHEDULE 8

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF CONSOLIDATED PRO FORMA RESULTS

Three Months Ended March 31, 2020

Historical Pro Forma Consolidated 2020(in thousands) Acquisitions^ Consolidated Company (1) Company

GAAP REVENUE

Digital - Marketing $ 50,548 $ 7,335 $ 57,883

Digital - Content 40,701 - 40,701

Research - Technology 16,310 - 16,310

Research - Corporate 12,314 - 12,314

Communications, Public Affairs 52,239 2,183 54,422and Advocacy

All Other 12,431 - 12,431

Total $ 184,543 $ 9,518 $ 194,061



Three Months Ended March 31, 2020

(in thousands)

Historical Consolidated

Company

2020 Acquisitions(1)

Pro Forma

Consolidated

Company

NET REVENUE

Digital - Marketing

$ 50,541

$ 7,334

$ 57,875

Digital - Content

36,139

-

36,139

Research - Technology

16,186

-

16,186

Research - Corporate

12,300

-

12,300

Communications, Public Affairs and Advocacy

26,706

1,862

28,568

All Other

8,961

-

8,961

Total

$ 150,833

$ 9,197

$ 160,029

Three Months Ended March 31, 2020

Historical Pro Forma Consolidated 2020(in thousands) Acquisitions^ Consolidated Company (1) Company

NET REVENUE

Digital - Marketing $ 50,541 $ 7,334 $ 57,875

Digital - Content 36,139 - 36,139

Research - Technology 16,186 - 16,186

Research - Corporate 12,300 - 12,300

Communications, Public Affairs 26,706 1,862 28,568and Advocacy

All Other 8,961 - 8,961

Total $ 150,833 $ 9,197 $ 160,029



Three Months Ended March 31, 2020

(in thousands)

Historical Consolidated

Company

2020 Acquisitions(1)

Pro Forma

Consolidated

Company

ADJUSTED EBITDA

Digital - Marketing

$ 5,971

$ 1,456

$ 7,427

Digital - Content

988

-

988

Research - Technology

3,788

-

3,788

Research - Corporate

1,180

-

1,180

Communications, Public Affairs and Advocacy

10,095

387

10,482

All Other

(184)

-

(184)

Corporate

(207)

-

(207)

Total

$ 21,631

$ 1,843

$ 23,474

Three Months Ended March 31, 2020

Historical Pro Forma Consolidated 2020(in thousands) Acquisitions^ Consolidated Company (1) Company

ADJUSTED EBITDA

Digital - Marketing $ 5,971 $ 1,456 $ 7,427

Digital - Content 988 - 988

Research - Technology 3,788 - 3,788

Research - Corporate 1,180 - 1,180

Communications, Public Affairs 10,095 387 10,482and Advocacy

All Other (184) - (184)

Corporate (207) - (207)

Total $ 21,631 $ 1,843 $ 23,474



(1)

Represents results of our acquired businesses for the respective period prior to acquisition by the Company.

Note: Actuals may not foot due to rounding.(1) Represents results of our acquired businesses for the respective period prior to acquisition by the Company.

Note: Actuals may not foot due to rounding.SCHEDULE 9

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF CONSOLIDATED PRO FORMA RESULTS

Three Months Ended March 31, 2019

(in thousands)

Historical

Consolidated

Company

2019

Acquisitions(1)

2020

Acquisitions(1)

Pro Forma

Consolidated

Company

GAAP REVENUE

Digital - Marketing

$ 49,855

$ 5,488

$ 6,536

$ 61,879

Digital - Content

23,183

30,773

-

53,956

Research - Technology

13,728

-

-

13,728

Research - Corporate

12,562

-

-

12,562

Communications, Public Affairs and Advocacy

22,520

-

4,003

26,523

All Other

8,368

-

-

8,368

Total

$ 130,216

$ 36,261

$ 10,539

$ 177,016

SCHEDULE 9

STAGWELL MARKETING GROUP LLC AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF CONSOLIDATED PRO FORMA RESULTS

Three Months Ended March 31, 2019

Historical 2019 2020 Pro Forma

(in thousands) Consolidated Acquisitions Acquisitions Consolidated ^(1) ^(1) Company Company

GAAP REVENUE

Digital - Marketing $ 49,855 $ 5,488 $ 6,536 $ 61,879

Digital - Content 23,183 30,773 - 53,956

Research - Technology 13,728 - - 13,728

Research - Corporate 12,562 - - 12,562

Communications, Public 22,520 - 4,003 26,523Affairs and Advocacy

All Other 8,368 - - 8,368

Total $ 130,216 $ 36,261 $ 10,539 $ 177,016



Three Months Ended March 31, 2019

(in thousands)

Historical

Consolidated

Company

2019

Acquisitions(1)

2020

Acquisitions(1)

Pro Forma

Consolidated

Company

NET REVENUE

Digital - Marketing

$ 49,446

$ 5,336

$ 6,536

$ 61,318

Digital - Content

23,183

23,769

-

46,952

Research - Technology

13,649

-

-

13,649

Research - Corporate

12,506

-

-

12,506

Communications, Public Affairs and Advocacy

14,947

-

3,587

18,534

All Other

8,366

-

-

8,366

Total

$ 122,097

$ 29,105

$ 10,123

$ 161,325

Three Months Ended March 31, 2019

Historical 2019 2020 Pro Forma

(in thousands) Consolidated Acquisitions Acquisitions Consolidated ^(1) ^(1) Company Company

NET REVENUE

Digital - Marketing $ 49,446 $ 5,336 $ 6,536 $ 61,318

Digital - Content 23,183 23,769 - 46,952

Research - Technology 13,649 - - 13,649

Research - Corporate 12,506 - - 12,506

Communications, Public 14,947 - 3,587 18,534Affairs and Advocacy

All Other 8,366 - - 8,366

Total $ 122,097 $ 29,105 $ 10,123 $ 161,325



Three Months Ended March 31, 2019

(in thousands)

Historical

Consolidated

Company

2019

Acquisitions(1)

2020

Acquisitions(1)

Pro Forma

Consolidated

Company

ADJUSTED EBITDA

Digital - Marketing

$ 6,917

$ 1,073

$ 1,026

$ 9,016

Digital - Content

2,213

2,014

-

4,227

Research - Technology

3,064

-

-

3,064

Research - Corporate

1,699

-

-

1,699

Communications, Public Affairs and Advocacy

3,029

-

926

3,954

All Other

257

-

-

257

Corporate

344

-

-

344

Total

$ 17,523

$ 3,087

$ 1,952

$ 22,561

Three Months Ended March 31, 2019

Historical 2019 2020 Pro Forma

(in thousands) Consolidated Acquisitions Acquisitions Consolidated ^(1) ^(1) Company Company

ADJUSTED EBITDA

Digital - Marketing $ 6,917 $ 1,073 $ 1,026 $ 9,016

Digital - Content 2,213 2,014 - 4,227

Research - Technology 3,064 - - 3,064

Research - Corporate 1,699 - - 1,699

Communications, Public 3,029 - 926 3,954Affairs and Advocacy

All Other 257 - - 257

Corporate 344 - - 344

Total $ 17,523 $ 3,087 $ 1,952 $ 22,561



(1)

Represents results of our acquired businesses for the respective period prior to acquisition by the Company.

Note: Actuals may not foot due to rounding. View source version on businesswire.com: https://www.businesswire.com/news/home/20210505005518/en/

CONTACT: Beth Lester Sidhu beth@stagwellgroup.com 202-423-4414