MDC Partners Q1: Revenue Down 10%; Profit Comes Following Mass Layoffs
MDC Partners saw revenue tumble 10 percent to $127 million in Q1 2009; net income rose to $400,000, from a loss of $1.3 million last year. The slide comes on the heels of hundreds of layoffs at Accent Marketing, MDC’s customer call center operation, following a massive cut by a single client.
Despite MDC coming down to earth, CEO Miles Nadal reaffirmed that he believed MDC will meet its guidance for 2009, which is growth in both revenues and net income.
Goodwill — the intangible asset that makes up nearly half of MDC’s assets — was flat at $238 million. It will be interesting to see if the decline in business at Accent will be reflected on the goodwill line as the year goes on.
MDC responded to the tough quarter by cutting its operating expenses, from $139 million to $125 million. It was that cut that created MDC’s profit.
But the cut did not make the company any more efficient. The revenue yield on every dollar spent on salaries and office expenses was $1.02, up from just $1.01 last year — remaining far below the productivity of the larger agency holding companies.
Nadal said in his conference call that Q1 had been “very difficult” and that “the first two months of the year were nearly void of new business.” he also noted that there were “cutbacks in fees and delays in project activity.”
But, he said, the recession in the U.S. would eventually work to MDC’s advantage:
Our focus on the U.S. is actually a benefit because the U.S. went into recession first and will emerge first.
- See previous coverage of MDC Partners:
- 163 Laid Off at Accent Marketing, the Agency That’s a Big Chunk of MDC Partners’ Revenues
- Cliff Freeman CEO Exits After Fla. Lottery Pitch Loss; Twitter Trail Tells Strange Tale
- MDC Q1 Preview: Freeman Off the Books; Goodwill “Unimpaired”; Nadal Does a Curious Art Deal
- Does MDC Partners Have a “Goodwill” Problem?
- MDC Partners Q4: Cliff Freeman Mystery Deepens
- MDC Cuts Cliff Freeman Free; Venerable Agency’s Options Get Narrower
- Cliff Freeman Loses Quiznos; Agency Survival in Question
- Cliff Freeman in Freefall? Client Gains Don’t Seem Big Enough to Cover Lost Revenue
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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