STGW 8-K
Stagwell Inc (STGW)
8-K
2022-03-08
For: 2022-03-08
View Original
Added on
April 10, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) — March 8, 2022
(Exact Name of Registrant as Specified in its Charter)
| (Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices and zip code)
(646 ) 429-1800
(Registrant’s Telephone Number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02 Results of Operations and Financial Condition
On March 8, 2022, Stagwell Inc. (the “Company”) issued an earnings release reporting its financial results for the three and twelve months ended December 31, 2021. A copy of this earnings release is attached as Exhibit 99.1 hereto. Following the issuance of this earnings release, the Company will host an earnings call in which its standalone financial results for the three and twelve months ended December 31, 2021 will be discussed. The investor presentation to be used for the call is attached as Exhibit 99.2 hereto.
The Company has posted the materials attached as Exhibit 99.1, and 99.2 on its website (www.stagwellglobal.com). The information found on, or otherwise accessible through, the Company’s website is not incorporated into, and does not form a part of, this Current Report on Form 8-K.
The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02 - Results of Operations and Financial Condition”. Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
The foregoing information and the exhibits hereto contain forward-looking statements within the meaning of the federal securities laws. These statements are based on present expectations, and are subject to the limitations listed therein and in the Company’s other SEC reports, including that actual events or results may differ materially from those in the forward-looking statements.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press release dated March 8, 2022, relating to the Company’s results for the three and twelve months ended December 31, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed by the undersigned hereunto duly authorized.
| Date: March 8, 2022 | Stagwell Inc. | |||||||
| By: | /s/ Frank Lanuto | |||||||
| Frank Lanuto | ||||||||
| Chief Financial Officer | ||||||||
FOR IMMEDIATE ISSUE
| CONTACTS: | |||||||||||||||||||||||
| For Investors: | For Media | ||||||||||||||||||||||
| Michaela Pewarski | Beth Sidhu | ||||||||||||||||||||||
| (646) 429-1812 | (202) 423-4414 | ||||||||||||||||||||||
STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021
Record first full-year financial results at Stagwell Inc. were fueled by fast growing digital transformation and digital marketing services, expansion of global media and large client wins
•GAAP Revenue growth of 95.5% in 4Q and 65.5% for the Full-Year
•Pro Forma Organic Net Revenue growth of 11.3% in 4Q and 14.5% for the Full-Year
•Ex-Advocacy Pro Forma Organic Net Revenue growth of 21.2% in 4Q and 18.0% for the Full-Year
•Net Income attributable to Stagwell of $0.8M in 4Q and Net Income of $21.0M for the Full-Year
•Pro Forma Adjusted EBITDA of $103.6M in 4Q and $378.0M for the Full-Year
•Issues 2022 Pro Forma Net Revenue growth guidance of 18%-22% and 13%-17% ex-Advocacy
•Issues 2022 Adjusted EBITDA guidance of $450M - $480M and ProForma Free Cash Flow growth of ~30%
New York, NY, March 8, 2022 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three and twelve months ended December 31, 2021.
REPORTED FOURTH QUARTER & YTD HIGHLIGHTS:
•Fourth quarter revenue of $611.9 million, an increase of 95.5% versus the prior year period; full-year revenue of $1,469.4 million, an increase of 65.5% versus a year ago.
•Fourth quarter net revenue of $519.7 million, an increase of 160.9% versus the prior period; full-year net revenue of $1,268.9 million, an increase of 100.4% versus a year ago.
•Fourth quarter net income attributable to Stagwell Inc. common shareholders of $0.8 million versus net income of $22.2 million in the prior year period; full-year net income of $21.0 million versus $56.4 million in the prior year period.
•Fourth quarter adjusted EBITDA of $103.6 million, an increase of 61.3% versus the prior year period; full-year adjusted EBITDA of $253.7 million an increase of 77.2% versus a year ago.
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PRO FORMA FOURTH QUARTER & YTD STAGWELL INC. HIGHLIGHTS:
•Fourth quarter Pro Forma revenue of $611.9 million, a decline of 4.6% versus the prior year period and an increase of 18.0% ex-Advocacy; full-year Pro Forma revenue of $2,224.3 million, an increase of 6.6% and an increase of 18.2% ex-Advocacy versus the prior year period.
•Fourth quarter Pro Forma net revenue of $519.7 million, an increase of 10.4% and 20.2% ex-Advocacy vs. a year ago; full-year Pro Forma net revenue of $1,926.8 million, an increase of 16.4% and 20.0% ex-Advocacy versus the prior year period.
•Fourth quarter Pro Forma organic net revenue increased 11.3% and 21.2% ex-Advocacy versus a year ago; full-year Pro Forma organic net revenue increased 14.5% and 18.0% ex-Advocacy versus a year ago.
•Fourth quarter Pro Forma adjusted EBITDA was $103.6 million, a decrease of 5.1% versus the prior year period and an increase of 31.2% ex-Advocacy; full-year Pro Forma adjusted EBITDA was $378.0 million, an increase of 19.6% versus the prior year period and an increase of 41.4% ex-Advocacy.
•Fourth quarter Pro Forma adjusted EBITDA margin was 19.9% of net revenue and full-year adjusted EBITDA margin was 19.6% of net revenue.
•Net New Business wins totaled $75 million in the fourth quarter.
“2021 was a breakthrough year for Stagwell. Our full-year results and 2022 outlook are a clear affirmation of the combination and Stagwell’s unique position as the challenger that will transform marketing,” said Mark Penn, Chairman and Chief Executive Officer. “We delivered pro forma organic net revenue growth of 14.5% for the year and an even more impressive 18% organic growth when excluding our Advocacy businesses, which lapped the 2020 election cycle.”
“Our record year was driven by tailwinds across our high concentration of leading digital capabilities, including digital transformation, influencer and global performance marketing; as well as a rapid acceleration in large contract wins,” Penn continued. “Our robust 2022 outlook reflects our expectation for continued digital strength; continued acceleration in scaled, integrated contract wins; and significant growth in the second-half in our Advocacy businesses driven by an anticipated record year of spend during the 2022 U.S. mid-term elections."
Frank Lanuto, Chief Financial Officer, commented: "The Company reported strong fourth quarter net revenue of $520 million, representing pro forma net revenue growth of 10.4% year-over-year with 11.3% organic growth. Strong operating performance led to pro forma adjusted EBITDA margins of 19.9% for the quarter. Effective cash flow management permitted our continued acquisitions of both minority interests in our fastest growing subsidiaries as well as the acquisition of Goodstuff in the UK while lowering our net leverage ratio from the prior quarter.”
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Financial Outlook
2022 financial guidance is as follows:
•Pro Forma Net Revenue growth of 18% – 22%
•Pro Forma Net Revenue growth ex-Advocacy of 13% – 17%
•Adjusted EBITDA of $450 million - $480 million
•Pro Forma Free Cash Flow growth of approximately 30%
•Guidance assumes no impact from foreign exchange or acquisitions or dispositions.
| * The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information. | |||||
Webcast
Management will host a video webcast on Tuesday, March 8, 2022, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and twelve months ended December 31, 2021. The video webcast will be accessible at https://stagwellq4andfullyear2021earnings.open-exchange.net. An investor presentation has been posted on our website at www.stagwellglobal.com/investors 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 Inc.
Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world's most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our 10,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.
Basis of Presentation
The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statement of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entire period presented.
Non-GAAP Financial Measures
In addition to its reported results, Stagwell Inc has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) 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:
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Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.
(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition 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, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.
(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.
(4) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.
(5) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.
Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.
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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.
Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows 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 combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, 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;
•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 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 Exhibit 99.2 to our Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on August 10, 2021, and accessible on the SEC’s website at www.sec.gov., under the caption “Risk Factors,” and in the Company’s other SEC filings.
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SCHEDULE 1
STAGWELL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ in 000s, Except per Share Amounts)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenue | $ | 611,927 | $ | 313,062 | $ | 1,469,363 | $ | 888,032 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Cost of services | 348,000 | 198,524 | 906,856 | 571,588 | |||||||||||||||||||
| Office and general expenses | 197,318 | 64,498 | 424,038 | 191,679 | |||||||||||||||||||
| Depreciation and amortization | 31,381 | 11,187 | 77,503 | 41,025 | |||||||||||||||||||
| Impairment and other losses | 1,314 | — | 16,240 | — | |||||||||||||||||||
| 578,013 | 274,209 | 1,424,637 | 804,292 | ||||||||||||||||||||
| Operating income | 33,914 | 38,853 | 44,726 | 83,740 | |||||||||||||||||||
| Other Income (expenses): | |||||||||||||||||||||||
| Interest expense, net | (16,697) | (1,558) | (31,894) | (6,223) | |||||||||||||||||||
| Foreign exchange, net | (1,377) | (1,515) | (3,332) | (721) | |||||||||||||||||||
| Gain on sale of business and other, net | 3,252 | (404) | 50,058 | 544 | |||||||||||||||||||
| (14,822) | (3,477) | 14,832 | (6,400) | ||||||||||||||||||||
| Income before income taxes and equity in earnings of non-consolidated affiliates | 19,092 | 35,376 | 59,558 | 77,340 | |||||||||||||||||||
| Income tax expense | 14,193 | 2,726 | 23,398 | 5,937 | |||||||||||||||||||
| Income before equity in earnings of non-consolidated affiliates | 4,899 | 32,650 | 36,160 | 71,403 | |||||||||||||||||||
| Equity in (income) losses of non-consolidated affiliates | (165) | 51 | (240) | 58 | |||||||||||||||||||
| Net income | 4,734 | 32,701 | 35,920 | 71,461 | |||||||||||||||||||
| Net income attributable to noncontrolling and redeemable noncontrolling interests | (3,897) | (10,469) | (14,884) | (15,105) | |||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | 837 | $ | 22,232 | $ | 21,036 | $ | 56,356 | |||||||||||||||
| Income (Loss) Per Common Share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 0.01 | N/A | $ | (0.03) | N/A | |||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 0.01 | N/A | $ | (0.03) | N/A | |||||||||||||||||
| Weighted Average Number of Common Shares Outstanding: | |||||||||||||||||||||||
| Basic | 99,615,252 | N/A | 90,426,215 | N/A | |||||||||||||||||||
| Diluted | 104,065,980 | N/A | 90,426,215 | N/A | |||||||||||||||||||
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SCHEDULE 2
STAGWELL INC.
UNAUDITED PRO FORMA COMPONENTS OF NET REVENUE CHANGE
(US$ in 000s, except percentages)
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended December 31, 2020 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended December 31, 2021 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| Integrated Agencies Network | $ | 283,330 | $ | (8) | $ | 382 | $ | 42,614 | $ | 42,988 | $ | 326,318 | 15.0 | % | 15.2 | % | |||||||||||||||||||||||||||||||
| Media Network | 94,860 | 454 | — | 34,313 | 34,767 | 129,627 | 36.2 | % | 36.7 | % | |||||||||||||||||||||||||||||||||||||
| Communications Network | 86,780 | 3 | — | (26,005) | (26,002) | 60,778 | (30.0) | % | (30.0) | % | |||||||||||||||||||||||||||||||||||||
| All Other | 5,645 | 88 | (5,022) | 2,258 | (2,676) | 2,969 | 40.0 | % | (47.4) | % | |||||||||||||||||||||||||||||||||||||
| $ | 470,615 | $ | 537 | $ | (4,640) | $ | 53,180 | $ | 49,077 | $ | 519,692 | 11.3 | % | 10.4 | % | ||||||||||||||||||||||||||||||||
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Twelve Months Ended December 31, 2020 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Twelve Months Ended December 31, 2021 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| Integrated Agencies Network | $ | 1,038,842 | $ | 9,265 | $ | 20,986 | $ | 189,337 | $ | 219,588 | $ | 1,258,430 | 18.2 | % | 21.1 | % | |||||||||||||||||||||||||||||||
| Media Network | 359,857 | 5,058 | — | 62,667 | 67,725 | 427,582 | 17.4 | % | 18.8 | % | |||||||||||||||||||||||||||||||||||||
| Communications Network | 236,045 | 594 | — | (21,810) | (21,216) | 214,829 | (9.2) | % | (9.0) | % | |||||||||||||||||||||||||||||||||||||
| All Other | 21,242 | 561 | (5,827) | 9,997 | 4,731 | 25,973 | 47.1 | % | 22.3 | % | |||||||||||||||||||||||||||||||||||||
| $ | 1,655,986 | $ | 15,478 | $ | 15,159 | $ | 240,191 | $ | 270,828 | $ | 1,926,814 | 14.5 | % | 16.4 | % | ||||||||||||||||||||||||||||||||
Note: Actuals may not foot due to rounding.
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SCHEDULE 3
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(US$ in 000s, except percentages)
For the Three Months Ended December 31, 2021
| Integrated Agencies Network | Media Network | Communications Network | All Other | Corporate | Total | ||||||||||||||||||||||||||||||
| Net Revenue | $ | 326,318 | $ | 129,627 | $ | 60,778 | $ | 2,969 | $ | — | $ | 519,692 | |||||||||||||||||||||||
| Billable Costs | 52,211 | 9,764 | 30,260 | — | — | 92,235 | |||||||||||||||||||||||||||||
| Revenue | 378,529 | 139,391 | 91,038 | 2,969 | — | 611,927 | |||||||||||||||||||||||||||||
| Billable Costs | 52,211 | 9,764 | 30,260 | — | — | 92,235 | |||||||||||||||||||||||||||||
| Staff costs | 210,918 | 71,742 | 36,877 | 1,634 | 9,466 | 330,637 | |||||||||||||||||||||||||||||
| Administrative costs | 33,332 | 16,363 | 6,583 | 563 | 3,503 | 60,344 | |||||||||||||||||||||||||||||
| Unbillable and other costs, net | 16,262 | 8,541 | 93 | 260 | (19) | 25,137 | |||||||||||||||||||||||||||||
Adjusted EBITDA (1) | 65,806 | 32,981 | 17,225 | 512 | (12,950) | 103,574 | |||||||||||||||||||||||||||||
| Stock-based compensation | 15,141 | 2,250 | 543 | 24 | 3,610 | 21,568 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 20,271 | 6,549 | 2,465 | 486 | 1,610 | 31,381 | |||||||||||||||||||||||||||||
| Deferred acquisition consideration | 9,001 | 184 | 80 | — | — | 9,265 | |||||||||||||||||||||||||||||
| Impairment and other losses | 1,314 | — | — | — | — | 1,314 | |||||||||||||||||||||||||||||
Other items, net (1) | 1,368 | 2,638 | 152 | — | 1,974 | 6,132 | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | 18,711 | $ | 21,360 | $ | 13,985 | $ | 2 | $ | (20,144) | $ | 33,914 | |||||||||||||||||||||||
(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA, Other items, net and Pro Forma adjusted EBITDA.
Note: Actuals may not foot due to rounding.
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SCHEDULE 4
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(US$ in 000s, except percentages)
For the Twelve Months Ended December 31, 2021
| Integrated Agencies Network | Media Network | Communications Network | All Other | Corporate | Total | ||||||||||||||||||||||||||||||
| Net Revenue | $ | 1,258,430 | $ | 427,582 | $ | 214,829 | $ | 25,973 | $ | — | $ | 1,926,814 | |||||||||||||||||||||||
| Billable Costs | 173,178 | 34,480 | 89,871 | — | — | 297,529 | |||||||||||||||||||||||||||||
| Revenue | 1,431,608 | 462,062 | 304,700 | 25,973 | — | 2,224,343 | |||||||||||||||||||||||||||||
| Billable Costs | 173,178 | 34,480 | 89,871 | — | — | 297,529 | |||||||||||||||||||||||||||||
| Staff costs | 786,766 | 260,245 | 138,200 | 17,023 | 35,487 | 1,237,721 | |||||||||||||||||||||||||||||
| Administrative costs | 124,843 | 59,266 | 22,474 | 9,783 | 5,511 | 221,877 | |||||||||||||||||||||||||||||
| Unbillable and other costs, net | 57,468 | 30,677 | 241 | 793 | 5 | 89,184 | |||||||||||||||||||||||||||||
Adjusted EBITDA (1) | 289,353 | 77,394 | 53,914 | (1,626) | (41,003) | 378,032 | |||||||||||||||||||||||||||||
| Stock-based compensation | 51,315 | 4,962 | 16,231 | 39 | 7,978 | 80,525 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 54,403 | 24,644 | 8,052 | 2,499 | 6,537 | 96,135 | |||||||||||||||||||||||||||||
| Deferred acquisition consideration | 35,840 | 286 | 28 | — | — | 36,154 | |||||||||||||||||||||||||||||
| Impairment and other losses | 2,269 | 14,846 | — | — | — | 17,115 | |||||||||||||||||||||||||||||
Other items, net (1) | 7,114 | 6,543 | 230 | — | 31,985 | 45,872 | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | 138,412 | $ | 26,113 | $ | 29,373 | $ | (4,164) | $ | (87,503) | $ | 102,231 | |||||||||||||||||||||||
(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA, Other items, net and Pro Forma adjusted EBITDA.
Note: Actuals may not foot due to rounding.
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SCHEDULE 5
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(US$ in 000s, except percentages)
For the Three Months Ended December 31, 2020
| Integrated Agencies Network | Media Network | Communications Network | All Other | Corporate | Total | ||||||||||||||||||||||||||||||
| Net Revenue | $ | 283,330 | $ | 94,860 | $ | 86,780 | $ | 5,645 | $ | — | $ | 470,615 | |||||||||||||||||||||||
| Billable Costs | 50,419 | 10,623 | 109,573 | — | — | 170,615 | |||||||||||||||||||||||||||||
| Revenue | 333,749 | 105,483 | 196,353 | 5,645 | — | 641,230 | |||||||||||||||||||||||||||||
| Billable Costs | 50,419 | 10,623 | 109,573 | — | — | 170,615 | |||||||||||||||||||||||||||||
| Staff costs | 173,381 | 54,785 | 36,551 | 4,819 | 10,486 | 280,022 | |||||||||||||||||||||||||||||
| Administrative costs | 34,554 | 17,339 | 7,103 | 4,379 | 761 | 64,136 | |||||||||||||||||||||||||||||
| Unbillable and other costs, net | 13,140 | 6,074 | 215 | (2,180) | 12 | 17,261 | |||||||||||||||||||||||||||||
Adjusted EBITDA (1) | 62,255 | 16,662 | 42,911 | (1,373) | (11,259) | 109,196 | |||||||||||||||||||||||||||||
| Stock-based compensation | 2,188 | — | — | — | 1,143 | 3,331 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 9,405 | 7,075 | 1,978 | 985 | 1,212 | 20,655 | |||||||||||||||||||||||||||||
| Deferred acquisition consideration | 42,356 | — | 2,543 | — | — | 44,899 | |||||||||||||||||||||||||||||
| Impairment and other losses | 70,802 | 6,438 | — | — | — | 77,240 | |||||||||||||||||||||||||||||
Other items, net (1) | 997 | 905 | 303 | — | 25,863 | 28,068 | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | (63,493) | $ | 2,244 | $ | 38,087 | $ | (2,358) | $ | (39,477) | $ | (64,997) | |||||||||||||||||||||||
(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA, Other items, net and Pro Forma adjusted EBITDA.
Note: Actuals may not foot due to rounding.
Page 10
SCHEDULE 6
STAGWELL INC.
UNAUDITED PRO FORMA SEGMENT OPERATING RESULTS
(US$ in 000s, except percentages)
For the Twelve Months Ended December 31, 2020
| Integrated Agencies Network | Media Network | Communications Network | All Other | Corporate | Total | ||||||||||||||||||||||||||||||
| Net Revenue | $ | 1,038,842 | $ | 359,857 | $ | 236,045 | $ | 21,242 | $ | — | $ | 1,655,986 | |||||||||||||||||||||||
| Billable Costs | 155,979 | 38,952 | 236,108 | — | — | 431,039 | |||||||||||||||||||||||||||||
| Revenue | 1,194,821 | 398,809 | 472,153 | 21,242 | — | 2,087,025 | |||||||||||||||||||||||||||||
| Billable Costs | 155,979 | 38,952 | 236,108 | — | — | 431,039 | |||||||||||||||||||||||||||||
| Staff costs | 644,896 | 222,872 | 121,184 | 21,094 | 27,929 | 1,037,975 | |||||||||||||||||||||||||||||
| Administrative costs | 129,686 | 62,042 | 20,570 | 13,096 | 5,041 | 230,435 | |||||||||||||||||||||||||||||
| Unbillable and other costs, net | 44,209 | 35,310 | 2,414 | (10,410) | 26 | 71,549 | |||||||||||||||||||||||||||||
Adjusted EBITDA (1) | 220,051 | 39,633 | 91,877 | (2,538) | (32,996) | 316,027 | |||||||||||||||||||||||||||||
| Stock-based compensation | 8,135 | — | 72 | — | 2,982 | 11,189 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 39,656 | 24,170 | 7,078 | 3,681 | 3,345 | 77,930 | |||||||||||||||||||||||||||||
| Deferred acquisition consideration | 43,658 | 375 | 2,651 | — | — | 46,684 | |||||||||||||||||||||||||||||
| Impairment and other losses | 88,797 | 6,473 | — | — | 1,129 | 96,399 | |||||||||||||||||||||||||||||
Other items, net (1) | 1,476 | 2,651 | 293 | 1 | 38,506 | 42,927 | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | 38,329 | $ | 5,964 | $ | 81,783 | $ | (6,220) | $ | (78,958) | $ | 40,898 | |||||||||||||||||||||||
(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA, Other items, net and Pro Forma adjusted EBITDA.
Note: Actuals may not foot due to rounding.
Page 11
SCHEDULE 7
STAGWELL INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(US$ in 000s)
| December 31, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 184,009 | $ | 92,457 | |||||||
| Accounts receivable, net | 696,937 | 225,733 | |||||||||
| Expenditures billable to clients | 63,065 | 11,063 | |||||||||
| Other current assets | 64,106 | 36,433 | |||||||||
| Total Current Assets | 1,008,117 | 365,686 | |||||||||
| Fixed assets, net | 118,603 | 35,614 | |||||||||
| Right-of-use assets - operating leases | 297,919 | 57,752 | |||||||||
| Goodwill | 1,682,397 | 351,725 | |||||||||
| Other intangible assets, net | 937,695 | 186,035 | |||||||||
| Other assets | 33,019 | 17,043 | |||||||||
| Total Assets | $ | 4,077,750 | $ | 1,013,855 | |||||||
| LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 271,769 | $ | 147,826 | |||||||
| Accruals and other liabilities | 504,780 | 90,557 | |||||||||
| Advance billings | 361,885 | 66,418 | |||||||||
| Current portion of lease liabilities - operating leases | 72,922 | 19,579 | |||||||||
| Current portion of deferred acquisition consideration | 77,946 | 12,579 | |||||||||
| Total Current Liabilities | 1,289,302 | 336,959 | |||||||||
| Long-term debt | 1,195,112 | 198,024 | |||||||||
| Long-term portion of deferred acquisition consideration | 148,464 | 5,268 | |||||||||
| Long-term lease liabilities - operating leases | 328,328 | 52,606 | |||||||||
| Deferred tax liabilities, net | 110,628 | 16,050 | |||||||||
| Other liabilities | 62,621 | 5,801 | |||||||||
| Total Liabilities | 3,134,455 | 614,708 | |||||||||
| Redeemable Noncontrolling Interests | 43,364 | 604 | |||||||||
| Commitments, Contingencies and Guarantees | |||||||||||
| Shareholders' Equity: | |||||||||||
| Convertible preference shares, 0 and 0 authorized, issued and outstanding at December 31, 2021 and 2020, respectively | — | — | |||||||||
| Members' capital | — | 358,756 | |||||||||
| Common shares - Class A & B | 118 | — | |||||||||
| Common shares - Class C | 2 | — | |||||||||
| Paid-in capital | 401,200 | — | |||||||||
| Accumulated deficit | (6,983) | — | |||||||||
| Accumulated other comprehensive loss | (12,720) | — | |||||||||
| Stagwell Inc. Shareholders' Equity | 381,617 | 358,756 | |||||||||
| Noncontrolling interests | 518,314 | 39,787 | |||||||||
| Total Shareholders' Equity | 899,931 | 398,543 | |||||||||
| Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit | $ | 4,077,750 | $ | 1,013,855 | |||||||
Page 12
SCHEDULE 8
STAGWELL INC.
UNAUDITED SUMMARY CASH FLOW DATA
(US$ in 000s)
| Twelve Months Ended December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 35,920 | $ | 71,461 | |||||||
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||||||||||
| Stock-based compensation | 75,032 | — | |||||||||
| Depreciation and amortization | 77,503 | 41,025 | |||||||||
| Debt issuance cost amortization | — | 811 | |||||||||
| Impairment and other losses | 16,240 | — | |||||||||
| Provision for bad debt | 2,031 | 6,222 | |||||||||
| Deferred income taxes | (20,139) | (5,463) | |||||||||
| Changes in fair value of investments in unconsolidated affiliates | — | 518 | |||||||||
| Adjustment to deferred acquisition consideration | 18,706 | 4,520 | |||||||||
| Interest from preferred investments | — | (600) | |||||||||
| Equity in losses of unconsolidated affiliates, net of dividends received | — | (58) | |||||||||
| Transaction costs contributed by Stagwell Media LP | — | 10,160 | |||||||||
| Foreign currency translation loss on foreign denominated debt | — | 721 | |||||||||
| Other | 5,396 | — | |||||||||
| Gain on sale of an asset | (43,440) | — | |||||||||
| Changes in working capital: | |||||||||||
| Accounts receivable | (35,669) | (26,805) | |||||||||
| Expenditures billable to clients | (35,371) | 10,078 | |||||||||
| Other assets | 930 | (10,461) | |||||||||
| Accounts payable | (46,351) | 5,606 | |||||||||
| Accruals and other liabilities | 56,196 | 22,922 | |||||||||
| Advance billings | 76,021 | 7,423 | |||||||||
| Acquisition related payments | (12,431) | — | |||||||||
| Net cash provided by operating activities | 170,574 | 138,080 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (22,626) | (12,099) | |||||||||
| Proceeds from sale of assets | 37,232 | — | |||||||||
| Acquisitions, net of cash acquired | 153,739 | (14,732) | |||||||||
| Other | (26,535) | (2,190) | |||||||||
| Net cash provided by (used in) investing activities | 141,810 | (29,021) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayment of borrowings under revolving credit facility | (716,339) | (126,994) | |||||||||
| Proceeds from borrowings under revolving credit facility | 518,537 | 167,000 | |||||||||
| Shares acquired and cancelled | (841) | — | |||||||||
| Distributions to noncontrolling interests and other | (18,850) | (115,543) | |||||||||
| Payment of deferred consideration and other | — | (1,000) | |||||||||
| Contributions | — | 1,554 | |||||||||
| Proceeds from issuance of the 5.625% Notes | 1,100,000 | — | |||||||||
| Purchase of noncontrolling interest | — | (1,559) | |||||||||
| Debt issuance costs | (15,365) | (3,099) | |||||||||
| Payment of contingent consideration | — | (500) | |||||||||
Page 13
| Distributions | (204,929) | — | |||||||||
| Repurchase of 7.50% Senior Notes | (884,398) | — | |||||||||
| Net cash used in financing activities | (222,185) | (80,141) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,353 | (321) | |||||||||
| Net increase in cash and cash equivalents | 91,552 | 28,597 | |||||||||
| Cash and cash equivalents at beginning of period | 92,457 | 63,860 | |||||||||
| Cash and cash equivalents at end of period | $ | 184,009 | $ | 92,457 | |||||||
Page 14
Fourth Quarter & Full Year 2021 EARNINGS PRESENTATION MARCH 8 | 2022
This presentation contains forward-looking statements. Statements in this presentation 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 combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, 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; • 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 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 and the additional risk factors outlined in more detail under the caption “Risk Factors” in Exhibit 99.2 to our Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on August 10, 2021, and accessible on the SEC’s website at www.sec.gov., and in the Company’s other SEC filings. FORWARD LOOKING INFORMATION & OTHER INFORMATION 2
Non-GAAP Financial Measures: In addition to its reported results, Stagwell Inc has included in this presentation certain financial results that the Securities and Exchange Commission (SEC) 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: Pro Forma Results: Unless otherwise noted, financial results are presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2019. The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. Net Revenue: GAAP Revenue adjusted to exclude certain third-party direct costs when the Company acts as principal for the services rendered in the client arrangement Organic Net Revenue: “Organic net revenue growth” and “organic net revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total net revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition 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, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year. Adjusted EBITDA: Adjusted EBITDA is defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items. Pro Forma Free Cash Flow: Pro Forma Free Cash Flow is a non-GAAP measure defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes M&A payments. Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results. Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period. Net Debt: defined as bonds plus revolver balance less cash. Net Leverage Ratio: defined as Net Debt divided by Last-Twelve-Months Adjusted EBITDA. DEFINITIONS OF NON-GAAP FINANCIAL MEASURES 3
FINANCIAL OUTLOOK Full-Year 2022 Net Revenue Growth Net Revenue Growth Ex-Advocacy Adjusted EBITDA 18% - 22% 13% - 17% $450M - $480M Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information. ~30% Free Cash Flow Growth
F O U R T H Q U A R T E R H I G H L I G H T S Strategic M&A Robust Revenue Growth Strong Margins & FCF Digital Strength Significant Investments Executing Against Plan Expanding global footprint & investing behind digital platforms Certainty around Instrument DAC & aligned incentives +32% y/y 4Q PF Organic Net Revenue Growth Ex-advocacy Broad-based; led by Consumer Insights & Strategy (+44% y/y) 53% of 4Q net revenue from digital capabilities +21% y/y 4Q PF Organic Net Revenue Growth Ex-advocacy +11% with Advocacy despite lapping 2020 Presidential election $75M 4Q Net New Business 19.9% 4Q Adjusted EBITDA Margin (on net revenue) +31% y/y 4Q PF Adjusted EBITDA growth ex-Advocacy -5% y/y 4Q PF Adjusted EBITDA in an off-cycle election year NET DEBT: $1,060M | LTM ADJ. EBITDA: $378M | NET DEBT RATIO: 2.8X Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. Net Debt defined as bonds plus revolver balance less cash. Net Debt Ratio defined as Net Debt divided by Pro Forma LTM Adjusted EBITDA.
S U M M A R Y P R O F O R M A C O M B I N E D F I N A N C I A L S Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. Three Months Ended Twelve Months Ended December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Net Revenue $ 519,692 $ 470,615 $ 1,926,814 $ 1,655,986 Billable Costs 92,235 170,615 297,529 431,039 Revenue 611,927 641,230 2,224,343 2,087,025 Billable Costs 92,235 170,615 297,529 431,039 Staff costs 330,637 280,022 1,237,721 1,037,975 Administrative costs 60,344 64,136 221,877 230,435 Unbillable and other costs, net 25,137 17,261 89,184 71,549 Adjusted EBITDA 103,574 109,196 378,032 316,027 Stock-based compensation 21,568 3,331 80,525 11,189 Depreciation and amortization 31,381 20,655 96,135 77,930 Deferred acquisition consideration 9,265 44,899 36,154 46,684 Impairment and other losses 1,314 77,240 17,115 96,399 Other items, net 6,132 28,068 45,872 42,927 Operating income (loss) $ 33,914 $ (64,997) $ 102,231 $ 40,898 Pro Forma adjusted EBITDA margin 19.9% 23.2% 19.6% 19.1%
Net Revenue Adjusted EBITDA 2021 2020 % Change 2021 2020 % Change Total 520 471 10.4% 104 109 -5.1% Advocacy 35 68 -48.0% 12 -69.5% Total Ex Advocacy 484 402 20.2% 92 70 31.2% Net Revenue Adjusted EBITDA 2021 2020 2021 2020 Total 1,927 1,656 16.4% 378 316 19.6% Advocacy 124 154 -19.6% 36 74 -51.6% Total Ex Advocacy 1,803 1,502 20.0% 342 242 41.4% E X - A D V O C A C Y N E T R E V E N U E & A D J U S T E D E B I T D A Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. Advocacy includes Targeted Victory and SKDK. Actuals may not foot due to rounding $ in Millions Q4 FULL YEAR
2 0 2 1 G A A P C O N S O L I D A T E D O P E R A T I N G P E R F O R M A N C E Three Months Ended, Dec 31 Twelve Months Ended, Dec 31 2021 2020 2021 2020 Revenue 611,927 313,062 1,469,363 888,032 Cost of services 348,000 198,524 906,856 571,588 Office & general expenses 197,318 64,498 424,038 191,679 Depreciation & amortization 31,381 11,187 77,503 41,025 Impairment & other losses 1,314 - 16,240 - Total operating expenses 578,013 274,209 1,424,637 804,292 Operating income (Loss) 33,914 38,853 44,726 83,740 Interest expense, net (16,697) (1,558) (31,894) (6,223) Foreign exchange, net (1,377) (1,515) (3,332) (721) Gain on sale of business and other, net 3,252 (404) 50,058 544 Other income (expenses) (14,822) (3,477) 14,832 (6,400) Income tax expense 14,193 2,726 23,398 5,937 Income before equity in earnings of non-consolidated affiliates 4,899 32,650 36,160 71,403 Equity in (income) losses of non-consolidated affiliates (165) 51 (240) 58 Net income 4,734 32,701 35,920 71,461 Net (income) loss attributable to non-controlling and redeemable non-controlling interests (3,897) (10,469) (14,884) (15,105) Net income attributable to Stagwell Inc. common shareholders 837 22,232 21,036 56,356 Note: Actuals may not foot due to rounding.
P R O F O R M A N E T R E V E N U E Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. Actuals may not foot due to rounding. Three Months Ended, Dec 31, 2021 Twelve Months Ended, Dec 31, 2021 Revenue Change Revenue Change December 31, 2020 470,615 1,655,986 Organic revenue 53,180 11.3% 240,191 14.5% Acquisitions (divestitures), net (4,640) -1.0% 15,159 0.9% Foreign currency 537 0.1% 15,478 0.9% Total Change 49,077 10.4% 270,828 16.4% December 31, 2021 519,692 1,926,814
I N T R O D U C I N G “ P R I N C I P A L C A P A B I L I T I E S ” Note: Legacy Stagwell Group performance marketing Agency, ForwardPMX, combined with Assembly (~80% of revenue is digital on a pro forma basis) and is included in “Performance Media and Data,” along with remaining legacy “Media” Line of Business, legacy “Other” Line of Business (primarily Ink), and Goodstuff (acquired in 4Q 2021). “Digital Transformation” is equivalent to legacy “Digital” Line of Business (excluding ForwardPMX). “Consumer Insights & Strategy” is equivalent to legacy “Research” Line of Business. “Creativity & Communications” is comprised of legacy “Creative,” “Public Relations,” and “Experiential” Lines of Business. Creativity & Communications Blue-Chip Customer Base Performance Media & Data Addressable on a Global Scale Consumer Insights & Strategy Tracking Across Consumer Journey Digital Transformation Building & Designing Digital Experiences for Clients 1 2 3 4
N E T R E V E N U E B Y P R I N C I P A L C A P A B I L I T Y Note: Figures presented on a Pro Forma basis giving effect to the combination as if completed on January 1, 2020 Figures may not foot due to rounding. Principal Capability 4Q PF FY 2021 Digital Transformation (2%) 25% Performance Media & Data 31% 11% Consumer Insights & Strategy 44% 46% Creativity & Communications 7% 7% TOTAL 11% 15% TOTAL EX-ADVOCACY 21% 18% % OF NET REVENUE 4Q PF FY 2021 Organic Growth Y/Y 23% 21% 9% 47% 24% 19% 9% 49%
N E T R E V E N U E B Y G E O G R A P H Y Note: Figures presented on a Pro Forma basis giving effect to the combination as if completed on January 1, 2020. 81% 7% 12% % OF NET REVENUE 4Q PF FY 2021 Organic Growth Y/Y 78% 8% 14% Geography 4Q PF FY 2021 United States 7% 14% United Kingdom 70% 34% Other 13% 12% TOTAL 11% 15% TOTAL EX-ADVOCACY 21% 18%
N E W B U S I N E S S U P D A T E Notable Logo EXPANSIONS Note: All figures presented on a Pro Forma basis giving effect to the combination as if it was completed on January 1, 2020. Net New Business Q4 2021 $75M H2 2021 $139M Large Contract Wins Q4 2021 3 FY 2021 8 Notable Logo ADDITIONS
G L O B A L N E T W O R K 14 North America Latin America Europe Asia Pacific • Indonesia • Malaysia • Thailand • Australia • China • Hong Kong • India • Japan • Philippines • Singapore • Taiwan • South Korea Middle East & Africa • Austria • Belgium • Bulgaria • Italy • Latvia • Lithuania • Romania • Slovak Republic • Slovenia • Switzerland • Turkey • Ukraine • France • Germany • Netherlands • Poland • Spain • Sweden • United Kingdom • Aruba • Curacao • Nicaragua • Panama • Venezuela • Colombia • Costa Rica • Brazil • Ecuador • Guatemala • Honduras • Peru • Argentina • Bolivia • Dominican Republic • Jamaica • Uruguay • Algeria • Bahrain • Jordan • Kuwait • Lebanon • Libya • Morocco • Nigeria • Oman • Saudi Arabia • South Africa • Tunisia • Egypt • United Arab Emirates Stagwell +Affiliates COUNTRIES 34 65 EMPLOYEES 10K+ 21K+ Stagwell’s Affiliate Network Significantly Expands Our Global Footprint • Canada • USA • Mexico Note: As of March 8, 2022.
S T R A T E G I C M & A Transaction 49% ACQUISITION (REMAINING STAKE) 100% ACQUISITION Business Leading digital brand and experience innovation company that is one of Stagwell’s fastest growing Digital Transformation companies (30% annual growth in each of the past two years). Founded in Portland, Oregon, Instrument employs over 400 people working on clients including Nike, Google, Salesforce and Epic Games. The UK’s second largest independent media agency with deep expertise in communications planning, media planning (brand, social & performance led), and media buying. Goodstuff was recently awarded the prestigious “Media Agency of the Year” at Campaign Magazine UK’s Agency of the Year Awards 2021. Rationale Stagwell’s predecessor company, MDC Partners, had acquired 51% of Instrument in 2018. Investment fully aligns Stagwell with one of its fastest-growing businesses, provides for easier- to-scale digital operations and creates greater certainty for investors through full-ownership. With this deal, all previous uncapped earn-out deals have now been restructured. Provides key traditional media buying and planning capabilities in the UK and Europe to complement Assembly’s strong existing digital and performance marketing capabilities allowing Stagwell to provide our clients with full-funnel, omnichannel media excellence in the region.
L I Q U I D I T Y Available Liquidity (as of 12/31/21) Commitment Under Credit Facility $500.0 Drawn $110.2 Undrawn Letters of Credit $24.3 Undrawn Commitments Under Facility $365.5 Total Cash & Cash Equivalents $184.0 Total Available Liquidity $549.5
Y E A R - E N D P R O F O R M A C A P I T A L S T R U C T U R E Note: fully diluted share counts as of 02/28/22 after assuming full vesting of awards outstanding and conversion of preferred. Numbers may not foot due to rounding. 1. Excludes $485M in Non-controlling interest of Stagwell Class C shareholders.. Net Debt & Debt-Like ($M) as of 12/31/21 Revolving Credit Facility $110 Bonds $1,100 NCI1 $33 RNCI $43 DAC $227 Less: Cash $184 TOTAL NET DEBT & DEBT-LIKE $1,329 Pro Forma Common Equity (Thousands) Class A & B 132,005 Class C 164,815 Awards Out. 2,859 FULLY DILUTED 299,678
Appendix
M A P P I N G O U R N E W P R I N C I P A L C A P A B I L I T I E S Digital Transformation Performance Media & Data Consumer Insights & Strategy Creativity & Communications Note Legacy Stagwell Group performance marketing Agency, ForwardPMX, combined with Assembly (~80% of revenue is digital on a pro forma basis) and is included in “Performance Media and Data,” along with remaining legacy “Media” Line of Business, legacy “Other” Line of Business (primarily Ink), and Goodstuff (acquired in 4Q 2021). “Digital Transformation” is equivalent to legacy “Digital” Line of Business (excluding ForwardPMX). “Consumer Insights & Strategy” is equivalent to legacy “Research” Line of Business. “Creativity & Communications” is comprised of legacy “Creative,” “Public Relations,” and “Experiential” Lines of Business. Creative Public Relations Experiential Research Media Other Digital New Principal CapabilitiesLegacy Lines of Business
