Good afternoon, and welcome to the MDC Partners' Second Quarter Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Matt Chesler. Please go ahead.

Good afternoon, everyone. I'd like to thank you for taking the time to listen to the MDC Partners' conference call for the second quarter of 2017. Joining me today from MDC are Scott Kauffman, Chairman and CEO; and David Doft, Chief Financial Officer. Before we begin our prepared remarks, I'd like to remind you, all, that the following discussion contains forward-looking statements and non-GAAP financial data. As we all know, forward-looking statements about the company are subject to uncertainties referenced in the cautionary statement included in our earnings release and slide presentation and are further detailed in the company's Form 10-K and subsequent SEC filings. For your reference, we've posted an investor presentation to our website. We also refer you to this afternoon's press release and slide presentation for definitions, explanations and reconciliations of non-GAAP financial data. And now, to start the call, I'd like to turn it over to our chairman and CEO, Scott Kauffman.

Thank you, Matt, and good afternoon, everyone. We had a strong second quarter. Revenue of $390 million increased 16% year-over-year, including an acceleration of organic revenue growth to nearly 12% or 8% on a net basis, significantly outpacing the industry. Performance was particularly strong in the U.S. with 11.5% organic growth and overseas with 28.5% organic growth. We generated $47 million of adjusted EBITDA, which was an increase of 12% year-over-year, even as we continue to allocate resources to our robust new business activity and to invest in emerging growth initiatives in order to sustain our competitive lead. Adjusted EBITDA was also impacted by some revenue recognition delays. Net new business was a healthy $26 million, including wins such as Bombardier, Electrolux, IKEA and Amazon. Importantly, we're growing our relationships with our largest clients. Cash generation was strong, including a $17 million seasonal inflow of working capital. And consistent with our priority to strengthen our balance sheet, after funding $84 million of acquisition-related payments during the quarter, we've now reduced our deferred consideration and minority interest to the lowest level in over five years. At the midway point of the year, we believe we're pacing very well against our full year 2017 financial goals, and David will elaborate on how we're tracking in just a moment. What I'd like to do now is spend a few minutes talking about why we are outperforming versus the industry and why we believe we're well positioned to continue to be a leader for years to come. The successes we're having goes to the heart of the core strategic positioning of MDC, our modern operating model and our unique culture and entrepreneurial mindset. To be sure, we're operating in an intensely competitive, fast-changing world. New entrants are disrupting entire industries, putting real pressure on…

Thank you, Scott, and good afternoon. It should be clear from Scott's remarks that we're confident in our business and our prospects. You've seen over the past few quarters that we've restored the growth profile of the company. We've turned cost management to a best practice both at the agencies as well as at the parent company. And something I'm particularly satisfied about, we've put in the place a long-term capital structure suitable for a growth company like ours and have made real progress reducing our contingent liabilities. With that brief intro, I'd like to begin by addressing a couple of items that drove adjusted EBITDA in the quarter, and then I'll speak more to our exceptionally strong top line in a moment. First is timing. There was about $3 million of revenue that we could not recognize in time for the second quarter for work already completed. We expect to recognize most, if not all, of this revenue in the third quarter. But we already booked the expense in Q2. So, it will drop right to the bottom line in Q3. And second, our margins in the quarter were impacted in a material way by the higher pass-through revenue. One component came from Forsman & Bodenfors which we acquired this past year and which has a higher mix of principal relationships and therefore lower GAAP margin. The other piece came from the series of projects which were completed in the quarter and which had a higher component of billable costs. The combined impact of these two specific items was to reduce our reported adjusted EBITDA margins by 70 basis points. In other words, excluding these two items, our GAAP adjusted EBITDA margins would have expanded year-over-year by 30 basis points, and this is without taking into account the 70…

We will now begin the question-and-answer session. The first question comes from Peter Stabler with Wells Fargo Securities. Please go ahead.

Good afternoon. Thanks for taking the question. I got a couple. David, could you tell us – on the pass-through, generally speaking, our pass-through is increasing as a percent of total company revenue. And then, secondly, can you remind us the status of MDC? You guys do or do not pass through any media buying in particular in the pass-through? And then, I've got one more. Thanks.

Sure. Thank you, Peter. So, clearly, in this quarter, pass-through did increase as a percent of revenue, which is why it was additive to the overall organic growth profile of the company. As you recall, we had prior periods where our revenue was impacted on the negative side by similar-sized swings to pass-throughs. And I think the first half of last year was a great example of that. But it tends to be somewhat volatile and a bit unpredictable. Over time, outside of the Forsman & Bodenfors acquisition, which based on the structure of their contract that's principal (20:48), has a little bit more pass-through related to production costs than other agencies. It shouldn't materially change from what we've seen in the past from what we can tell. As far as media, there is a minimal and very immaterial amount of media that we're a principal on. Our media buying business at MDC Media Partners goes to market entirely transparent. And so, it's not our practice to be – take principal positions in media.

Great. Helpful. Thanks. And then, a quick one for Scott, if I could. You talked in your prepared remarks about not being dependent upon legacy structures alluding to television. Wondering if you could offer a little bit more color there. Are you saying that your agencies, kind of as a percent of output, are producing substantially less television? And could you help us understand what exactly – when you say kind of burdened by that infrastructure, what exactly does that mean? Thanks so much.

Sure. I'll tackle it in two ways. First, let's talk about the media selection process and the focus of the industry on the relative health of those various categories. It's somewhat immaterial to us in the sense that we are always agents for our clients, who have a prescribed need to affect a certain level of communication with prospects and customers. Historically and traditionally, that was typically through traditional measured media, television, print and outdoor. There are many, many more choices available today, and the consumers are making themselves available in many different ways today. And so, today's modern agency, while it can still execute television very well and we don't think television is going away anytime soon and we're certainly quite proficient at it, we're more focused on what the specific needs of each individual clients are and there's no formulaic answer. So, when we think about creativity, we're really expanding the very definition of creativity and expanding the class of activity that comes under the guise of creativity. And so, again, we're not dependent on any one formula. When we talk about infrastructure broadly, we're also talking about just the overall footprint, particularly as it relates to the increasingly global presence of our agencies and the ability to bring messaging across the globe on behalf of clients that are looking for a broader solution. We used to be referred to as a collection of creative boutiques. But with the advent of technology and the settling of the grid, those creative boutiques are now increasingly global agency of record for the world's most iconic brands and – but we're not burdened with a lot of offices in a lot of cities around the world or any of the feet on the street or infrastructure that the so called traditional holding companies are grappling with right now. Being born in a modern age when the Internet was already in place allows us to operate in a far more efficient and effective manner on behalf of our clients.

Thank you.

The next question comes from Tom Eagan of Telsey Advisory Group. Please go ahead.

Hi. Good afternoon. This is actually Chris Barnes on for Tom. Thanks for taking our questions. So, we've heard from some of your other agency peers that U.S. clients are holding back on spending. Are you seeing any political issues weighing on ad spending with any of your clients or any of your verticals?

When we say we're not a proxy for what's going on in the industry, it's in large measure because clients are reevaluating a lot of those legacy relationships. And so, as we look at just the extent of our organic growth and the current status of our pipeline, we see that we can be oftentimes the very beneficiary of that internal questioning of the status quo.

Okay. Thank you. And then, could you just provide some more details on your plans to pay down debt after the DAC payments this year? Is it possible that we could see MDC return to the M&A market next year?

Sure. So, our capital structure is made up of our revolver and $900 million of senior notes that are due in 2024. We don't intend to prepay those senior notes in the short term. And so, the cash generation of the company will continue to fund the deferred acquisition consideration that remains, pay down our revolver and we expect to be in a cash balance with zero drawn at the revolver at year-end. And then, that does begin to give us flexibility to potentially look to invest again in the business. But I would add that our intentions is to do that in a way that is respectful of our balance sheet targets to continue to bring leverage down over time.

Okay. Thank you very much.

The next question comes from Leo Kulp with RBC Capital Markets. Please go ahead.

Hi. Good afternoon, and thanks for taking the question. I just had two quick ones. First, can you talk about your expected margin ramp over the remainder of the year? You've got that $3 million zero cost revenue in 3Q, is that enough to drive meaningful margin expansion or is it going to be really 4Q weighted?

So, we do expect to have margin expansion both in 3Q and 4Q. If you look at the trajectory of EBITDA for our year, what we're looking for in an absolute amount of EBITDA in the second half relative to our target for the full year is well within the range of what we've done historically in the second half. And seasonally, second half typically has higher margins than the first half. I would also add, our comparisons in the second half are a little bit easier. Second half last year was not what any of us hoped for. So, our expectation is that we'll be able to see margin expansion both in 3Q and 4Q.

Got it. Okay. And then, on your organic growth guidance for the full year, what are you assuming there in terms of pass-through for the impact on the top line? Will it be comparable to the – I think you said 360 bps you saw this quarter?

We're assuming a bit more modest than that. The pass-through does tend to bounce around a bit. And as I said, it's a bit unpredictable. And so, we're not assuming that it contributes much to growth in the second half.

Thank you, David.

Thank you.

The next question comes from Barry Lucas with Gabelli & Company. Please go, ahead. Barry L. Lucas - Gabelli & Company: Thank you, and good afternoon. Scott, I was hoping you could talk about two things, one, the new business pipeline. And then, just to remind us when the Samsung business is lapped and we get beyond that picket (28:01)? And I have one other.

So, the new business pipeline, as you might have gathered, we often talk about it as being robust and you saw that reflected both in the combination of organic growth and net new business activity for the first half of the year. And it continues the pace. And this gets back to what we're talking about as market peers are looking for new solutions, unhappy with the status quo and continuing to put rather significant pieces of business into review. So, we are very oftentimes invited to those conversations and like our position and, again, believe we have a unique point of view and a unique place in the world and just doubling down on creativity and going forward with a set of product offerings that the marketers continually – are continuing to find quite compelling. We don't get into specifics of any one review or any one bake-off. But this is a game of winning more than you lose. And as we've reflected in our net new business, we continue to do that.

As for Samsung, Barry, as we previously disclosed, we lost it in two parts last year. The first part was the end of 1Q, so we cycled that for 2Q. The second part we lost at the end of 3Q, so we have one more quarter of the drag of cycling that business. Barry L. Lucas - Gabelli & Company: Okay. Thank you, David. And the last item for me, as you have looked at the balance sheet and the remaining deferred acquisition costs at, let's call it, at yearend, what – assuming no further M&A in 2018, where do you kind of ballpark the payments, on average, in 2018 and beyond?

So, if you look at what we're telling you about the second half, we expect to fund $30 million in the second half. And offsetting that will be $3 million, $3.5 million a quarter of time value accretion because it's presented on the balance sheet at fair value. And so, that's – a time value discount is implied in that. So, about $3.5 million a quarter of accretion so you can do the math from what we reported on this balance sheet to what the yearend may look like. And then, going forward 2018, at this point, we're looking for at least a 35%, maybe 40% drop from the amount of payments that were made in 2017. But ultimately, actual performance, as we move through this year, will determine what the ultimate amount will be in 2018. Barry L. Lucas - Gabelli & Company: Great. Thanks for that, David.

Sure thing.

This concludes our question-and-answer session. I would like to turn the conference back over to Scott Kauffman for any closing remarks.

Thank you, operator. In closing, I just want to mark our progress halfway through the year and express our confidence that we're very well positioned to deliver on our expectations for the year. And with that, I'd like to extend my sincerest appreciation and deepest gratitude to our talented employees and partners and to you, our fellow shareholders. Your continued confidence, investment and partnership in our business remains the very foundation of the value we work so hard to build upon each and every day. Good afternoon from New York City.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.