InnerWorkings, Inc.
Nov 7, 2017
PDF

InnerWorkings Announces Third Quarter 2017 Results

Record third quarter gross revenue and gross profit (net revenue)

Raising earnings guidance for 2017

Year-to-date new business awards now over $100 million

CHICAGO--(BUSINESS WIRE)-- InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, today announced financial results for the three months ended September 30, 2017. For all Non-GAAP references below, please refer to the non-GAAP reconciliation tables at the end of this release for more information.

Financial and Business Highlights

"The investments we have made to build our global capabilities and technology platform are paying off in a meaningful way," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "Our large backlog of new business awards and pipeline of pursuits position us well for 2018 and beyond."

"We are continuing to improve our mix of high value-add services leading to stronger net revenue and profit performance," said Jeffrey P. Pritchett, Chief Financial Officer of InnerWorkings. "We expect 2017 to be another record year on both the top and bottom line."

Outlook

The Company is raising its 2017 guidance for non-GAAP diluted earnings per share to be $0.47 to $0.50, compared to prior guidance of a range of $0.46 to $0.49. InnerWorkings is maintaining its 2017 gross revenue guidance to range between $1.115 billion and $1.145 billion and non-GAAP adjusted EBITDA to be between $65.0 million and $68.0 million.

Conference Call

Eric D. Belcher, Chief Executive Officer, and Jeffrey P. Pritchett, Chief Financial Officer, will host a conference call to discuss the results today at 4:30 p.m. Central time (5:30 p.m. Eastern time).

The phone number to access the conference call is (877) 771-7024. A live audio webcast of the call will be available through InnerWorkings' website at http://investor.inwk.com/events.cfm. A replay of the webcast will be available later today at the same location.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission: non-GAAP adjusted EBITDA and non-GAAP diluted earnings per share. We believe these measures provide useful information to investors because they provide further insights into the Company's financial performance. These measures are also used by management in its financial and operational decision-making and evaluation of overall performance. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, please see the reconciliation of non-GAAP adjusted EBITDA and non-GAAP diluted earnings per share included in this release.

The Company has not quantitatively reconciled its guidance for non-GAAP adjusted EBITDA or non-GAAP diluted earnings per share to their most comparable GAAP measure because the Company does not provide specific guidance for the various reconciling items as certain items that impact these measures have not occurred, are out of the Company's control, or cannot be reasonably predicted. Accordingly, a reconciliation to the nearest GAAP financial metric is not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the Company's results.

Forward-Looking Statements

This release contains statements relating to future results. These statements are forward-looking statements under the federal securities laws. We can give no assurance that any future results discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. For a discussion of important factors that could affect our actual results, please refer to our SEC filings, including the "Risk Factors" section of our most recently filed Form 10-K.

About InnerWorkings

InnerWorkings, Inc. (NASDAQ: INWK) is the leading global marketing execution firm serving Fortune 1000 brands across a wide range of industries. As a comprehensive outsourced enterprise solution, the Company leverages proprietary technology, an extensive supplier network and deep domain expertise to streamline the production of branded materials and retail experiences across geographies and formats. InnerWorkings is headquartered in Chicago, IL and employs approximately 1,900 individuals to support global clients in the execution of multi-faceted brand campaigns in every major market around the world. InnerWorkings serves many industries, including: retail, financial services, hospitality, consumer packaged goods, nonprofit, healthcare, food & beverage, broadcasting & cable, automotive, and transportation. For more information visit: www.inwk.com.

Condensed Consolidated Statement of Comprehensive Income (Loss)

(Unaudited)

(In thousands, except per share data)

   

Three Months Ended

September 30,

Nine Months Ended

September 30,

2017   2016 2017   2016
 
Revenue $ 288,386 $ 279,993 $ 835,306 $ 820,286
Cost of goods sold 215,867   212,212   628,282   625,465  
Gross profit 72,519 67,781 207,024 194,821
Operating expenses:
Selling, general and administrative expenses 57,134 52,601 165,647 155,511
Depreciation and amortization 3,317 5,066 9,403 14,382
Change in fair value of contingent consideration (167 ) 788 677 9,975
Restructuring and other charges   466     4,433  
Income from operations 12,235 8,860 31,297 10,520
Other income (expense):
Interest income 31 26 77 63
Interest expense (1,198 ) (1,191 ) (3,239 ) (3,252 )
Other, net 427   (114 ) (962 ) 16  
Total other expense (740 ) (1,279 ) (4,123 ) (3,173 )
Income before income taxes 11,495 7,581 27,173 7,347
Income tax expense 3,967   3,240   9,694   8,023  
Net income (loss) $ 7,528   $ 4,341   $ 17,479   $ (676 )
 
Basic earnings (loss) per share $ 0.14 $ 0.08 $ 0.32 $ (0.01 )
Diluted earnings (loss) per share $ 0.14 $ 0.08 $ 0.32 $ (0.01 )
 
Weighted-average shares outstanding - basic 53,964 53,818 53,962 53,536
Weighted-average shares outstanding - diluted 55,189 54,772 55,127 53,536

Condensed Consolidated Balance Sheet

(In thousands)

 
  September 30, 2017   December 31, 2016
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 27,682 $ 30,924
Accounts receivable, net of allowance for doubtful accounts of $2,692 and $2,622, respectively 203,306 182,874
Unbilled revenue 50,130 32,723
Inventories 48,744 31,638
Prepaid expenses 22,018 18,772
Other current assets 31,850   24,769  
Total current assets 383,730 321,700
Property and equipment, net 37,212 32,656
Intangibles and other assets:
Goodwill 206,704 202,700
Intangible assets, net 28,745 31,538
Deferred income taxes 1,432 1,031
Other assets 1,312   1,374  
Total intangibles and other assets 238,193   236,642  
Total assets $ 659,135   $ 590,999  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 129,600 $ 121,289
Current portion of contingent consideration 19,283
Accrued expenses 32,994 30,068
Other liabilities 43,296   35,049  
Total current liabilities 205,890 205,688
Revolving credit facility 149,184 107,468
Deferred income taxes 9,834 11,291
Other long-term liabilities 1,958   1,926  
Total liabilities 366,866 326,374
Commitments and contingencies (See Note 10)
Stockholders' equity:
Common stock, par value $0.0001 per share, 200,000 and 200,000 shares authorized, 63,964 and 63,391 shares issued, and 54,037 and 54,088 shares outstanding, respectively 6 6
Additional paid-in capital 232,979 224,480
Treasury stock at cost, 9,927 and 9,303 shares, respectively (54,938 ) (49,458 )
Accumulated other comprehensive loss (12,772 ) (20,799 )
Retained earnings 126,994   110,397  
Total stockholders' equity 292,269   264,625  
Total liabilities and stockholders' equity $ 659,135   $ 590,999  

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(In thousands)

 
  Nine Months Ended September 30,
2017   2016
 
Cash flows from operating activities
Net income $ 17,479 $ (676 )
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 9,403 14,382
Stock-based compensation expense 5,296 4,097
Deferred income taxes (82 ) 677
Bad debt provision 268 1,433
Change in fair value of contingent consideration 677 9,975
Other operating activities 157 157
Change in assets:
Accounts receivable and unbilled revenue (38,108 ) (12,798 )
Inventories (17,106 ) (12,050 )
Prepaid expenses and other assets (10,401 ) 3,574
Change in liabilities:
Accounts payable 8,312 (40,264 )
Accrued expenses and other liabilities 11,722   7,861  
Net cash used in operating activities (12,383 ) (23,632 )
 
Cash flows from investing activities
Purchases of property and equipment (10,274 ) (10,502 )
Net cash used in investing activities (10,274 ) (10,502 )
 
Cash flows from financing activities
Net borrowings from revolving credit facility 42,258 34,722
Net short-term secured borrowings 633 (820 )
Repurchases of common stock (10,041 )
Payments of contingent consideration (15,345 ) (11,008 )
Proceeds from exercise of stock options 1,824 2,002
Other financing activities (850 ) (680 )
Net cash provided by financing activities 18,479 24,216
 
Effect of exchange rate changes on cash and cash equivalents 936   (50 )
(Decrease) increase in cash and cash equivalents (3,242 ) (9,968 )
Cash and cash equivalents, beginning of period 30,924   30,755  
Cash and cash equivalents, end of period $ 27,682   $ 20,787  

Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share

(Unaudited)

(In thousands)

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

2017   2016 2017   2016
Net income (loss) $ 7,528 $ 4,341 $ 17,479 $ (676 )
Income tax expense 3,967 3,240 9,694 8,023
Interest income (31 ) (26 ) (77 ) (63 )
Interest expense 1,198 1,191 3,239 3,252
Other, net (427 ) 114 962 (16 )
Depreciation and amortization 3,317 5,066 9,403 14,382
Stock-based compensation expense 2,375 1,740 5,296 4,097
Change in fair value of contingent consideration (167 ) 788 677 9,975
Restructuring and other charges 466 4,433
Business development realignment $ 715 $ $ 715 $
Professional fees related to ASC 606 implementation $ 300   $   $ 300   $  
Non-GAAP Adjusted EBITDA $ 18,775 $ 16,920 $ 47,688 $ 43,407
 
 

(In thousands, except per share data)

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

2017 2016 2017 2016
Net income (loss) $ 7,528 $ 4,341 $ 17,479 $ (676 )
Change in fair value of contingent consideration (167 ) 788 677 9,975
Czech exit from exchange rate commitment, net of tax 294
Restructuring and other charges, net of tax 382 3,964
Realignment-related income tax charges 263 898
Business development realignment, net of tax $ 875 $ $ 875 $
Professional fees related to ASC 606 implementation, net of tax 204     204    
Adjusted net income $ 8,440   $ 5,774   $ 19,529   $ 14,162  
Weighted-average shares outstanding, diluted $ 55,189   $ 54,772   $ 55,127   $ 54,359  
Non-GAAP Diluted Earnings Per Share $ 0.15 $ 0.11 $ 0.35 $ 0.26

InnerWorkings, Inc.
Bridget Freas
312.589.5613
bfreas@inwk.com

Source: InnerWorkings, Inc.

News Provided by Acquire Media