InnerWorkings Announces First Quarter 2016 Results
First quarter revenue grew 12%; significant profit improvement; continued momentum of new contract wins
"InnerWorkings is off to a very strong start in 2016 in terms of
profitable organic growth and new contracts signed," said Eric D.
Belcher, Chief Executive Officer of
First Quarter 2016 Highlights
-
Revenue was
$271.1 million , an increase of 12.0% compared with$242.1 million in the first quarter of 2015. -
Gross profit was
$61.9 million , or 22.9% of revenue, a 12.5% increase compared to$55.1 million , or 22.7% of revenue, in the same period of last year. -
Non-GAAP adjusted EBITDA was
$12.6 million , reflecting 32.5% growth as compared to$9.5 million in the first quarter of 2015. -
GAAP net loss per share was
$0.04 and GAAP net loss was$2.1 million , mainly due to an after-tax cash charge of$3.0 million related to the global realignment strategy and a$1.9 million increase in our earnout obligation due to the strong performance of two previously-acquired businesses. Non-GAAP diluted earnings per share were$0.06 , an increase of 112.2% compared to$0.03 in the first quarter of 2015.
Operational Highlights
-
InnerWorkings has been awarded several new enterprise contracts so far during 2016, which collectively are expected to exceed$30 million of annual revenue at full run-rate, with nearly half stemming from expanded relationships with active clients. - The largest of the new client wins includes managing several marketing execution services for a large direct and franchise consumer and commercial services company through a dedicated onsite team of seven production managers and technology professionals.
"We succeeded in growing the top line while managing our cost structure
to achieve meaningful operating leverage in the first quarter," said
Financial Results
First quarter non-GAAP diluted earnings per share were
Outlook
The Company's guidance for 2016 remains unchanged.
Conference Call
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
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 financial 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
About
Condensed Consolidated Statements of Income |
||||||||||
(in thousands) |
Three Months Ended |
|||||||||
2016 | 2015 | |||||||||
(unaudited) | (unaudited) | |||||||||
Revenue | $ | 271,073 | $ | 242,095 | ||||||
Cost of goods sold | 209,127 | 187,031 | ||||||||
Gross profit | 61,946 | 55,064 | ||||||||
Operating expenses: | ||||||||||
Selling, general and administrative expenses | 50,627 | 47,647 | ||||||||
Depreciation and amortization | 4,596 | 4,091 | ||||||||
Change in fair value of contingent consideration | 1,911 | 313 | ||||||||
Restructuring and other charges | 3,344 | — | ||||||||
Income from operations | 1,468 | 3,013 | ||||||||
Other income (expense): | ||||||||||
Interest income | 14 | 21 | ||||||||
Interest expense | (1,077 | ) | (1,145 | ) | ||||||
Other, net | (161 | ) | 84 | |||||||
Total other expense | (1,224 | ) | (1,040 | ) | ||||||
Income before income taxes | 244 | 1,973 | ||||||||
Income tax expense | 2,393 | 834 | ||||||||
Net income (loss) | $ | (2,149 | ) | $ | 1,139 | |||||
Basic earnings (loss) per share | $ | (0.04 | ) | $ | 0.02 | |||||
Diluted earnings (loss) per share | $ | (0.04 | ) | $ | 0.02 | |||||
Weighted-average shares outstanding - basic | 53,145 | 52,754 | ||||||||
Weighted-average shares outstanding - diluted | 53,145 | 53,879 | ||||||||
Condensed Consolidated Balance Sheets |
||||||||||
|
|
|||||||||
(in thousands) | 2016 | 2015 | ||||||||
(unaudited) | ||||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 20,929 | $ | 30,755 | ||||||
Accounts receivable, net | 200,629 | 188,819 | ||||||||
Unbilled revenue | 34,548 | 30,758 | ||||||||
Inventories | 34,715 | 33,327 | ||||||||
Prepaid expenses | 12,957 | 14,353 | ||||||||
Other current assets | 16,707 | 31,825 | ||||||||
Total current assets | 320,485 | 329,837 | ||||||||
Property and equipment, net | 33,208 | 32,681 | ||||||||
Intangibles and other assets: | ||||||||||
|
206,069 | 206,257 | ||||||||
Intangible assets, net | 36,577 | 37,715 | ||||||||
Deferred income taxes | 788 | 586 | ||||||||
Other non-current assets | 1,469 | 1,391 | ||||||||
Total intangibles and other assets | 244,903 | 245,949 | ||||||||
Total assets | $ | 598,596 | $ | 608,467 | ||||||
Liabilities and stockholders' equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 130,048 | $ | 170,244 | ||||||
Current portion of contingent consideration | 11,131 | 11,387 | ||||||||
Due to seller | 3,604 | 402 | ||||||||
Accrued expenses | 17,129 | 11,603 | ||||||||
Other current liabilities | 35,377 | 31,363 | ||||||||
Total current liabilities | 197,288 | 224,999 | ||||||||
Revolving credit facility | 118,615 | 99,258 | ||||||||
Deferred income taxes | 13,168 | 12,898 | ||||||||
Contingent consideration, net of current portion | 9,187 | 10,775 | ||||||||
Other non-current liabilities | 2,773 | 2,510 | ||||||||
Total liabilities | 341,031 | 350,440 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 6 | 6 | ||||||||
Additional paid-in capital | 215,723 | 213,566 | ||||||||
|
(52,207 | ) | (52,207 | ) | ||||||
Accumulated other comprehensive loss | (14,463 | ) | (13,993 | ) | ||||||
Retained earnings | 108,506 | 110,655 | ||||||||
Total stockholders' equity | 257,565 | 258,027 | ||||||||
Total liabilities and stockholders' equity | $ | 598,596 | $ | 608,467 | ||||||
Cash Flow Data |
||||||||||
(in thousands) |
Three Months Ended |
|||||||||
2016 | 2015 | |||||||||
(unaudited) | (unaudited) | |||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | $ | (2,149 | ) | $ | 1,139 | |||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||
Depreciation and amortization | 4,596 | 4,091 | ||||||||
Stock-based compensation expense | 1,241 | 2,061 | ||||||||
Deferred income taxes | (68 | ) | (7 | ) | ||||||
Bad debt provision | 656 | 875 | ||||||||
Change in fair value of contingent consideration | 1,911 | 313 | ||||||||
Other operating activities | 52 | 52 | ||||||||
Change in assets: | ||||||||||
Accounts receivable and unbilled revenue | (16,256 | ) | (3,952 | ) | ||||||
Inventories | (1,388 | ) | (6,489 | ) | ||||||
Prepaid expenses and other assets | 16,382 | 3,100 | ||||||||
Change in liabilities: | ||||||||||
Accounts payable | (40,196 | ) | (3,850 | ) | ||||||
Accrued expenses and other liabilities | 10,653 | (3,608 | ) | |||||||
Net cash used in operating activities | (24,566 | ) | (6,275 | ) | ||||||
Cash flows from investing activities | ||||||||||
Purchases of property and equipment | (3,987 | ) | (3,719 | ) | ||||||
Net cash used in investing activities | (3,987 | ) | (3,719 | ) | ||||||
Cash flows from financing activities | ||||||||||
Net borrowings from revolving credit facility | 19,358 | 5,580 | ||||||||
Net short-term secured borrowings (repayments) | (1,803 | ) | 89 | |||||||
Repurchases of common stock | — | (3,500 | ) | |||||||
Payments of contingent consideration | (525 | ) | (438 | ) | ||||||
Proceeds from exercise of stock options | 984 | 39 | ||||||||
Other financing activities | 382 | (99 | ) | |||||||
Net cash provided by financing activities | 18,396 | 1,671 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 331 | (849 | ) | |||||||
Decrease in cash and cash equivalents | (9,826 | ) | (9,172 | ) | ||||||
Cash and cash equivalents, beginning of period | 30,755 | 22,578 | ||||||||
Cash and cash equivalents, end of period | $ | 20,929 | $ | 13,406 | ||||||
Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share | |||||||||
(Unaudited) | |||||||||
(in thousands) |
Three Months Ended |
||||||||
2016 | 2015 | ||||||||
Net income (loss) | $ | (2,149 | ) | $ | 1,139 | ||||
Income tax expense | 2,393 | 834 | |||||||
Total other expense | 1,224 | 1,040 | |||||||
Depreciation and amortization | 4,596 | 4,091 | |||||||
Stock-based compensation expense | 1,241 | 2,061 | |||||||
Change in fair value of contingent consideration | 1,911 | 313 | |||||||
Restructuring and other charges | 3,344 | — | |||||||
Non-GAAP Adjusted EBITDA | $ | 12,560 | $ | 9,478 | |||||
(in thousands, except per share amounts) |
Three Months Ended |
||||||||
2016 | 2015 | ||||||||
Net income (loss) | $ | (2,149 | ) | $ | 1,139 | ||||
Change in fair value of contingent consideration, net of tax | 1,911 | 311 | |||||||
Restructuring and other charges, net of tax | 2,964 | — | |||||||
Realignment-related income tax charges | 397 | — | |||||||
Adjusted net income | $ | 3,123 | $ | 1,450 | |||||
Weighted-average shares outstanding - diluted | 54,688 | 53,879 | |||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.06 | $ | 0.03 | |||||
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312.589.5613
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