InnerWorkings Announces First Quarter 2018 Results
Cash flow provided by operating activities was a record
“My first few months as CEO have confirmed to me that the market opportunity has never been better for InnerWorkings,” said Chief Executive Officer
Financial and Business Highlights
- Gross revenue was
$274.5 million , an increase of 4% compared to$264.4 million in the first quarter of 2017. - Gross profit (net revenue) was
$66.1 million , or 24.1% of gross revenue in the first quarter of 2018, a 2% increase compared to$64.7 million , or 24.5% of revenue, in the same period of last year. - Net loss for the first quarter of 2018 was
$(1.7) million , or$(0.03) per diluted share, compared to net income of$5.7 million , or$0.10 per diluted share in the first quarter of 2017. - Non-GAAP loss per diluted share for the first quarter was
$(0.02) , compared to earnings of$0.08 in the first quarter of 2017. - Non-GAAP adjusted EBITDA was
$7.4 million in the first quarter 2018, compared to$12.5 million in the first quarter of 2017. - Cash flow provided by operating activities was
$34.3 million in the first quarter of 2018, compared to$0.1 million in the same quarter of last year. Cash flow provided by operating activities for the trailing twelve months endedMarch 31, 2018 was a record$50.2 million . InnerWorkings has been awarded additional work from new and existing clients so far during 2018, which collectively is expected to exceed$70 million of annual revenue at full run-rate.
“Our first quarter financial results reflect initial investments we are making to drive operational improvements, but also the need for aggressive actions to lower our SG&A expenses,” said
Outlook
The Company is lowering its 2018 guidance for gross revenue to a range of
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
Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the
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 Operations (In thousands, except per share data) (Unaudited) |
|||||||||
Three Months Ended March 31, | |||||||||
2018 | 2017 | ||||||||
(as restated) | |||||||||
Revenue | $ | 274,539 | $ | 264,405 | |||||
Cost of goods sold | 208,472 | 199,701 | |||||||
Gross profit | 66,067 | 64,704 | |||||||
Operating expenses: | |||||||||
Selling, general and administrative expenses | 61,167 | 53,615 | |||||||
Depreciation and amortization | 3,659 | 2,904 | |||||||
Change in fair value of contingent consideration | — | (1,040 | ) | ||||||
Income from operations | 1,241 | 9,225 | |||||||
Other income (expense): | |||||||||
Interest income | 62 | 34 | |||||||
Interest expense | (1,568 | ) | (1,003 | ) | |||||
Other, net | (846 | ) | (224 | ) | |||||
Total other expense | (2,352 | ) | (1,193 | ) | |||||
(Loss) income before income taxes | (1,111 | ) | 8,032 | ||||||
Income tax expense | 573 | 2,354 | |||||||
Net (loss) income | $ | (1,684 | ) | $ | 5,678 | ||||
Basic (loss) earnings per share | $ | (0.03 | ) | $ | 0.11 | ||||
Diluted (loss) earnings per share | $ | (0.03 | ) | $ | 0.10 | ||||
Weighted-average shares outstanding – basic | 53,716 | 54,056 | |||||||
Weighted-average shares outstanding – diluted | 53,716 | 54,729 |
Condensed Consolidated Balance Sheets |
|||||||||
(in thousands) | March 31, 2018 | December 31, 2017 | |||||||
(unaudited) |
(as restated) | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 43,474 | $ | 30,562 | |||||
Accounts receivable, net | 183,012 | 205,386 | |||||||
Unbilled revenue | 47,685 | 50,016 | |||||||
Inventories | 38,563 | 40,694 | |||||||
Prepaid expenses | 19,846 | 18,565 | |||||||
Other current assets | 33,716 | 37,865 | |||||||
Total current assets | 366,296 | 383,088 | |||||||
Property and equipment, net | 37,207 | 36,714 | |||||||
Intangibles and other assets: | |||||||||
Goodwill | 200,743 | 199,946 | |||||||
Intangible assets, net | 26,641 | 27,563 | |||||||
Deferred income taxes | 947 | 691 | |||||||
Other non-current assets | 2,139 | 1,636 | |||||||
Total intangibles and other assets | 230,470 | 229,836 | |||||||
Total assets | $ | 633,973 | $ | 649,638 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | 120,260 | 141,164 | |||||||
Accrued expenses | 40,081 | 34,391 | |||||||
Deferred revenue | 31,524 | 17,620 | |||||||
Other current liabilities | 24,073 | 24,078 | |||||||
Total current liabilities | 215,938 | 217,253 | |||||||
Revolving credit facility | 118,886 | 128,398 | |||||||
Deferred income taxes | 12,208 | 12,043 | |||||||
Other non-current liabilities | 7,287 | 7,399 | |||||||
Total liabilities | 354,319 | 365,093 | |||||||
Stockholders' equity: | |||||||||
Common stock | 6 | 6 | |||||||
Additional paid-in capital | 236,664 | 235,199 | |||||||
Treasury stock at cost | (64,544 | ) | (55,873 | ) | |||||
Accumulated other comprehensive loss | (15,865 | ) | (19,229 | ) | |||||
Retained earnings | 123,393 | 124,442 | |||||||
Total stockholders' equity | 279,654 | 284,545 | |||||||
Total liabilities and stockholders' equity | $ | 633,973 | $ | 649,638 |
Condensed Consolidated Statement of Cash Flows (Unaudited) |
|||||||||
(in thousands) | Three Months Ended March 31, | ||||||||
2018 | 2017 | ||||||||
(as restated) | |||||||||
Cash flows from operating activities | |||||||||
Net (loss) income | $ | (1,684 | ) | $ | 5,678 | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 3,659 | 2,904 | |||||||
Stock-based compensation expense | 1,417 | 1,419 | |||||||
Deferred income taxes | 30 | 478 | |||||||
Bad debt provision | 538 | 175 | |||||||
Implementation cost amortization | 125 | — | |||||||
Change in fair value of contingent consideration liability | — | (1,040 | ) | ||||||
Other operating activities | 52 | 52 | |||||||
Change in assets, net of acquisitions: | |||||||||
Accounts receivable and unbilled revenue | 24,165 | (4,680 | ) | ||||||
Inventories | 2,131 | (226 | ) | ||||||
Prepaid expenses and other assets | 2,941 | (1,167 | ) | ||||||
Change in liabilities, net of acquisitions: | |||||||||
Accounts payable | (20,922 | ) | (8,396 | ) | |||||
Accrued expenses and other liabilities | 21,857 | 4,923 | |||||||
Net cash provided by operating activities | 34,309 | 120 | |||||||
Cash flows from investing activities | |||||||||
Purchases of property and equipment | (2,874 | ) | (3,042 | ) | |||||
Net cash used in investing activities | (2,874 | ) | (3,042 | ) | |||||
Cash flows from financing activities | |||||||||
Net borrowing (repayments) of revolving credit facility | (9,023 | ) | 6,519 | ||||||
Net short-term secured borrowings (repayments) | (1,986 | ) | (801 | ) | |||||
Repurchases of common stock | (8,048 | ) | (4,342 | ) | |||||
Proceeds from exercise of stock options | 7 | 189 | |||||||
Other financing activities | (67 | ) | (95 | ) | |||||
Net cash (used in) provided by in financing activities | (19,117 | ) | 1,470 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 594 | 448 | |||||||
Increase (decrease) in cash and cash equivalents | 12,912 | (1,004 | ) | ||||||
Cash and cash equivalents, beginning of period | 30,562 | 30,924 | |||||||
Cash and cash equivalents, end of period | $ | 43,474 | $ | 29,920 |
Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share (Unaudited) |
|||||||||
(in thousands) | Three Months Ended March 31, | ||||||||
2018 | 2017 | ||||||||
(as restated) | |||||||||
Net (loss) income | $ | (1,684 | ) | $ | 5,678 | ||||
Income tax expense | 573 | 2,354 | |||||||
Interest income | (62 | ) | (34 | ) | |||||
Interest expense | 1,568 | 1,003 | |||||||
Other, net | 846 | 224 | |||||||
Depreciation and amortization | 3,659 | 2,904 | |||||||
Stock-based compensation expense | 1,417 | 1,419 | |||||||
Change in fair value of contingent consideration | — | (1,040 | ) | ||||||
Professional fees related to ASC 606 implementation | 1,033 | — | |||||||
Non-GAAP Adjusted EBITDA | $ | 7,350 | $ | 12,508 | |||||
(in thousands, except per share amounts) | Three Months Ended March 31, | ||||||||
2018 | 2017 | ||||||||
(as restated) | |||||||||
Net (loss) income | $ | (1,684 | ) | $ | 5,678 | ||||
Change in fair value of contingent consideration, net of tax | — | (1,040 | ) | ||||||
Professional fees related to ASC 606 implementation, net of tax | 760 | — | |||||||
Adjusted net (loss) income | $ | (924 | ) | $ | 4,638 | ||||
Weighted average shares outstanding, diluted | 53,716 | 54,729 | |||||||
Non-GAAP Diluted (Loss) Earnings Per Share | $ | (0.02 | ) | $ | 0.08 |
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Source:
InnerWorkings, Inc.
Bridget Freas, 312.589.5613
bfreas@inwk.com