Press Release
“Our pursuit of operational excellence and cost reduction measures have
not impacted our ability to maintain strong partnerships with our
existing client base and attract additional large, global brands,” said
Chief Executive Officer
Financial and Business Highlights
-
Gross revenue was
$267.2 million in the first quarter of 2019, a decrease of 3% compared to$274.5 million in the first quarter of 2018. Excluding currency impacts, first quarter gross revenue increased 1% compared to the same period of last year. -
Gross profit (net revenue) was
$61.2 million , or 22.9% of gross revenue in the first quarter of 2019, compared to$66.1 million , or 24.1% of revenue, in the same period of last year. Excluding the impact of write-offs related to the previous exit of certain client work, first quarter gross margin would have been 23.2%. -
Net loss for the first quarter of 2019 was
$(2.5) million , or$(0.05) per diluted share, compared to net loss of$(1.7) million , or$(0.03) per diluted share in the first quarter of 2018. First quarter 2019 net loss included$3.9 million of restructuring charges related to the previously-announced cost reduction plan. -
Non-GAAP diluted earnings per share for the first quarter of 2019 was
$0.02 , compared to a loss of$(0.02) in the first quarter of 2018. -
Adjusted EBITDA was
$6.6 million in the first quarter of 2019, compared to$7.4 million in the first quarter of 2018. -
Additional work from new and existing clients awarded to date in 2019
amounts to approximately
$75 million of annual revenue at full run-rate. The latest of these wins include new partnerships with one of the largest producers of consumer discretionary products and a global manufacturer of home improvement products.
“I am encouraged by the progress our teams are making to improve the
efficiency of our operations, which is reflected in our sequential
reduction in SG&A this quarter,” said
Outlook
The Company is maintaining its guidance for 2019. Revenue is expected to
be in 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, | ||||||||||
| 2019 | 2018 | |||||||||
| Revenue | $ | 267,239 | $ | 274,539 | ||||||
| Cost of goods sold | 206,043 | 208,472 | ||||||||
| Gross profit | 61,196 | 66,067 | ||||||||
| Operating expenses: | ||||||||||
| Selling, general and administrative expenses | 55,805 | 61,167 | ||||||||
| Depreciation and amortization | 2,617 | 3,659 | ||||||||
| Restructuring charges | 3,934 | — | ||||||||
| (Loss) income from operations | (1,160 | ) | 1,241 | |||||||
| Other income (expense): | ||||||||||
| Interest income | 98 | 62 | ||||||||
| Interest expense | (2,745 | ) | (1,568 | ) | ||||||
| Other, net | (740 | ) | (846 | ) | ||||||
| Total other expense | (3,387 | ) | (2,352 | ) | ||||||
| Loss before income taxes | (4,547 | ) | (1,111 | ) | ||||||
| Income tax (benefit) expense | (2,085 | ) | 573 | |||||||
| Net loss | $ | (2,462 | ) | $ | (1,684 | ) | ||||
| Basic loss per share | $ | (0.05 | ) | $ | (0.03 | ) | ||||
| Diluted loss per share | $ | (0.05 | ) | $ | (0.03 | ) | ||||
| Weighted-average shares outstanding – basic | 51,830 | 53,716 | ||||||||
| Weighted-average shares outstanding – diluted | 51,830 | 53,716 | ||||||||
|
Condensed Consolidated Balance Sheets (In thousands) |
||||||||||
| March 31, 2019 | December 31, 2018 | |||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 25,851 | $ | 26,770 | ||||||
| Accounts receivable, net | 184,359 | 193,253 | ||||||||
| Unbilled revenue | 51,166 | 46,474 | ||||||||
| Inventories | 46,927 | 56,001 | ||||||||
| Prepaid expenses | 14,245 | 16,982 | ||||||||
| Other current assets | 36,188 | 34,106 | ||||||||
| Total current assets | 358,736 | 373,586 | ||||||||
| Property and equipment, net | 35,952 | 82,933 | ||||||||
| Intangibles and other assets: | ||||||||||
| Goodwill | 152,181 | 152,158 | ||||||||
| Intangible assets, net | 9,301 | 9,828 | ||||||||
| Right of use assets | 39,391 | — | ||||||||
| Deferred income taxes | 1,073 | 1,195 | ||||||||
| Other non-current assets | 3,486 | 2,976 | ||||||||
| Total intangibles and other assets | 205,432 | 166,157 | ||||||||
| Total assets | $ | 600,120 | $ | 622,676 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | 149,813 | 158,449 | ||||||||
| Accrued expenses | 31,339 | 35,474 | ||||||||
| Deferred revenue | 20,945 | 17,614 | ||||||||
| Revolving credit facility - current | 138,923 | 142,736 | ||||||||
| Other current liabilities | 31,493 | 26,231 | ||||||||
| Total current liabilities | 372,513 | 380,504 | ||||||||
| Lease liabilities | 35,044 | — | ||||||||
| Deferred income taxes | 8,268 | 8,178 | ||||||||
| Other non-current liabilities | 1,986 | 50,903 | ||||||||
| Total liabilities | 417,811 | 439,585 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 6 | 6 | ||||||||
| Additional paid-in capital | 240,734 | 239,960 | ||||||||
| Treasury stock at cost | (81,471 | ) | (81,471 | ) | ||||||
| Accumulated other comprehensive loss | (23,562 | ) | (24,309 | ) | ||||||
| Retained earnings | 46,602 | 48,905 | ||||||||
| Total stockholders' equity | 182,309 | 183,091 | ||||||||
| Total liabilities and stockholders' equity | $ | 600,120 | $ | 622,676 | ||||||
|
Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited) |
||||||||||
| Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Cash flows from operating activities | ||||||||||
| Net loss | $ | (2,462 | ) | $ | (1,684 | ) | ||||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||||
| Depreciation and amortization | 2,617 | 3,659 | ||||||||
| Stock-based compensation expense | 739 | 1,417 | ||||||||
| Deferred income taxes | — | 30 | ||||||||
| Bad debt provision | 385 | 538 | ||||||||
| Implementation cost amortization | 143 | 125 | ||||||||
| Other operating activities | 102 | 52 | ||||||||
| Change in assets: | ||||||||||
| Accounts receivable and unbilled revenue | 3,924 | 24,165 | ||||||||
| Inventories | 9,149 | 2,131 | ||||||||
| Prepaid expenses and other assets | 116 | 2,941 | ||||||||
| Change in liabilities: | ||||||||||
| Accounts payable | (8,351 | ) | (20,922 | ) | ||||||
| Accrued expenses and other liabilities | (870 | ) | 21,857 | |||||||
| Net cash provided by operating activities | 5,492 | 34,309 | ||||||||
| Cash flows from investing activities | ||||||||||
| Purchases of property and equipment | (3,345 | ) | (2,874 | ) | ||||||
| Net cash used in investing activities | (3,345 | ) | (2,874 | ) | ||||||
| Cash flows from financing activities | ||||||||||
| Net repayments of revolving credit facility | (3,800 | ) | (9,023 | ) | ||||||
| Net short-term secured borrowings (repayments) | 1,256 | (1,986 | ) | |||||||
| Repurchases of common stock | — | (8,048 | ) | |||||||
| Proceeds from exercise of stock options | 63 | 7 | ||||||||
| Payment of debt issuance costs | (585 | ) | — | |||||||
| Other financing activities | (29 | ) | (67 | ) | ||||||
| Net cash used in financing activities | (3,095 | ) | (19,117 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 29 | 594 | ||||||||
| (Decrease) increase in cash and cash equivalents | (919 | ) | 12,912 | |||||||
| Cash and cash equivalents, beginning of period | 26,770 | 30,562 | ||||||||
| Cash and cash equivalents, end of period | $ | 25,851 | $ | 43,474 | ||||||
|
Reconciliation of Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share (In thousands, except per share amounts) (Unaudited) |
||||||||||
| Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Net loss | $ | (2,462 | ) | $ | (1,684 | ) | ||||
| Income tax (benefit) expense | (2,085 | ) | 573 | |||||||
| Interest income | (98 | ) | (62 | ) | ||||||
| Interest expense | 2,745 | 1,568 | ||||||||
| Other, net | 740 | 846 | ||||||||
| Depreciation and amortization | 2,617 | 3,659 | ||||||||
| Stock-based compensation expense | 739 | 1,417 | ||||||||
| Restructuring charges | 3,934 | — | ||||||||
| Professional fees related to ASC 606 implementation | — | 1,033 | ||||||||
| Executive search fees | 80 | — | ||||||||
| Restatement-related professional fees | 365 | — | ||||||||
| Non-GAAP Adjusted EBITDA | $ | 6,575 | $ | 7,350 | ||||||
| Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Net loss | $ | (2,462 | ) | $ | (1,684 | ) | ||||
| Restructuring charges, net of tax | 3,030 | — | ||||||||
| Restatement-related professional fees, net of tax | 272 | — | ||||||||
| Executive search fees, net of tax | 60 | — | ||||||||
| Professional fees related to ASC 606 implementation, net of tax | — | 760 | ||||||||
| Adjusted net income (loss) | $ | 900 | $ | (924 | ) | |||||
| Weighted-average shares outstanding, diluted | 51,895 | 53,716 | ||||||||
| Non-GAAP diluted earnings (loss) per share | $ | 0.02 | $ | (0.02 | ) | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005863/en/
Source:
InnerWorkings, Inc.
Bridget Freas
312.589.5613
bfreas@inwk.com