InnerWorkings Announces Fourth Quarter and Full-Year 2017 Results
Record fourth quarter revenue increased 11% compared to prior year; strong growth in profitability expected in 2018
“We had a strong finish to 2017 with a growth rate that exceeded our expectations. In addition, we’ve won several large new contracts in recent months, and we’re well down the path on a number of exciting sales pursuits,” said Chief Executive Officer
Fourth Quarter 2017 Results
- Record gross revenue was
$301.0 million in the fourth quarter, an increase of 11% compared with$270.4 million in the fourth quarter of 2016. - Gross profit (net revenue) was
$71.3 million , or 23.7% of gross revenue, in the fourth quarter, an increase of 4% compared to$68.7 million , or 25.4% of revenue, in the same period of 2016. - Net income for the fourth quarter was
$1.5 million , or$0.03 per diluted share, compared to$5.0 million , or$0.09 per diluted share, in the prior year period. - Non-GAAP adjusted EBITDA was
$14.6 million in the fourth quarter, compared to$15.7 million in the fourth quarter of 2016. - Non-GAAP diluted earnings per share for the fourth quarter was
$0.06 , compared to$0.12 in the fourth quarter of 2016.
Full-Year 2017 Results and Recent Highlights
- Gross revenue was
$1,136.3 million in 2017, an increase of 4% compared with$1,090.7 million in 2016. - Gross profit (net revenue) was
$278.3 million , or 24.5% of gross revenue, in 2017, a 6% increase compared to$263.5 million , or 24.2% of revenue, in 2016. - Net income in 2017 was
$19.0 million , or$0.35 per diluted share, compared to$4.4 million , or$0.08 per diluted share, in 2016. - Non-GAAP adjusted EBITDA was
$62.3 million in 2017, reflecting growth of 5% compared to$59.2 million in 2016. - Non-GAAP diluted earnings per share for 2017 was
$0.41 , compared to$0.38 in 2016. - Cash flow from operations was
$16.1 million in 2017, compared to$10.5 million in the year before. InnerWorkings signed new client contracts during 2017 totaling$130 million of annual revenue at full run-rate. This growth is a blend of expansions with existing accounts as well as the addition of a number of first time clients.- In 2018 to date,
InnerWorkings has already signed several new client contracts totaling$41 million of annual revenue at full run-rate.
“Our expected growth in 2018 will generate meaningful operating leverage and free cash flow in 2018, giving us the ability to reinvest in our business on behalf of our clients, employees and shareholders,” said
Outlook
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
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
About
Condensed Consolidated Statements of Income (In thousands, except per share data) |
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Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenue | $ | 300,950 | $ | 270,418 | $ | 1,136,256 | $ | 1,090,704 | ||||||||
Cost of goods sold | 229,639 | 201,691 | 857,921 | 827,156 | ||||||||||||
Gross profit | 71,311 | 68,727 | 278,335 | 263,548 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 60,091 | 54,456 | 225,738 | 209,967 | ||||||||||||
Depreciation and amortization | 3,987 | 3,534 | 13,390 | 17,916 | ||||||||||||
Change in fair value of contingent consideration | — | 442 | 677 | 10,417 | ||||||||||||
Intangible asset impairment charges | — | 70 | — | 70 | ||||||||||||
Restructuring and other charges | — | 1,181 | — | 5,615 | ||||||||||||
Income from operations | 7,233 | 9,044 | 38,530 | 19,563 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 20 | 23 | 97 | 86 | ||||||||||||
Interest expense | (1,491 | ) | (918 | ) | (4,729 | ) | (4,171 | ) | ||||||||
Other, net | (826 | ) | (168 | ) | (1,788 | ) | (153 | ) | ||||||||
Total other expense | (2,297 | ) | (1,064 | ) | (6,420 | ) | (4,238 | ) | ||||||||
Income before income taxes | 4,936 | 7,980 | 32,110 | 15,325 | ||||||||||||
Income tax expense | 3,437 | 2,933 | 13,131 | 10,955 | ||||||||||||
Net income | $ | 1,499 | $ | 5,047 | $ | 18,979 | $ | 4,370 | ||||||||
Basic earnings per share | $ | 0.03 | $ | 0.09 | $ | 0.35 | $ | 0.08 | ||||||||
Diluted earnings per share | $ | 0.03 | $ | 0.09 | $ | 0.35 | $ | 0.08 | ||||||||
Weighted-average shares outstanding – basic | 54,113 | 54,025 | 53,851 | 53,607 | ||||||||||||
Weighted-average shares outstanding – diluted | 55,175 | 55,019 | 54,944 | 54,460 |
Condensed Consolidated Balance Sheets |
|||||||||
(in thousands) | December 31, 2017 | December 31, 2016 | |||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 30,562 | $ | 30,924 | |||||
Accounts receivable, net | 206,712 | 182,874 | |||||||
Unbilled revenue | 49,389 | 32,723 | |||||||
Inventories | 34,807 | 31,638 | |||||||
Prepaid expenses | 19,638 | 18,772 | |||||||
Other current assets | 32,694 | 24,769 | |||||||
Total current assets | 373,802 | 321,700 | |||||||
Property and equipment, net | 36,714 | 32,656 | |||||||
Intangibles and other assets: | |||||||||
Goodwill | 207,162 | 202,700 | |||||||
Intangible assets, net | 27,563 | 31,538 | |||||||
Deferred income taxes | 612 | 1,031 | |||||||
Other non-current assets | 1,382 | 1,374 | |||||||
Total intangibles and other assets | 236,719 | 236,643 | |||||||
Total assets | $ | 647,235 | $ | 590,999 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | 134,609 | 121,289 | |||||||
Current portion of contingent consideration | — | 19,283 | |||||||
Accrued expenses | 33,694 | 30,067 | |||||||
Other current liabilities | 39,538 | 35,049 | |||||||
Total current liabilities | 207,841 | 205,688 | |||||||
Revolving credit facility | 128,398 | 107,468 | |||||||
Deferred income taxes | 12,348 | 11,291 | |||||||
Other non-current liabilities | 1,874 | 1,926 | |||||||
Total liabilities | 350,461 | 326,373 | |||||||
Stockholders' equity: | |||||||||
Common stock | 6 | 6 | |||||||
Additional paid-in capital | 235,199 | 224,480 | |||||||
Treasury stock at cost | (55,873 | ) | (49,458 | ) | |||||
Accumulated other comprehensive loss | (11,863 | ) | (20,799 | ) | |||||
Retained earnings | 129,305 | 110,397 | |||||||
Total stockholders' equity | 296,774 | 264,626 | |||||||
Total liabilities and stockholders' equity | $ | 647,235 | $ | 590,999 |
Condensed Consolidated Statement of Cash Flows |
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(in thousands) | Year Ended December 31, | |||||||||
2017 | 2016 | |||||||||
Cash flows from operating activities | ||||||||||
Net income | $ | 18,979 | $ | 4,370 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 13,390 | 17,916 | ||||||||
Stock-based compensation expense | 6,820 | 5,572 | ||||||||
Deferred income taxes | 3,752 | 4,084 | ||||||||
Change in fair value of contingent consideration liability | 677 | 10,417 | ||||||||
Intangible asset impairment charges | — | 70 | ||||||||
Bad debt provision | 454 | 2,171 | ||||||||
Excess tax benefit from exercise of stock awards | — | (4,030 | ) | |||||||
Other operating activities | 210 | 210 | ||||||||
Change in assets, net of acquisitions: | ||||||||||
Accounts receivable and unbilled revenue | (40,959 | ) | 1,809 | |||||||
Inventories | (3,169 | ) | 1,690 | |||||||
Prepaid expenses and other assets | (8,989 | ) | 2,442 | |||||||
Change in liabilities, net of acquisitions: | ||||||||||
Accounts payable | 13,320 | (48,955 | ) | |||||||
Accrued expenses and other liabilities | 11,662 | 12,759 | ||||||||
Net cash provided by operating activities | 16,147 | 10,525 | ||||||||
Cash flows from investing activities | ||||||||||
Purchases of property and equipment | (12,483 | ) | (13,319 | ) | ||||||
Net cash used in investing activities | (12,483 | ) | (13,319 | ) | ||||||
Cash flows from financing activities | ||||||||||
Net short-term secured borrowings (repayments) | (867 | ) | 405 | |||||||
Payments of contingent consideration | (15,345 | ) | (11,374 | ) | ||||||
Net borrowing of revolving credit facility | 20,709 | 8,739 | ||||||||
Proceeds from exercise of stock options | 2,663 | 2,636 | ||||||||
Repurchases of common stock | (10,976 | ) | — | |||||||
Excess tax benefit from exercise of stock awards | — | 4,030 | ||||||||
Other financing activities | (1,156 | ) | (866 | ) | ||||||
Net cash provided by (used) in financing activities | (4,972 | ) | 3,570 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 947 | (607 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (362 | ) | 169 | |||||||
Cash and cash equivalents, beginning of period | 30,924 | 30,755 | ||||||||
Cash and cash equivalents, end of period | $ | 30,562 | $ | 30,924 |
Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share (Unaudited) |
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(in thousands) | Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Net income | $ | 1,499 | $ | 5,047 | $ | 18,979 | $ | 4,370 | |||||||||||
Income tax expense | 3,437 | 2,933 | 13,131 | 10,955 | |||||||||||||||
Interest income | (20 | ) | (23 | ) | (97 | ) | (86 | ) | |||||||||||
Interest expense | 1,491 | 918 | 4,729 | 4,171 | |||||||||||||||
Other, net | 826 | 168 | 1,788 | 153 | |||||||||||||||
Depreciation and amortization | 3,987 | 3,534 | 13,390 | 17,916 | |||||||||||||||
Stock-based compensation expense | 1,524 | 1,474 | 6,820 | 5,572 | |||||||||||||||
Change in fair value of contingent consideration | — | 442 | 677 | 10,417 | |||||||||||||||
Intangible asset impairment charges | — | 70 | — | 70 | |||||||||||||||
Restructuring and other charges | — | 1,181 | — | 5,615 | |||||||||||||||
Professional fees related to ASC 606 implementation | 529 | — | 829 | — | |||||||||||||||
Business development realignment | — | — | 715 | — | |||||||||||||||
CEO search costs | 454 | — | 454 | — | |||||||||||||||
Czech currency impact on procurement margin | 860 | — | 860 | — | |||||||||||||||
Non-GAAP Adjusted EBITDA | $ | 14,587 | $ | 15,745 | $ | 62,275 | $ | 59,153 |
(in thousands, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 1,499 | $ | 5,047 | $ | 18,979 | $ | 4,370 | ||||||||
Change in fair value of contingent consideration, net of tax | — | 442 | 677 | 10,417 | ||||||||||||
Intangible asset impairment charges, net of tax | — | 56 | — | 56 | ||||||||||||
Restructuring and other charges, net of tax | — | 909 | — | 4,873 | ||||||||||||
Realignment-related income tax charges | — | 282 | — | 1,179 | ||||||||||||
Czech exit from exchange rate commitment, net of tax | — | — | 294 | — | ||||||||||||
Business development realignment, net of tax | — | — | 875 | — | ||||||||||||
Professional fees related to ASC 606 implementation, net of tax | 324 | — | 528 | — | ||||||||||||
CEO search costs, net of tax | 282 | — | 282 | — | ||||||||||||
Czech currency impact on procurement margin, net of tax | 697 | — | 697 | — | ||||||||||||
Accelerated depreciation of internal use software, net of tax | 246 | — | 246 | — | ||||||||||||
Adjusted net income | $ | 3,048 | $ | 6,736 | $ | 22,578 | $ | 20,895 | ||||||||
Weighted average shares outstanding, diluted | 55,175 | 55,019 | 54,944 | 54,460 | ||||||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.06 | $ | 0.12 | $ | 0.41 | $ | 0.38 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20180312006175/en/
Source:
InnerWorkings, Inc.
Chip Hodgkins
312.676.5774
chodgkins@inwk.com
or
Bridget Freas
312.589.5613
bfreas@inwk.com