InnerWorkings Announces Second Quarter 2017 Results
Record second quarter gross profit (net revenue) increased 8%;
Year-to-date new signings reach
Financial and Business Highlights
-
Gross revenue was
$279.5 million in the second quarter, an increase of 4% compared with$269.2 million in the second quarter of 2016. Year-to-date gross revenue was$546.9 million , a 1% increase compared with$540.3 million in the prior period. -
Gross profit (net revenue) was a record
$70.2 million , or 25.1% of gross revenue in the second quarter, an 8% increase compared to$65.1 million , or 24.2% of gross revenue, in the same period of last year. Year-to-date gross profit (net revenue) was$134.5 million , or 24.6% of gross revenue, an increase of 6% compared to the prior-year period. -
Net income was
$4.5 million or$0.08 per diluted share in the second quarter, compared to a net loss of$2.3 million or$0.04 per share in the second quarter of 2016. Year-to-date net income was$10.0 million or$0.18 per diluted share, compared to a loss of$5.0 million or$0.09 per diluted share in the same period of 2016. -
Non-GAAP diluted earnings per share was
$0.12 in the second quarter, an increase of 11% compared to$0.11 in the second quarter of 2016. Year-to-date non-GAAP diluted earnings per share was$0.20 , a 30% increase compared to$0.15 in the same period of 2016. -
Non-GAAP adjusted EBITDA was
$16.6 million , reflecting 13% growth as compared to$14.8 million in the second quarter of 2016. Year-to-date non-GAAP adjusted EBITDA was$28.9 million , an increase of 9% compared to$26.5 million in the same period of 2016. -
InnerWorkings has continued to sign new enterprise contracts in recent months, bringing the year-to-date cumulative total to more than$75 million of annual gross revenue at full run-rate. -
The largest of the new wins is an expansion of the Company's long-term
business relationship with a global spirits producer, supporting its
expansive brand portfolio across
Latin America .
"Our second quarter results reflect strong execution of our strategy,"
said
"We continue to see robust growth in net revenue, which we believe is
the most important sales growth indicator for our business," said
Outlook
The Company is revising its guidance for 2017 gross revenue.
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 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 Statement of Comprehensive Income (Loss)
(Unaudited) (In thousands, except per share data) |
|||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenue | $ | 279,530 | $ | 269,220 | $ | 546,920 | $ | 540,292 | |||||||||
Cost of goods sold | 209,303 | 204,126 | 412,416 | 413,253 | |||||||||||||
Gross profit | 70,227 | 65,094 | 134,504 | 127,039 | |||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative expenses | 55,086 | 51,418 | 108,513 | 102,910 | |||||||||||||
Depreciation and amortization | 3,182 | 4,721 | 6,086 | 9,316 | |||||||||||||
Change in fair value of contingent consideration | 1,884 | 7,276 | 844 | 9,187 | |||||||||||||
Restructuring and other charges | — | 623 | — | 3,967 | |||||||||||||
Income from operations | 10,075 | 1,056 | 19,061 | 1,659 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest income | 12 | 24 | 46 | 38 | |||||||||||||
Interest expense | (1,038 | ) | (985 | ) | (2,041 | ) | (2,062 | ) | |||||||||
Other, net | (1,165 | ) | 291 | (1,388 | ) | 130 | |||||||||||
Total other expense | (2,191 | ) | (670 | ) | (3,383 | ) | (1,894 | ) | |||||||||
Income (loss) before income taxes | 7,884 | 386 | 15,678 | (235 | ) | ||||||||||||
Income tax expense | 3,391 | 2,710 | 5,727 | 4,782 | |||||||||||||
Net income (loss) | $ | 4,493 | $ | (2,324 | ) | $ | 9,951 | $ | (5,017 | ) | |||||||
Basic earnings (loss) per share | $ | 0.08 | $ | (0.04 | ) | $ | 0.19 | $ | (0.09 | ) | |||||||
Diluted earnings (loss) per share | $ | 0.08 | $ | (0.04 | ) | $ | 0.18 | $ | (0.09 | ) | |||||||
Weighted-average shares outstanding - basic | 53,278 | 53,411 | 53,665 | 53,278 | |||||||||||||
Weighted-average shares outstanding - diluted | 55,189 | 53,411 | 55,070 | 53,278 |
Condensed Consolidated Balance Sheet (In thousands) |
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|
|
||||||||
(unaudited) | |||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 23,537 | $ | 30,924 | |||||
Accounts receivable, net of allowance for doubtful accounts of
|
208,382 | 182,874 | |||||||
Unbilled revenue | 36,515 | 32,723 | |||||||
Inventories | 28,192 | 31,638 | |||||||
Prepaid expenses | 23,588 | 18,772 | |||||||
Other current assets | 20,949 | 24,769 | |||||||
Total current assets | 341,163 | 321,700 | |||||||
Property and equipment, net | 36,030 | 32,656 | |||||||
Intangibles and other assets: | |||||||||
|
205,399 | 202,700 | |||||||
Intangible assets, net | 29,699 | 31,538 | |||||||
Deferred income taxes | 1,281 | 1,031 | |||||||
Other non-current assets | 1,267 | 1,374 | |||||||
Total intangibles and other assets | 237,646 | 236,643 | |||||||
Total assets | $ | 614,839 | $ | 590,999 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 125,593 | $ | 121,289 | |||||
Current portion of contingent consideration | — | 19,283 | |||||||
Due to seller | 17,842 | — | |||||||
Accrued expenses | 27,567 | 30,067 | |||||||
Other current liabilities | 37,748 | 35,049 | |||||||
Total current liabilities | 208,750 | 205,688 | |||||||
Revolving credit facility | 118,658 | 107,468 | |||||||
Deferred income taxes | 9,852 | 11,291 | |||||||
Other non-current liabilities | 1,988 | 1,926 | |||||||
Total liabilities | 339,248 | 326,373 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity: | |||||||||
Common stock, par value |
6 | 6 | |||||||
Additional paid-in capital | 230,030 | 224,480 | |||||||
|
(59,224 | ) | (49,458 | ) | |||||
Accumulated other comprehensive loss | (14,940 | ) | (20,799 | ) | |||||
Retained earnings | 119,719 | 110,397 | |||||||
Total stockholders' equity | 275,591 | 264,626 | |||||||
Total liabilities and stockholders' equity | $ | 614,839 | $ | 590,999 |
Condensed Consolidated Statement of Cash Flows
(Unaudited) (In thousands) |
|||||||||
Six Months Ended |
|||||||||
2017 | 2016 | ||||||||
Cash flows from operating activities | |||||||||
Net income (loss) | $ | 9,951 | $ | (5,017 | ) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||
Depreciation and amortization | 6,086 | 9,316 | |||||||
Stock-based compensation expense | 2,921 | 2,358 | |||||||
Deferred income taxes | 76 | 450 | |||||||
Bad debt provision | 82 | 789 | |||||||
Change in fair value of contingent consideration | 844 | 9,187 | |||||||
Other operating activities | 104 | 105 | |||||||
Change in assets: | |||||||||
Accounts receivable and unbilled revenue | (29,395 | ) | (2,366 | ) | |||||
Inventories | 3,446 | (2,573 | ) | ||||||
Prepaid expenses and other assets | (957 | ) | 16,255 | ||||||
Change in liabilities: | |||||||||
Accounts payable | 4,304 | (33,984 | ) | ||||||
Accrued expenses and other liabilities | 851 | 4,632 | |||||||
Net cash used in operating activities | (1,687 | ) | (848 | ) | |||||
Cash flows from investing activities | |||||||||
Purchases of property and equipment | (7,024 | ) | (7,445 | ) | |||||
Net cash used in investing activities | (7,024 | ) | (7,445 | ) | |||||
Cash flows from financing activities | |||||||||
Net borrowings from revolving credit facilities | 11,491 | 12,553 | |||||||
Net short-term secured borrowings | 37 | 104 | |||||||
Repurchases of common stock | (10,041 | ) | — | ||||||
Payments of contingent consideration | (2,089 | ) | (4,144 | ) | |||||
Proceeds from exercise of stock options | 1,319 | 1,090 | |||||||
Other financing activities | (119 | ) | (474 | ) | |||||
Net cash provided by financing activities | 598 | 9,129 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 726 | 15 | |||||||
Increase (decrease) in cash and cash equivalents | (7,387 | ) | 851 | ||||||
Cash and cash equivalents, beginning of period | 30,924 | 30,755 | |||||||
Cash and cash equivalents, end of period | $ | 23,537 | $ | 31,606 |
Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share
(Unaudited) (In thousands) |
|||||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Net income (loss) | $ | 4,493 | $ | (2,324 | ) | $ | 9,951 | $ | (5,017 | ) | |||||||||||
Income tax expense | 3,391 | 2,710 | 5,727 | 4,782 | |||||||||||||||||
Interest income | (12 | ) | (24 | ) | (46 | ) | (38 | ) | |||||||||||||
Interest expense | 1,038 | 985 | 2,041 | 2,062 | |||||||||||||||||
Other, net | 1,165 | (291 | ) | 1,388 | (130 | ) | |||||||||||||||
Depreciation and amortization | 3,182 | 4,721 | 6,086 | 9,316 | |||||||||||||||||
Stock-based compensation expense | 1,503 | 1,117 | 2,921 | 2,358 | |||||||||||||||||
Change in fair value of contingent consideration | 1,884 | 7,276 | 844 | 9,187 | |||||||||||||||||
Restructuring and other charges | — | 623 | — | 3,967 | |||||||||||||||||
Non-GAAP Adjusted EBITDA | $ | 16,644 | $ | 14,793 | $ | 28,912 | $ | 26,487 |
(In thousands, except per share data) |
||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income (loss) | $ | 4,493 | $ | (2,324 | ) | $ | 9,951 | $ | (5,017 | ) | ||||||
Change in fair value of contingent consideration | 1,884 | 7,276 | 844 | 9,187 | ||||||||||||
Czech exit from exchange rate commitment, net of tax | 294 | — | 294 | — | ||||||||||||
Restructuring and other charges, net of tax | — | 618 | — | 3,582 | ||||||||||||
Realignment-related income tax charges | — | 238 | — | 635 | ||||||||||||
Adjusted net income | $ | 6,671 | $ | 5,808 | $ | 11,089 | $ | 8,387 | ||||||||
Weighted-average shares outstanding, diluted | 55,189 | 54,297 | 55,070 | 54,139 | ||||||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.12 | $ | 0.11 | $ | 0.20 | $ | 0.15 |
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