InnerWorkings Announces Second Quarter 2018 Results
detailed plan underway to reduce G&A expenses by
“One of the best indicators of a company's strength is its ability to
grow within its existing clients. We have been awarded additional work
with two existing accounts in just the last two weeks, and our pipeline
is full of opportunities to further penetrate our customer base,” said
Chief Executive Officer
Financial and Business Highlights
-
Gross revenue was
$282.0 million in the second quarter of 2018, an increase of 1% compared to$280.1 million in the second quarter of 2017. Excluding currency impacts, second quarter gross revenue increased 4% compared to the same period of last year. -
Gross profit (net revenue) was
$64.9 million , or 23.0% of gross revenue in the second quarter of 2018, compared to$70.0 million , or 25.0% of revenue, in the same period of last year. -
Net loss for the second quarter of 2018 was
$(0.3) million , or$(0.01) per diluted share, compared to net income of$4.4 million , or$0.08 per diluted share in the second quarter of 2017. -
Non-GAAP earnings per diluted share for the second quarter of 2018 was
$0.01 , compared to$0.12 in the second quarter of 2017. -
Non-GAAP adjusted EBITDA was
$8.2 million in the second quarter of 2018, compared to$16.5 million in the second quarter of 2017. InnerWorkings has been awarded additional work from new and existing clients so far during 2018, which collectively is expected to drive$85 million of annual revenue at full run-rate. Recent new wins include two expansions with global Fortune 500 companies in the healthcare and food verticals.
Cost Reduction Plan
“We have already initiated cost reduction measures with approximately
50% of the plan to be actioned by October 1st,” said
Outlook
The Company reaffirmed its 2018 guidance for gross revenue at 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
(as restated) | (as restated) | |||||||||||||||||||
Revenue | $ | 281,967 | $ | 280,066 | $ | 556,506 | $ | 544,471 | ||||||||||||
Cost of goods sold | 217,096 | 210,020 | 425,568 | 409,721 | ||||||||||||||||
Gross profit | 64,871 | 70,046 | 130,938 | 134,750 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general and administrative expenses | 59,002 | 55,054 | 120,169 | 108,669 | ||||||||||||||||
Depreciation and amortization | 3,514 | 3,182 | 7,173 | 6,086 | ||||||||||||||||
Change in fair value of contingent consideration | — | 1,884 | — | 844 | ||||||||||||||||
Income from operations | 2,355 | 9,926 | 3,596 | 19,151 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 54 | 12 | 115 | 46 | ||||||||||||||||
Interest expense | (1,517 | ) | (1,038 | ) | (3,085 | ) | (2,041 | ) | ||||||||||||
Other, net | (588 | ) | (1,164 | ) | (1,433 | ) | (1,388 | ) | ||||||||||||
Total other expense | (2,051 | ) | (2,190 | ) | (4,403 | ) | (3,383 | ) | ||||||||||||
(Loss) income before income taxes | 304 | 7,736 | (807 | ) | 15,768 | |||||||||||||||
Income tax expense | 603 | 3,362 | 1,176 | 5,716 | ||||||||||||||||
Net (loss) income | $ | (299 | ) | $ | 4,374 | $ | (1,983 | ) | $ | 10,052 | ||||||||||
Basic (loss) earnings per share | $ | (0.01 | ) | $ | 0.08 | $ | (0.04 | ) | $ | 0.19 | ||||||||||
Diluted (loss) earnings per share | $ | (0.01 | ) | $ | 0.08 | $ | (0.04 | ) | $ | 0.18 | ||||||||||
Weighted-average shares outstanding – basic | 51,770 | 53,278 | 52,738 | 53,665 | ||||||||||||||||
Weighted-average shares outstanding – diluted | 51,770 | 55,189 | 52,738 | 55,070 | ||||||||||||||||
Condensed Consolidated Balance Sheets |
||||||||||
December 31, | ||||||||||
(in thousands) | June 30, 2018 | 2017 | ||||||||
(unaudited) | (as restated) | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 28,266 | $ | 30,562 | ||||||
Accounts receivable, net | 185,222 | 205,386 | ||||||||
Unbilled revenue | 47,906 | 50,016 | ||||||||
Inventories | 40,781 | 40,694 | ||||||||
Prepaid expenses | 20,584 | 18,565 | ||||||||
Other current assets | 26,296 | 37,865 | ||||||||
Total current assets | 349,055 | 383,088 | ||||||||
Property and equipment, net | 68,028 | 36,714 | ||||||||
Intangibles and other assets: | ||||||||||
Goodwill | 199,135 | 199,946 | ||||||||
Intangible assets, net | 25,068 | 27,563 | ||||||||
Deferred income taxes | 1,084 | 691 | ||||||||
Other non-current assets | 2,047 | 1,636 | ||||||||
Total intangibles and other assets | 227,334 | 229,836 | ||||||||
Total assets | $ | 644,417 | $ | 649,638 | ||||||
Liabilities and stockholders' equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 122,452 | $ | 141,164 | ||||||
Accrued expenses | 34,386 | 34,391 | ||||||||
Deferred revenue | 20,022 | 17,620 | ||||||||
Revolving credit facility - current | 136,538 | — | ||||||||
Other current liabilities | 22,770 | 24,078 | ||||||||
Total current liabilities | 336,168 | 217,253 | ||||||||
Revolving credit facility - non-current | — | 128,398 | ||||||||
Financing obligation - build-to-suit leases | 31,147 | — | ||||||||
Deferred income taxes | 12,236 | 12,043 | ||||||||
Other non-current liabilities | 7,075 | 7,399 | ||||||||
Total liabilities | 386,626 | 365,093 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 6 | 6 | ||||||||
Additional paid-in capital | 237,634 | 235,199 | ||||||||
Treasury stock at cost | (81,471 | ) | (55,873 | ) | ||||||
Accumulated other comprehensive loss | (21,472 | ) | (19,229 | ) | ||||||
Retained earnings | 123,094 | 124,442 | ||||||||
Total stockholders' equity | 257,791 | 284,545 | ||||||||
Total liabilities and stockholders' equity | $ | 644,417 | $ | 649,638 |
Condensed Consolidated Statement of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
(in thousands) | Six Months Ended June 30, | |||||||||
2018 | 2017 | |||||||||
(as restated) | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | $ | (1,983 | ) | $ | 10,052 | |||||
Adjustments to reconcile net (loss) income to net cash from operating activities: | ||||||||||
Depreciation and amortization | 7,173 | 6,086 | ||||||||
Stock-based compensation expense | 2,823 | 2,921 | ||||||||
Deferred income taxes | — | 624 | ||||||||
Bad debt provision | 630 | 82 | ||||||||
Implementation cost amortization | 263 | — | ||||||||
Change in fair value of contingent consideration | — | 844 | ||||||||
Payments of contingent consideration | — | (662 | ) | |||||||
Other operating activities | (154 | ) | 104 | |||||||
Change in assets: | ||||||||||
Accounts receivable and unbilled revenue | 21,643 | (26,620 | ) | |||||||
Inventories | (87 | ) | 1,890 | |||||||
Prepaid expenses and other assets | 9,424 | (971 | ) | |||||||
Change in liabilities: | ||||||||||
Accounts payable | (18,735 | ) | 3,370 | |||||||
Accrued expenses and other liabilities | 1,643 | (69 | ) | |||||||
Net cash provided by (used in) operating activities | 22,640 | (2,349 | ) | |||||||
Cash flows from investing activities | ||||||||||
Purchases of property and equipment | (5,490 | ) | (7,024 | ) | ||||||
Net cash used in investing activities | (5,490 | ) | (7,024 | ) | ||||||
Cash flows from financing activities | ||||||||||
Net borrowings from revolving credit facility | 8,629 | 11,491 | ||||||||
Net short-term secured (repayments) borrowings | (578 | ) | 37 | |||||||
Repurchases of common stock | (25,689 | ) | (10,041 | ) | ||||||
Payments of contingent consideration | — | (1,427 | ) | |||||||
Proceeds from exercise of stock options | 284 | 1,319 | ||||||||
Other financing activities | (695 | ) | (119 | ) | ||||||
Net cash (used in) provided by financing activities | (18,049 | ) | 1,260 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (1,397 | ) | 726 | |||||||
Decrease in cash and cash equivalents | (2,296 | ) | (7,387 | ) | ||||||
Cash and cash equivalents, beginning of period | 30,562 | 30,924 | ||||||||
Cash and cash equivalents, end of period | $ | 28,266 | $ | 23,537 | ||||||
Reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Diluted Earnings Per Share and Constant Currency | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
(as restated) | (as restated) | |||||||||||||||||||
Net (loss) income | $ | (299 | ) | $ | 4,374 | $ | (1,983 | ) | $ | 10,052 | ||||||||||
Income tax expense | 603 | 3,362 | 1,176 | 5,716 | ||||||||||||||||
Interest income | (54 | ) | (12 | ) | (115 | ) | (46 | ) | ||||||||||||
Interest expense | 1,517 | 1,038 | 3,085 | 2,041 | ||||||||||||||||
Other, net | 588 | 1,164 | 1,433 | 1,388 | ||||||||||||||||
Depreciation and amortization | 3,514 | 3,182 | 7,173 | 6,086 | ||||||||||||||||
Stock-based compensation expense | 1,406 | 1,503 | 2,823 | 2,921 | ||||||||||||||||
Change in fair value of contingent consideration | — | 1,884 | — | 844 | ||||||||||||||||
Professional fees related to ASC 606 implementation | 60 | — | 1,092 | — | ||||||||||||||||
Executive search fees | 234 | — | 234 | — | ||||||||||||||||
Restatement-related professional fees | 537 | — | 537 | — | ||||||||||||||||
Other professional fees | 80 | — | 80 | — | ||||||||||||||||
Non-GAAP Adjusted EBITDA | $ | 8,186 | $ | 16,493 | $ | 15,535 | $ | 29,002 | ||||||||||||
(in thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
(as restated) | (as restated) | ||||||||||||||||||
Net (loss) income | $ | (299 | ) | $ | 4,374 | $ | (1,983 | ) | $ | 10,052 | |||||||||
Change in fair value of contingent consideration | — | 1,884 | — | 844 | |||||||||||||||
Czech exit from exchange rate commitment, net of tax | — | 294 | — | 294 | |||||||||||||||
Professional fees related to ASC 606 implementation, net of tax | 45 | — | 819 | — | |||||||||||||||
Executive search fees, net of tax | 176 | — | 176 | — | |||||||||||||||
Restatement-related professional fees, net of tax | 403 | — | 403 | — | |||||||||||||||
Other professional fees, net of tax | 60 | — | 60 | — | |||||||||||||||
Adjusted net income (loss) | $ | 385 | $ | 6,552 | $ | (526 | ) | $ | 11,190 | ||||||||||
Weighted-average shares outstanding, diluted | 52,528 | 55,189 | 52,738 | 55,070 | |||||||||||||||
Non-GAAP diluted earnings (loss) per share | $ | 0.01 | $ | 0.12 | $ | (0.01 | ) | $ | 0.20 | ||||||||||
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
2018 | 2018 | ||||||||||
Revenue as reported | $ | 281,967 | $ | 556,506 | |||||||
Currency impact | 10,580 | 4,421 | |||||||||
Constant currency revenue | $ | 292,547 | $ | 560,927 | |||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180814005713/en/
Source:
InnerWorkings, Inc.
Bridget Freas
312.589.5613
bfreas@inwk.com