InnerWorkings Announces Third Quarter 2014 Results
Generates 41% Adjusted EBITDA growth; announces large new enterprise agreement
Highlights
-
Revenue of
$251.7 million , an increase of 8% compared to$232.6 million in the third quarter of 2013. -
Non-GAAP Adjusted EBITDA of
$12.3 million , an increase of 41% compared to Non-GAAP Adjusted EBITDA of$8.7 million in the third quarter of 2013. -
Non-GAAP diluted earnings per share of
$0.07 , an increase of 40% compared to Non-GAAP diluted earnings per share of$0.05 in the third quarter of 2013. -
Non-GAAP Adjusted Operating Cash Flow of
$(11.3) million , compared to Non-GAAP Adjusted Operating Cash Flow of$1.6 million in the third quarter of 2013.
"Our consistent growth and solid momentum continued in the third quarter
as we landed major new client contracts, underscoring our opportunity
within a large and underpenetrated market," said
Additional financial and operational highlights include the following:
-
Organic enterprise account growth was
$19 million in the third quarter. - Among several new enterprise agreements signed during the quarter, the most significant was with one of the world's largest office supply retailers to manage in-store and corporate marketing materials.
-
The
North America segment accounted for 66% of revenue and international segments accounted for 34%, compared to a 70% / 30% mix in the third quarter of 2013.
| Revenue Growth - Comparing 2014 to 2013 | |||||||||
|
Q3 $(MM) Change |
Q3 % Change |
YTD $(MM) Change |
YTD% Change |
||||||
| Organic Enterprise Account Growth |
|
8% |
|
11% | |||||
| Loss of Spend from Large Customer 1 |
|
0% |
( |
-1% | |||||
| Acquisitive Growth |
|
0% |
|
7% |
|||||
| Total Revenue Growth |
|
8% |
|
16% | |||||
|
1 Includes loss of spending from large retail
customer announced in |
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Outlook
The Company updated and narrowed its 2014 revenue guidance to
"We're delivering on our commitment to accelerate our bottom-line
results, generating meaningful Adjusted EBITDA growth in each of the
first three quarters this year," said
Conference Call
The management team will host a conference call to discuss the Company's
third quarter 2014 results, which will be broadcast live on
To access the conference call by telephone, interested parties may dial
(877) 771-7024. Interested parties are also invited to listen to the
live webcast by visiting the Investor "Events & Presentations" section
of
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 Income (Unaudited) | ||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Revenue | $ | 232,629,788 | $ | 251,651,521 | $ | 648,082,830 | $ | 753,490,776 | ||||||||
| Cost of goods sold | 179,448,580 | 194,553,275 | 500,375,219 | 582,881,105 | ||||||||||||
| Gross profit | 53,181,208 | 57,098,246 | 147,707,611 | 170,609,671 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 44,724,982 | 46,187,034 | 133,183,782 | 146,393,186 | ||||||||||||
| Depreciation and amortization | 3,880,431 | 4,387,438 | 8,994,494 | 12,931,952 | ||||||||||||
| Change in fair value of contingent consideration | (29,627,005 | ) | (1,570,129 | ) | (30,667,562 | ) | (1,743,637 | ) | ||||||||
| Goodwill impairment charge | 37,908,000 | - | 37,908,000 | - | ||||||||||||
| Restructuring and other charges | 4,321,862 | - | 4,321,862 | - | ||||||||||||
| Income (loss) from operations | (8,027,062 | ) | 8,093,903 | (6,032,965 | ) | 13,028,170 | ||||||||||
| Total other expense | (728,047 | ) | (1,180,813 | ) | (2,140,743 | ) | (3,354,653 | ) | ||||||||
| Income (loss) before income taxes | (8,755,109 | ) | 6,913,090 | (8,173,708 | ) | 9,673,517 | ||||||||||
| Income tax expense | 310,961 | 1,799,419 | 18,115 | 2,665,067 | ||||||||||||
| Net income (loss) | $ | (9,066,070 | ) | $ | 5,113,671 | $ | (8,191,823 | ) | $ | 7,008,450 | ||||||
| Basic earnings (loss) per share | $ | (0.18 | ) | $ | 0.10 | $ | (0.16 | ) | $ | 0.13 | ||||||
| Diluted earnings (loss) per share | $ | (0.18 | ) | $ | 0.10 | $ | (0.16 | ) | $ | 0.13 | ||||||
| Weighted average shares outstanding, basic | 51,157,933 | 52,655,284 | 50,743,576 | 51,974,408 | ||||||||||||
| Weighted average shares outstanding, diluted | 52,217,066 | 53,742,472 | 52,122,553 | 52,781,851 | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||
|
|
|
|||||
| 2013 | 2014 | |||||
| (unaudited) | ||||||
| Cash and cash equivalents | $ | 18,606,030 | $ | 22,153,663 | ||
| Accounts receivable, net of allowance for doubtful accounts | 171,832,907 | 182,497,497 | ||||
| Unbilled revenue | 27,483,544 | 34,225,093 | ||||
| Inventories | 26,473,732 | 41,256,484 | ||||
| Prepaid expenses | 11,746,965 | 11,152,793 | ||||
| Other current assets | 23,528,025 | 35,966,267 | ||||
| Total long-term assets | 334,995,575 | 332,340,327 | ||||
| Total assets | $ | 614,666,778 | $ | 659,592,124 | ||
| Accounts payable-trade | $ | 169,243,349 | $ | 165,800,771 | ||
| Other current liabilities | 49,655,185 | 65,998,339 | ||||
| Revolving credit facility | 69,000,000 | 103,500,000 | ||||
| Other long-term liabilities | 81,326,670 | 62,497,110 | ||||
| Total stockholders' equity | 245,441,574 | 261,795,904 | ||||
| Total liabilities and stockholders' equity | $ | 614,666,778 | $ | 659,592,124 | ||
| Cash Flow Data (Unaudited) | ||||||||
|
Nine Months Ended |
||||||||
| 2013 | 2014 | |||||||
| Net cash provided by (used in) operating activities | $ | 9,463,850 | $ | (16,037,736 | ) | |||
| Net cash used in investing activities | (28,486,508 | ) | (11,500,078 | ) | ||||
| Net cash provided by financing activities | 20,907,572 | 31,691,417 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 120,988 | (605,970 | ) | |||||
| Increase in cash and cash equivalents | 2,005,902 | 3,547,633 | ||||||
| Cash and cash equivalents, beginning of period | 17,218,899 | 18,606,030 | ||||||
| Cash and cash equivalents, end of period | $ | 19,224,801 | $ | 22,153,663 | ||||
| Reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow, Non-GAAP Diluted Earnings Per Share and Non-GAAP Adjusted SG&A | ||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Operating income | $ | (8,027,062 | ) | $ | 8,093,903 | $ | (6,032,965 | ) | $ | 13,028,170 | ||||||
| Depreciation and amortization | 3,880,431 | 4,387,438 | 8,994,494 | 12,931,952 | ||||||||||||
| Stock-based compensation expense | 982,082 | 1,374,496 | 3,036,188 | 4,023,227 | ||||||||||||
| Change in fair value of contingent consideration | (29,627,005 | ) | (1,570,129 | ) | (30,667,562 | ) | (1,743,637 | ) | ||||||||
| Payments to former owner of Productions Graphics, net of cash recovered | (910,811 | ) | - | 2,876,214 | - | |||||||||||
| Goodwill impairment charge | 37,908,000 | - | 37,908,000 | - | ||||||||||||
| Restructuring and other charges | 4,321,862 | - | 4,321,862 | - | ||||||||||||
| Legal fees in connection with patent infringement defense | 209,075 | - | 961,295 | - | ||||||||||||
| Restatement-related professional fees | - | - | - | 2,093,104 | ||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 8,736,572 | $ | 12,285,708 | $ | 21,397,526 | $ | 30,332,816 | ||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Net cash provided by (used in) operating activities | $ | 6,553,846 | $ | (11,849,650 | ) | $ | 9,463,850 | $ | (16,037,736 | ) | ||||||
| Excess tax benefit from exercise of stock awards * | (2,834,634 | ) | - | (1,768,277 | ) | - | ||||||||||
|
Refund of VAT assessment in |
(2,166,664 | ) | - | (2,166,664 | ) | - | ||||||||||
| Cash paid for settlement for preference claim | - | - | 900,000 | - | ||||||||||||
| Net short-term advances on International receivables *** | - | 521,313 | - | 2,717,222 | ||||||||||||
| Non-GAAP Adjusted Operating Cash Flow | $ | 1,552,548 | $ | (11,328,337 | ) | $ | 6,428,909 | $ | (13,320,514 | ) | ||||||
| * Represents a U.S. tax deduction in an amount equal to the excess of the market price of the stock on the date of exercise over exercise price. | ||||||||||||||||
|
** Represents a payment made to Her Majesty's Revenue and Customers
for VAT assessments in the |
||||||||||||||||
| *** US GAAP requires classification in financing activities despite inclusion in working capital on the balance sheet. | ||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Net income | $ | (9,066,070 | ) | $ | 5,113,671 | $ | (8,191,823 | ) | $ | 7,008,450 | ||||||
| Change in fair value of contingent consideration, net of tax | (28,489,495 | ) | (1,504,985 | ) | (29,046,641 | ) | (1,448,566 | ) | ||||||||
| Payments to former owner of Productions Graphics, net of cash recovered, net of tax | (630,896 | ) | - | 1,791,487 | - | |||||||||||
| Goodwill impairment charge | 37,908,000 | - | 37,908,000 | - | ||||||||||||
| Restructuring and other charges | 2,614,726 | - | 2,614,726 | - | ||||||||||||
| Legal fees in connection with patent infringement defense, net of tax | 135,941 | - | 625,034 | - | ||||||||||||
| Restatement-related professional fees, net of tax | - | - | - | 1,266,328 | ||||||||||||
| Adjusted net income | $ | 2,472,206 | $ | 3,608,686 | $ | 5,700,783 | $ | 6,826,212 | ||||||||
| Weighted average shares outstanding, diluted | 52,217,066 | 53,742,472 | 52,122,553 | 52,781,851 | ||||||||||||
| Non-GAAP Diluted Earnings Per Share | $ | 0.05 | $ | 0.07 | $ | 0.11 | $ | 0.13 | ||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Selling, general and administrative expenses | $ | 44,724,982 | $ | 46,187,034 | $ | 133,183,782 | $ | 146,393,186 | ||||||||
| Restatement-related professional fees | - | - | - | (2,093,104 | ) | |||||||||||
| Legal fees in connection with patent infringement defense | (209,075 | ) | - | (961,295 | ) | - | ||||||||||
| Payments to former owner of Productions Graphics, net of cash recovered | 910,811 | - | (2,876,214 | ) | - | |||||||||||
| Non-GAAP Adjusted SG&A | $ | 45,426,718 | $ | 46,187,034 | $ | 129,346,273 | $ | 144,300,082 | ||||||||
bmoore@inwk.com
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