Press Release
Record third quarter gross revenue and gross profit (net revenue)
Raising earnings guidance for 2017
Year-to-date new business awards now over
Financial and Business Highlights
-
Record gross revenue was
$288.4 million in the third quarter, an increase of 3% compared with$280.0 million in the third quarter of 2016. Year-to-date gross revenue was$835.3 million , a 2% increase compared with$820.3 million in the prior period. -
Record gross profit (net revenue) was
$72.5 million , or 25.1% of gross revenue in the third quarter, a 7% increase compared to$67.8 million , or 24.2% of gross revenue, in the same period of last year. Year-to-date gross profit (net revenue) was$207.0 million , or 24.8% of gross revenue, an increase of 6% compared to the prior-year period. -
Net income was
$7.5 million or$0.14 per diluted share in the third quarter, compared to net income of$4.3 million or$0.08 per share in the third quarter of 2016. Year-to-date net income was$17.5 million or$0.32 per diluted share, compared to net income (loss) of$(0.7) million or$(0.01) per diluted share in the same period of 2016. -
Record non-GAAP diluted earnings per share was
$0.15 in the third quarter, an increase of 46% compared to$0.11 in the third quarter of 2016. Year-to-date non-GAAP diluted earnings per share was$0.35 , a 34% increase compared to$0.26 in the same period of 2016. -
Record non-GAAP adjusted EBITDA was
$18.8 million in the third quarter, reflecting 11% growth as compared to$16.9 million in the third quarter of 2016. Year-to-date non-GAAP adjusted EBITDA was$47.7 million , an increase of 10% compared to$43.4 million in the same period of 2016. - Non-GAAP adjusted EBITDA as a percentage of gross profit (net revenue) was 25.9% in the third quarter and 23.0% year to date, compared to 25.0% in the third quarter of 2016 and 22.3% for the first nine months of 2016.
-
InnerWorkings has continued to sign new enterprise contracts in recent months, bringing the year-to-date cumulative total to more than$100 million of annual gross revenue at full run-rate. -
The largest of the new wins during the third quarter is a partnership
with a
Detroit -based financial services firm to manage the company's direct marketing and creative services execution.
"The investments we have made to build our global capabilities and
technology platform are paying off in a meaningful way," said Eric D.
Belcher, Chief Executive Officer of
"We are continuing to improve our mix of high value-add services leading
to stronger net revenue and profit performance," said Jeffrey P.
Pritchett, Chief Financial Officer of
Outlook
The Company is raising its 2017 guidance for non-GAAP diluted earnings
per share to be
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) |
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|
Three Months Ended
|
Nine Months Ended
|
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 288,386 | $ | 279,993 | $ | 835,306 | $ | 820,286 | ||||||||
| Cost of goods sold | 215,867 | 212,212 | 628,282 | 625,465 | ||||||||||||
| Gross profit | 72,519 | 67,781 | 207,024 | 194,821 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 57,134 | 52,601 | 165,647 | 155,511 | ||||||||||||
| Depreciation and amortization | 3,317 | 5,066 | 9,403 | 14,382 | ||||||||||||
| Change in fair value of contingent consideration | (167 | ) | 788 | 677 | 9,975 | |||||||||||
| Restructuring and other charges | — | 466 | — | 4,433 | ||||||||||||
| Income from operations | 12,235 | 8,860 | 31,297 | 10,520 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 31 | 26 | 77 | 63 | ||||||||||||
| Interest expense | (1,198 | ) | (1,191 | ) | (3,239 | ) | (3,252 | ) | ||||||||
| Other, net | 427 | (114 | ) | (962 | ) | 16 | ||||||||||
| Total other expense | (740 | ) | (1,279 | ) | (4,123 | ) | (3,173 | ) | ||||||||
| Income before income taxes | 11,495 | 7,581 | 27,173 | 7,347 | ||||||||||||
| Income tax expense | 3,967 | 3,240 | 9,694 | 8,023 | ||||||||||||
| Net income (loss) | $ | 7,528 | $ | 4,341 | $ | 17,479 | $ | (676 | ) | |||||||
| Basic earnings (loss) per share | $ | 0.14 | $ | 0.08 | $ | 0.32 | $ | (0.01 | ) | |||||||
| Diluted earnings (loss) per share | $ | 0.14 | $ | 0.08 | $ | 0.32 | $ | (0.01 | ) | |||||||
| Weighted-average shares outstanding - basic | 53,964 | 53,818 | 53,962 | 53,536 | ||||||||||||
| Weighted-average shares outstanding - diluted | 55,189 | 54,772 | 55,127 | 53,536 | ||||||||||||
|
Condensed Consolidated Balance Sheet (In thousands) |
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|
|
|
|||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 27,682 | $ | 30,924 | ||||
|
Accounts receivable, net of allowance for doubtful accounts of
|
203,306 | 182,874 | ||||||
| Unbilled revenue | 50,130 | 32,723 | ||||||
| Inventories | 48,744 | 31,638 | ||||||
| Prepaid expenses | 22,018 | 18,772 | ||||||
| Other current assets | 31,850 | 24,769 | ||||||
| Total current assets | 383,730 | 321,700 | ||||||
| Property and equipment, net | 37,212 | 32,656 | ||||||
| Intangibles and other assets: | ||||||||
|
|
206,704 | 202,700 | ||||||
| Intangible assets, net | 28,745 | 31,538 | ||||||
| Deferred income taxes | 1,432 | 1,031 | ||||||
| Other assets | 1,312 | 1,374 | ||||||
| Total intangibles and other assets | 238,193 | 236,642 | ||||||
| Total assets | $ | 659,135 | $ | 590,999 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 129,600 | $ | 121,289 | ||||
| Current portion of contingent consideration | — | 19,283 | ||||||
| Accrued expenses | 32,994 | 30,068 | ||||||
| Other liabilities | 43,296 | 35,049 | ||||||
| Total current liabilities | 205,890 | 205,688 | ||||||
| Revolving credit facility | 149,184 | 107,468 | ||||||
| Deferred income taxes | 9,834 | 11,291 | ||||||
| Other long-term liabilities | 1,958 | 1,926 | ||||||
| Total liabilities | 366,866 | 326,374 | ||||||
| Commitments and contingencies (See Note 10) | ||||||||
| Stockholders' equity: | ||||||||
|
Common stock, par value |
6 | 6 | ||||||
| Additional paid-in capital | 232,979 | 224,480 | ||||||
|
|
(54,938 | ) | (49,458 | ) | ||||
| Accumulated other comprehensive loss | (12,772 | ) | (20,799 | ) | ||||
| Retained earnings | 126,994 | 110,397 | ||||||
| Total stockholders' equity | 292,269 | 264,625 | ||||||
| Total liabilities and stockholders' equity | $ | 659,135 | $ | 590,999 | ||||
|
Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands) |
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|
Nine Months Ended |
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| 2017 | 2016 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 17,479 | $ | (676 | ) | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 9,403 | 14,382 | ||||||
| Stock-based compensation expense | 5,296 | 4,097 | ||||||
| Deferred income taxes | (82 | ) | 677 | |||||
| Bad debt provision | 268 | 1,433 | ||||||
| Change in fair value of contingent consideration | 677 | 9,975 | ||||||
| Other operating activities | 157 | 157 | ||||||
| Change in assets: | ||||||||
| Accounts receivable and unbilled revenue | (38,108 | ) | (12,798 | ) | ||||
| Inventories | (17,106 | ) | (12,050 | ) | ||||
| Prepaid expenses and other assets | (10,401 | ) | 3,574 | |||||
| Change in liabilities: | ||||||||
| Accounts payable | 8,312 | (40,264 | ) | |||||
| Accrued expenses and other liabilities | 11,722 | 7,861 | ||||||
| Net cash used in operating activities | (12,383 | ) | (23,632 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (10,274 | ) | (10,502 | ) | ||||
| Net cash used in investing activities | (10,274 | ) | (10,502 | ) | ||||
| Cash flows from financing activities | ||||||||
| Net borrowings from revolving credit facility | 42,258 | 34,722 | ||||||
| Net short-term secured borrowings | 633 | (820 | ) | |||||
| Repurchases of common stock | (10,041 | ) | — | |||||
| Payments of contingent consideration | (15,345 | ) | (11,008 | ) | ||||
| Proceeds from exercise of stock options | 1,824 | 2,002 | ||||||
| Other financing activities | (850 | ) | (680 | ) | ||||
| Net cash provided by financing activities | 18,479 | 24,216 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 936 | (50 | ) | |||||
| (Decrease) increase in cash and cash equivalents | (3,242 | ) | (9,968 | ) | ||||
| Cash and cash equivalents, beginning of period | 30,924 | 30,755 | ||||||
| Cash and cash equivalents, end of period | $ | 27,682 | $ | 20,787 | ||||
|
Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share (Unaudited) (In thousands) |
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Three Months Ended
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Nine Months Ended
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net income (loss) | $ | 7,528 | $ | 4,341 | $ | 17,479 | $ | (676 | ) | |||||||
| Income tax expense | 3,967 | 3,240 | 9,694 | 8,023 | ||||||||||||
| Interest income | (31 | ) | (26 | ) | (77 | ) | (63 | ) | ||||||||
| Interest expense | 1,198 | 1,191 | 3,239 | 3,252 | ||||||||||||
| Other, net | (427 | ) | 114 | 962 | (16 | ) | ||||||||||
| Depreciation and amortization | 3,317 | 5,066 | 9,403 | 14,382 | ||||||||||||
| Stock-based compensation expense | 2,375 | 1,740 | 5,296 | 4,097 | ||||||||||||
| Change in fair value of contingent consideration | (167 | ) | 788 | 677 | 9,975 | |||||||||||
| Restructuring and other charges | — | 466 | — | 4,433 | ||||||||||||
| Business development realignment | $ | 715 | $ | — | $ | 715 | $ | — | ||||||||
| Professional fees related to ASC 606 implementation | $ | 300 | $ | — | $ | 300 | $ | — | ||||||||
| Non-GAAP Adjusted EBITDA | $ | 18,775 | $ | 16,920 | $ | 47,688 | $ | 43,407 | ||||||||
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(In thousands, except per share data) |
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Three Months Ended
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Nine Months Ended
|
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net income (loss) | $ | 7,528 | $ | 4,341 | $ | 17,479 | $ | (676 | ) | |||||||
| Change in fair value of contingent consideration | (167 | ) | 788 | 677 | 9,975 | |||||||||||
| Czech exit from exchange rate commitment, net of tax | — | — | 294 | — | ||||||||||||
| Restructuring and other charges, net of tax | — | 382 | — | 3,964 | ||||||||||||
| Realignment-related income tax charges | — | 263 | — | 898 | ||||||||||||
| Business development realignment, net of tax | $ | 875 | $ | — | $ | 875 | $ | — | ||||||||
| Professional fees related to ASC 606 implementation, net of tax | 204 | — | 204 | — | ||||||||||||
| Adjusted net income | $ | 8,440 | $ | 5,774 | $ | 19,529 | $ | 14,162 | ||||||||
| Weighted-average shares outstanding, diluted | $ | 55,189 | $ | 54,772 | $ | 55,127 | $ | 54,359 | ||||||||
| Non-GAAP Diluted Earnings Per Share | $ | 0.15 | $ | 0.11 | $ | 0.35 | $ | 0.26 | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171107006687/en/
312.589.5613
bfreas@inwk.com
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