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InnerWorkings, Inc. Announces Third Quarter 2007 Results

November 7, 2007
InnerWorkings, Inc. Announces Third Quarter 2007 Results

CHICAGO, Nov 07, 2007 (BUSINESS WIRE) -- InnerWorkings, Inc. (NASDAQ:INWK), a leading provider of managed print solutions to corporate clients in the United States, today reported record results for the three months ended September 30, 2007.

Quarterly Highlights:

  • Revenue grew 73 percent versus the third quarter of 2006 to a record $72.1 million.
  • Operating income rose 60 percent to $5.8 million, up from $3.6 million in the third quarter of 2006.
  • Net income increased 70 percent to $4.0 million, up from $2.4 million in the third quarter of 2006.
  • Year-over-year enterprise revenue increased 51 percent to $47 million.
  • During the quarter the Company added five new enterprise clients.
  • The Company increased its sales force through the addition of 10 new account executives during the quarter, increasing the total to 178 as of September 30, 2007.
  • Diluted earnings per share were $0.08, up from $0.05 in the third quarter of 2006.

Revenue for the Company's third quarter was $72.1 million, an increase of 73 percent compared to revenue of $41.8 million in the third quarter of 2006. Operating income was $5.8 million, an increase of 60 percent from $3.6 million during the same quarter of 2006.

For the three months ended September 30, 2007, net income was $4.0 million, an increase of 70 percent from $2.4 million during the third quarter of 2006. For the quarter, diluted earnings per share were $0.08.

"Our focus on our sales efforts and overall business fundamentals continues to be rewarded with excellent top-line and bottom-line growth," stated Steve Zuccarini, Chief Executive Officer of InnerWorkings. "We are very pleased with the track record of consistent results that we are building, as it is a continued demonstration of the substantial value that our model delivers to our customers."

Additional third quarter 2007 financial and operational highlights include the following:

  • For the third quarter of 2007, 65 percent of the Company's revenue was generated from sales to enterprise clients, with the remaining 35 percent coming from transactional clients.
  • During the quarter the Company generated cash flow from operations of $2.5 million.
  • The Company had a cash and marketable securities balance of $70.3 million as of September 30, 2007. This cash balance increased over $1.6 million sequentially from the second quarter of 2007.
  • The Company's balance sheet contained no debt as of September 30, 2007.
  • As previously announced, the Company acquired Brown+Partners, Inc. in July of 2007.

"The investments in personnel and processes during the quarter are a reflection of our desire to continue to build out the organization in order to capture the significant potential that exists in the marketplace," stated Nick Galassi, Chief Financial Officer of InnerWorkings. "From an operational perspective we are very pleased to see steadily increasing cash flow, which reflects the financial strength of the business."

Outlook

"We continue to be impressed with the exceptional commitment of the InnerWorkings team, which has allowed the Company to establish a strong track record of growth," Zuccarini concluded. "As the year comes to a close, we are confident in our ability to achieve revenue for fiscal year 2007 at the high end or slightly above our forecasted range of $260 million to $280 million. Based upon our continued investment in the business, we are reiterating guidance related to net income and diluted earnings per share in the ranges of $16 million to $17 million and $0.30 to $0.33, respectively."

Conference Call

A conference call will be broadcast live on Wednesday, November 7, 2007, at 4:30 p.m. Central Time (5:30 p.m. Eastern Time). The live webcast discussion, which will include a Q&A session, will be hosted by Steven E. Zuccarini, Chief Executive Officer; Nicholas J. Galassi, Chief Financial Officer; and Eric D. Belcher, Chief Operating Officer. Interested parties are invited to listen to the live webcast by visiting the Investor "Events & Presentations" section of InnerWorkings' website at www.iwprint.com. A replay of the webcast will be available later that day in the same section of the website.

About InnerWorkings, Inc.

Chicago-based InnerWorkings, Inc. (NASDAQ:INWK) is a leading provider of managed print solutions to corporate clients in the United States. With proprietary technology, an extensive supplier network and domain expertise, the Company procures, manages and delivers printed products as part of a comprehensive outsourced enterprise solution. Based in Chicago with numerous other offices in the United States, InnerWorkings procures printed products for clients across a wide range of industries, such as advertising, consumer products, publishing and retail. For more information on InnerWorkings, visit: www.iwprint.com.

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 the Form 10-K, including the "Risk Factors" section, we filed with the SEC.

Consolidated Statements of Income (Unaudited)

                      Three months ended        Nine months ended
                          September 30,            September 30,
                    ------------------------ -------------------------
                        2006        2007         2006         2007
                    ------------ ----------- ------------ ------------

Revenue             $41,784,814  $72,149,970 $99,361,724  $198,392,945
Cost of goods sold   32,239,588   53,806,336  78,227,822   148,417,678
                    ------------ ----------- ------------ ------------
Gross profit          9,545,226   18,343,634  21,133,902    49,975,267
Operating expenses:
   Selling, general,
    and
    administrative
    expenses          5,665,111   11,877,927  12,770,496    33,202,122
   Depreciation and
    amortization        240,123      640,697     574,016     1,579,815
                    ------------ ----------- ------------ ------------
Income from
 operations           3,639,992    5,825,010   7,789,390    15,193,330
Total other income      248,453      779,448     338,908     2,022,304
                    ------------ ----------- ------------ ------------
Income before taxes   3,888,445    6,604,458   8,128,298    17,215,634
Income tax expense    1,521,225    2,577,243   3,215,327     6,705,397
                    ------------ ----------- ------------ ------------
Net income            2,367,220    4,027,215   4,912,971    10,510,237
Dividends on
 preferred shares      (293,740)           -  (1,408,740)            -
                    ------------ ----------- ------------ ------------
Net income
 applicable to
 common shareholders $2,073,480   $4,027,215  $3,504,231   $10,510,237
                    ============ =========== ============ ============

Basic earnings per
 share                    $0.06        $0.08       $0.13         $0.22
Diluted earnings per
 share                    $0.05        $0.08       $0.13         $0.21

Weighted average
 shares outstanding,
 basic               34,222,084   47,768,666  27,517,682    47,340,337
Weighted average
 shares outstanding,
 diluted             43,552,432   50,192,014  36,803,747    49,885,117




Consolidated Balance Sheet

                                          December 31,   September 30,
                                              2006           2007
                                          -------------  -------------
Assets                                                    (Unaudited)

Cash and cash equivalents                   $20,612,944    $54,317,892
Marketable securities                         9,979,755     15,950,000
Accounts receivable, net of allowance for
 doubtful accounts                           44,990,964     57,453,661
Unbilled revenue                              4,691,546      8,816,169
Inventories                                   2,080,257      3,786,805
Prepaid expenses                              5,538,998      4,297,425
Other current assets                          1,644,323      2,853,030
Total long-term assets                       23,971,117     31,716,424
Total assets                               $113,509,904   $179,191,406
Accounts payable-trade                      $24,016,249    $36,509,839
Other current liabilities                     7,817,456      7,817,552
Total long-term liabilities                     221,685        165,117
Total stockholders' equity                   81,454,514    134,698,898
Total liabilities and stockholders' equity $113,509,904   $179,191,406




                                                 Nine Months Ended
                                                   September 30,
                                             -------------------------
                                                 2006         2007
                                             ------------ ------------
Cash Flow Data (Unaudited)
Net cash provided by (used in) operating
 activities                                   (7,793,701)   6,874,276

Net cash used in investing activities        (13,966,229) (14,977,702)

Net cash provided by financing activities     53,080,726   41,808,374
                                             ------------ ------------

Increase in cash and cash equivalents         31,320,796   33,704,948

Cash and cash equivalents, beginning of
 period                                        2,962,740   20,612,944
                                             ------------ ------------

Cash and cash equivalents, end of period     $34,283,536  $54,317,892
                                             ============ ============

(inwk-e)

SOURCE: InnerWorkings, Inc.

InnerWorkings, Inc.
Mark Desky, 312-604-5470
mdesky@iwprint.com

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