InnerWorkings Announces First Quarter 2015 Results
May 7, 2015 | By Business Wire News
CHICAGO
InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, today reported results for the three months ended March 31, 2015. For all Non-GAAP references, please refer to the Non-GAAP reconciliation table below for more information.
First Quarter Highlights
- Revenue was $242.1 million as reported and $256.7 million in constant currency, reflecting 6% growth in constant currency over $241.5 million in the first quarter of 2014.
- Non-GAAP Adjusted EBITDA was $9.5 million as reported and $9.6 million in constant currency, reflecting 13% growth in constant currency over $8.5 million in the first quarter of 2014.
- Non-GAAP diluted earnings per share were $0.03, compared to Non-GAAP diluted earnings per share of $0.02 in the first quarter of 2014. GAAP diluted earnings per share were $0.02, compared to GAAP diluted earnings per share of $0.01 in the first quarter of 2014.
“We are pleased to announce we have added four new enterprise clients in recent weeks, which brings the expected value of new enterprise agreements signed in 2015 to over $40 million of future annual revenue,” said Eric D. Belcher, Chief Executive Officer of InnerWorkings. “With our expectation to add several more new clients in the near-term, 2015 is shaping up to be one of our strongest years in terms of new enterprise client wins.”
Additional Highlights
- A new enterprise client agreement was signed with the leading brand of children’s clothing, gifts and accessories in the U.S. The agreement includes in-store signage and direct mail, supporting all 800+ owned stores nationwide.
- A new enterprise agreement was signed with an international children’s charity to manage the direct mail marketing efforts associated with their fundraising campaign.
- A new enterprise agreement was signed with a large pizza chain franchisor and operator with over 1,400 locations in the U.S. to manage in-store marketing materials.
- A new enterprise agreement was signed with a large financial services company operating over 300 retail locations in the U.S. to manage signage, point of sale materials, direct mail, an e-store, warehousing and fulfillment.
“Our bottom-line results reflect our ongoing efforts to improve our operating margins, a trend we expect will continue as we add new enterprise clients,” said Ryan K. Spohn, Interim Chief Financial Officer of InnerWorkings. “While the strengthening dollar has impacted our reported revenue growth, we are encouraged by our growing client base and confident in our constant currency projections.”
Outlook
The Company reaffirms its 2015 revenue guidance of 8% to 11% growth over 2014 in constant currency. The Company reaffirms its 2015 Non-GAAP Adjusted EBITDA guidance of $49 million to $51 million and Non-GAAP diluted earnings per share guidance of $0.25 to $0.27 in reported terms.
Conference Call
The management team will host a conference call to discuss the Company’s first quarter 2015 results, which will be broadcast live on Thursday, May 7, 2015, 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 Eric D. Belcher, Chief Executive Officer, and Ryan K. Spohn, Interim Chief Financial Officer.
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 InnerWorkings’ website at investor.inwk.com/events.cfm. A replay of the webcast will be available later that day in the same section of the website.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow, Non-GAAP diluted earnings per share and constant currency. We believe these measures provide useful information to investors because they provide information about the estimated financial performance of the Company’s ongoing business. These measures are used by management in its financial and operational decision-making and evaluation of overall operating performance. With respect to constant currency, we believe such presentation allows investors to measure our financial performance exclusive of foreign currency exchange fluctuations more clearly. Constant currency for revenue is calculated by retranslating current period results at a consistent rate with the prior period results. This approach is based on the pricing currency for each country, which is typically the functional currency. All of these non-GAAP financial measures may be different from similar measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, please see the “GAAP to Non-GAAP Reconciliation” included in this release.
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 SEC filings, including the “Risk Factors” section of our most recently filed Form 10-K.
About InnerWorkings
InnerWorkings, Inc. (NASDAQ: INWK) is the leading global marketing execution firm serving Fortune 500 brands across a wide range of industries. As a comprehensive outsourced enterprise solution, the Company leverages proprietary technology, an extensive supplier network and deep domain expertise to streamline the production of branded materials and retail experiences across geographies and formats. InnerWorkings is based in Chicago, IL, employs approximately 1,600 individuals, and maintains 67 global offices in 30 countries. Among the many industries InnerWorkings serves are: retail, financial services, hospitality, consumer packaged goods, not-for-profits, healthcare, food & beverage, broadcasting & cable, and transportation. For more information visit: www.inwk.com.
| Condensed Consolidated Statements of Income | |||||||||
| Three Months Ended March 31, | |||||||||
| 2015 | 2014 | ||||||||
| Revenue | $ | 242,095,497 | $ | 241,489,664 | |||||
| Cost of goods sold | 187,030,793 | 186,905,270 | |||||||
| Gross profit | 55,064,704 | 54,584,394 | |||||||
| Operating expenses: | |||||||||
| Selling, general and administrative expenses | 47,647,330 | 49,571,481 | |||||||
| Depreciation and amortization | 4,090,938 | 4,170,716 | |||||||
| Change in fair value of contingent consideration | 313,233 | (695,177 | ) | ||||||
| Income from operations | 3,013,203 | 1,537,374 | |||||||
| Total other expense | (1,039,789 | ) | (1,115,673 | ) | |||||
| Income before income taxes | 1,973,414 | 421,701 | |||||||
| Income tax expense | 834,694 | 132,294 | |||||||
| Net income | $ | 1,138,720 | $ | 289,407 | |||||
| Basic earnings per share | $ | 0.02 | $ | 0.01 | |||||
| Diluted earnings per share | $ | 0.02 | $ | 0.01 | |||||
| Weighted average shares outstanding, basic | 52,753,621 | 51,312,649 | |||||||
| Weighted average shares outstanding, diluted | 53,878,697 | 52,189,091 | |||||||
| Condensed Consolidated Balance Sheets | ||||||
| March 31, | December 31, | |||||
| 2015 | 2014 | |||||
| Cash and cash equivalents | $ | 13,406,040 | $ | 22,577,942 | ||
| Accounts receivable, net of allowance for doubtful accounts | 178,595,264 | 179,465,922 | ||||
| Unbilled revenue | 35,646,695 | 31,698,924 | ||||
| Inventories | 33,651,592 | 27,162,642 | ||||
| Prepaid expenses | 12,765,069 | 12,684,237 | ||||
| Other current assets | 27,113,449 | 30,638,030 | ||||
| Total long-term assets | 322,850,515 | 327,022,683 | ||||
| Total assets | $ | 624,028,624 | $ | 631,250,380 | ||
| Accounts payable | $ | 140,194,670 | $ | 144,044,592 | ||
| Other current liabilities | 50,388,725 | 50,107,105 | ||||
| Revolving credit facility | 110,118,500 | 104,538,750 | ||||
| Other long-term liabilities | 33,758,416 | 36,413,364 | ||||
| Total stockholders’ equity | 289,568,313 | 296,146,569 | ||||
| Total liabilities and stockholders’ equity | $ | 624,028,624 | $ | 631,250,380 | ||
| Cash Flow Data | ||||||||
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net cash used in operating activities | $ | (6,275,596 | ) | $ | (8,408,343 | ) | ||
| Net cash used in investing activities | (3,718,679 | ) | (4,483,271 | ) | ||||
| Net cash provided by financing activities | 1,670,870 | 15,431,352 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (848,497 | ) | (22,449 | ) | ||||
| (Decrease) increase in cash and cash equivalents | (9,171,902 | ) | 2,517,289 | |||||
| Cash and cash equivalents, beginning of period | 22,577,942 | 18,606,303 | ||||||
| Cash and cash equivalents, end of period | $ | 13,406,040 | $ | 21,123,592 | ||||
| Reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and Non-GAAP Diluted Earnings Per Share | ||||||||
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Operating income | $ | 3,013,203 | $ | 1,537,374 | ||||
| Depreciation and amortization | 4,090,938 | 4,170,716 | ||||||
| Stock-based compensation expense | 2,060,738 | 1,396,274 | ||||||
| Change in fair value of contingent consideration | 313,233 | (695,177 | ) | |||||
| Restatement-related professional fees | – | 2,093,104 | ||||||
| Non-GAAP Adjusted EBITDA | $ | 9,478,112 | $ | 8,502,291 | ||||
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net cash used in operating activities | $ | (6,275,596 | ) | $ | (8,408,343 | ) | ||
| Net short-term advances on International receivables * | 88,837 | – | ||||||
| Non-GAAP Adjusted Operating Cash Flow | $ | (6,186,759 | ) | $ | (8,408,343 | ) | ||
| * US GAAP requires classification in financing activities despite inclusion in working capital on the balance sheet. | ||||||||
| Three Months Ended March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net income | $ | 1,138,720 | $ | 289,407 | ||||
| Change in fair value of contingent consideration, net of tax | 310,851 | (536,797 | ) | |||||
| Restatement-related professional fees, net of tax | – | 1,266,328 | ||||||
| Adjusted net income | $ | 1,449,571 | $ | 1,018,938 | ||||
| Weighted average shares outstanding, diluted | 53,878,697 | 52,189,091 | ||||||
| Non-GAAP Diluted Earnings Per Share | $ | 0.03 | $ | 0.02 | ||||
InnerWorkings, Inc.
Brad Moore, (312) 277-1510
bmoore@inwk.com
