InnerWorkings Announces Second Quarter 2013 Results New Enterprise Business Momentum Continues to Position the Company for Long-term Growth Business Wire CHICAGO -- August 8, 2013 InnerWorkings, Inc. (NASDAQ: INWK), a leading global marketing supply chain company, today reported results for the three months ended June 30, 2013. Quarterly Highlights: *Revenue was $210.9 million, compared to $201.4 million in the second quarter of 2012. *Non-GAAP Adjusted EBITDA was $5.4 million, compared to $11.9 million in the same period last year, due to a previously-announced loss of a portion of a significant client, lower inside sales profitability, and lower profitability in the EMEA region. Please refer to the Non-GAAP reconciliation table below for more information. *GAAP diluted earnings per share were $0.04, compared to GAAP diluted earnings per share of $0.09 in the second quarter of 2012. *Non-GAAP Adjusted Operating Cash Flow was $3.9 million, compared to Non-GAAP Adjusted Operating Cash Flow of $0.8 million in the second quarter of 2012. Please refer to the non-GAAP reconciliation table below for more information. *New organic enterprise account growth was $19.9 million in the second quarter. “As expected, this wasn’t a particularly strong quarter by our standards,” said Joseph M. Busky, Chief Financial Officer of InnerWorkings. “However, we expect growth will accelerate in the second half of the year due to recent new enterprise wins, contributions from acquisitions, and the overall seasonality of our business.” Additional second quarter 2013 financial and operational highlights include the following: *77% of the Company’s revenues were generated from the enterprise channel, with the remaining 23% derived from the middle market channel. *Today, a major new enterprise agreement was announced with Mondelez, one of the world’s largest snack companies. The long-term partnership encompasses $45 million of annual spending in Brazil and represents one of the largest agreements in the Company’s history. *Other new client agreements were recently signed with a large publisher, as well as with a Fortune 1000 financial services firm, both headquartered in North America. "We continue to add new blue-chip clients in many regions around the world, as evidenced most recently by the new commitment from Mondelez,” said Eric D. Belcher, Chief Executive Officer of InnerWorkings. “Further, our multinational clients are taking advantage of our new global scale by expanding with us into additional markets. This is a trend we expect will drive significant long-term growth for us.” Revenue Growth - Comparing 2013 to 2012 Q2 YTD $(MM) Q2 % $(MM) YTD % Change Change Change Change New Enterprise Account Growth $20 10% $38 10% New Middle Market Growth $0 0% $2 1% Same Customer Spend ($8) -4% ($14) -4% Lost Customer Spending ($8) -4% ($8) -2% Acquisitive Growth $6 3% $8 2% Total Revenue Growth $10 5% $25 6% Total Organic Revenue Growth $12 6% $25 6% (1) (1) Organic Revenue Growth excludes Lost Customer Spending and Acquisitive Growth. Outlook The Company is increasing its 2013 revenue guidance range from $900 to $930 million to $910 to $940 million, representing 14-18% growth over 2012. The Company is reaffirming its 2013 GAAP EPS guidance of $0.45 to $0.50, which represents 10-22% growth over 2012 adjusted diluted earnings per share. Projected revenue and profit from recent acquisitions is expected to be offset by lower Inside Sales profitability and lower same-customer spending projections. Conference Call A conference call to discuss the Company’s second quarter 2013 results will be broadcast live on Thursday, August 8, 2013, 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 Joseph M. Busky, 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. About InnerWorkings InnerWorkings, Inc. (NASDAQ: INWK) is a leading global marketing supply chain company servicing corporate clients across a wide range of industries. With proprietary technology, an extensive supplier network and deep domain expertise, the Company procures, manages and delivers printed materials and promotional products as part of a comprehensive outsourced enterprise solution. InnerWorkings is based in Chicago, IL, employs approximately 1,400 individuals, and maintains 49 global offices. Among the many industries InnerWorkings services are: retail, financial services, hospitality, non-profits, healthcare, food & beverage, broadcasting & cable, education, transportation and utilities. For more information visit: www.inwk.com. 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 and Non-GAAP Adjusted Operating Cash Flow. We believe that Non-GAAP Adjusted EBITDA and Non GAAP Adjusted Operating Cash Flow provide useful information to investors because they provide information about the estimated financial performance of the Company's ongoing business. Non-GAAP Adjusted EBITDA and Non-GAAP Adjusted Operating Cash Flow are used by management in its financial and operational decision-making and evaluation of overall operating performance. Non-GAAP Adjusted EBITDA and Non-GAAP Adjusted Operating Cash Flow 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, see "Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Adjusted Operating Cash Flow” 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. Consolidated Statements of Income Three Months Ended June 30, Six Months Ended June 30, 2012 2013 2012 2013 Revenue $ 201,397,471 $ 210,875,626 $ 389,943,873 $ 415,191,751 Cost of goods 153,551,408 162,699,024 300,704,427 321,022,654 sold Gross profit 47,846,063 48,176,602 89,239,446 94,169,097 Operating expenses: Selling, general and 37,644,103 42,257,681 70,727,367 83,993,470 administrative expenses Depreciation and 2,936,981 2,648,396 5,381,077 5,114,063 amortization Income from 7,264,979 3,270,525 13,131,002 5,061,564 operations Total other (493,899 ) (488,760 ) (754,287 ) (1,412,696 ) expense Income before 6,771,080 2,781,765 12,376,715 3,648,868 income taxes Income tax 2,296,680 878,420 4,214,627 850,393 expense Net income $ 4,474,400 $ 1,903,345 $ 8,162,088 $ 2,798,475 Basic earnings $ 0.09 $ 0.04 $ 0.17 $ 0.06 per share Diluted earnings per $ 0.09 $ 0.04 $ 0.16 $ 0.05 share Weighted average shares 48,617,646 50,728,372 47,904,961 50,533,521 outstanding, basic Weighted average shares 50,706,956 51,965,539 50,554,642 52,046,000 outstanding, diluted Consolidated Balance Sheets December 31, June 30, 2012 2013 Cash and cash equivalents $ 17,218,899 $ 14,164,356 Accounts receivable, net of allowance for 149,246,568 151,357,448 doubtful accounts Unbilled revenue 30,798,230 27,041,664 Inventories 17,406,863 16,390,726 Prepaid expenses 16,210,053 16,276,354 Other current assets 22,565,321 20,156,268 Total long-term assets 268,797,648 321,587,535 Total assets $ 522,243,582 $ 566,974,351 Accounts payable-trade $ 121,132,051 $ 117,661,216 Other current liabilities 44,262,065 52,726,450 Revolving credit facility 65,000,000 78,300,000 Other long-term liabilities 68,870,021 87,210,243 Total stockholders' equity 222,979,445 231,076,443 Total liabilities and stockholders' equity $ 522,243,582 $ 566,974,351 Cash Flow Data Six Months Ended June 30, 2012 2013 Net cash provided by (used in) $ (9,996,549 ) $ 8,305,023 operating activities Net cash used in investing activities (7,247,738 ) (17,381,833 ) Net cash provided by financing 16,119,500 6,112,521 activities Effect of exchange rate changes on cash (123,182 ) (90,254 ) and cash equivalents Decrease in cash and cash equivalents (1,247,969 ) (3,054,543 ) Cash and cash equivalents, beginning of 13,219,385 17,218,899 period Cash and cash equivalents, end of $ 11,971,416 $ 14,164,356 period Reconciliation of Adjusted EBITDA and Adjusted Operating Cash Flows Three Months Ended June 30, Six Months Ended June 30, 2012 2013 2012 2013 Operating $ 7,264,979 $ 3,270,525 $ 13,131,002 $ 5,061,564 income Depreciation and 2,936,981 2,648,396 5,381,077 5,114,063 amortization Stock-based compensation 1,403,729 1,080,913 2,451,374 2,054,106 expense Change in fair value of 266,544 (1,649,389 ) 466,685 (1,040,557 ) contingent consideration Adjusted $ 11,872,233 $ 5,350,445 $ 21,430,138 $ 11,189,176 EBITDA Three Months Ended June 30, Six Months Ended June 30, 2012 2013 2012 2013 Net cash provided by (used in) $ (2,523,911 ) $ 3,752,643 $ (9,996,549 ) $ 8,305,023 operating activities Excess tax benefit from exercise of 3,283,275 115,291 7,447,068 1,066,357 stock awards * Cash paid for settlement of - - - 900,000 preference claim Adjusted net cash provided by (used in) $ 759,364 $ 3,867,934 $ (2,549,481 ) $ 10,271,380 operating activities * 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. Contact: InnerWorkings, Inc. Brad Moore, (312) 277-1510 email@example.com
InnerWorkings Announces Second Quarter 2013 Results
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