InnerWorkings Announces Second Quarter 2014 Results

  InnerWorkings Announces Second Quarter 2014 Results

 Achieves highest revenue in Company’s history driven by 23% revenue growth;
                          62% Adjusted EBITDA growth

Business Wire

CHICAGO -- August 6, 2014

InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution
firm, today reported results for the three months ended June 30, 2014.

Highlights

  *Record revenue of $260.3 million, an increase of 23% compared to $210.9
    million in the second quarter of 2013.
  *Non-GAAP Adjusted EBITDA of $9.5 million, an increase of 62% compared to
    Non-GAAP Adjusted EBITDA of $5.9 million in the second quarter of 2013.
    Please refer to the non-GAAP reconciliation table below for more
    information.
  *Non-GAAP diluted earnings per share of $0.04, compared to Non-GAAP diluted
    earnings per share of $0.02 in the second quarter of 2013. Please refer to
    the non-GAAP reconciliation table below for more information.
  *Non-GAAP Adjusted Operating Cash Flow of $6.4 million, an increase of 66%
    compared to Non-GAAP Adjusted Operating Cash Flow of $3.9 million in the
    second quarter of 2013. Please refer to the non-GAAP reconciliation table
    below for more information.

"Our core enterprise business fueled record revenue for us in the second
quarter. A large portion of this growth came from expanding our relationships
with several of our long-standing Fortune 500 customers,” said Eric D.
Belcher, Chief Executive Officer of InnerWorkings.

Additional financial and operational highlights include the following:

  *Organic enterprise account growth was $27 million in the second quarter, a
    13% increase over the prior-year period.
  *The Company recently signed new enterprise agreements with Sanofi, a
    global pharmaceutical firm; Newsday, one of the largest newspaper
    publishers in the U.S.; and Edrington, the owner of leading spirits brands
    around the world.
  *The North America segment accounted for 70% of revenue and international
    segments accounted for 30%, compared to a 77% / 23% mix in the second
    quarter of 2013.

“Our international regions continue to generate strong organic growth, which
positions us well for improved EBITDA margin in the second half of the year,”
said Joseph M. Busky, Chief Financial Officer of InnerWorkings.

                                                                  
Revenue Growth - Comparing 2014 to 2013
                                Q2 $(MM)     Q2 %      YTD $(MM)    YTD%
                                 Change        Change     Change        Change
Organic Enterprise Account       $27           13%        $51           12%
Growth
Loss of Spend from Large         $0            0%         ($9)          (2)%
Customer ^1
Acquisitive Growth               $22           10%        $44           11%
Total Revenue Growth            $49          23%       $86          21%
                                                                        
^1 Includes loss of spending from large retail customer previously announced
in April 2013.


Outlook

The Company reaffirms its 2014 revenue guidance of $965 million to $1 billion,
which reflects 8 to 12 percent growth over 2013. The Company also reaffirms
its 2014 Non-GAAP diluted earnings per share guidance of $0.23 to $0.27,
compared to $0.09 in 2013.

Conference Call

The management team will host a conference call to discuss the Company’s
second quarter 2014 results, which will be broadcast live on Wednesday, August
6, 2014, 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.

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 SG&A, Non-GAAP Adjusted Operating
Cash Flow and Non-GAAP diluted earnings per share. We believe that Non-GAAP
Adjusted EBITDA, Non-GAAP Adjusted SG&A, Non GAAP Adjusted Operating Cash Flow
and Non-GAAP diluted earnings per share provide useful information to
investors because they provide information about the estimated financial
performance of the Company's ongoing business. Non-GAAP Adjusted EBITDA,
Non-GAAP Adjusted SG&A, Non-GAAP Adjusted Operating Cash Flow and Non-GAAP
diluted earnings per share are used by management in its financial and
operational decision-making and evaluation of overall operating performance.
Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted SG&A, Non-GAAP Adjusted Operating
Cash Flow and Non-GAAP diluted earnings per share 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, Non-GAAP Adjusted SG&A, Non-GAAP
Adjusted Operating Cash Flow and Non-GAAP diluted earnings per share” 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 1,500 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 (Unaudited)
                                                                     
                     Three Months Ended June 30,           Six Months Ended June 30,
                     2013              2014                2013              2014
Revenue              $ 210,875,626     $ 260,349,591       $ 415,453,042     $ 501,839,255
Cost of goods         162,699,024     201,422,560       320,926,639     388,327,830 
sold
Gross profit           48,176,602        58,927,031          94,526,403        113,511,425
Operating
expenses:
  Selling,
  general and          41,347,183        50,634,671          88,458,800        100,206,152
  administrative
  expenses
  Depreciation
  and                  2,648,396         4,373,798           5,114,063         8,544,514
  amortization
  Change in fair
  value of            (1,649,389  )    521,669           (1,040,557  )    (173,508    )
  contingent
  consideration
Income from           5,830,412       3,396,893         1,994,097       4,934,267   
operations
Total other           (488,760    )    (1,058,167  )      (1,412,696  )    (2,173,840  )
expense
Income before          5,341,652         2,338,726           581,401           2,760,427
income taxes
Income tax
expense               1,666,131       733,354           (292,846    )    865,648     
(benefit)
Net income           $ 3,675,521      $ 1,605,372        $ 874,247        $ 1,894,779   
                                                                             
Basic earnings       $ 0.07            $ 0.03              $ 0.02            $ 0.04
per share
Diluted earnings     $ 0.07            $ 0.03              $ 0.02            $ 0.04
per share
                                                                             
Weighted average
shares                 50,728,372        51,543,799          50,554,642        51,444,535
outstanding,
basic
Weighted average
shares                 51,965,539        53,199,279          52,046,000        52,766,406
outstanding,
diluted
                                                                                           

Condensed Consolidated Balance Sheets
                                                            
                                               December 31,      June 30,
                                               2013              2014
                                                                 (unaudited)
Cash and cash equivalents                      $ 18,606,030      $ 23,364,199
Accounts receivable, net of allowance for        171,832,907       186,722,463
doubtful accounts
Unbilled revenue                                 27,483,544        31,457,926
Inventories                                      26,473,732        26,762,086
Prepaid expenses                                 11,746,965        11,532,751
Other current assets                             23,528,025        31,604,673
Total long-term assets                          334,995,575      337,145,506
Total assets                                   $ 614,666,778     $ 648,589,604
                                                                 
Accounts payable-trade                         $ 169,243,349     $ 173,413,169
Other current liabilities                        49,655,185        72,258,306
Revolving credit facility                        69,000,000        89,000,000
Other long-term liabilities                      81,326,670        61,433,950
Total stockholders' equity                      245,441,574      252,484,179
Total liabilities and stockholders' equity     $ 614,666,778     $ 648,589,604
                                                                   

Cash Flow Data (Unaudited)
                                                           
                                            Six Months Ended June 30,
                                            2013                2014
Net cash provided by (used in)              $ 2,910,004         $ (4,188,086 )
operating activities
Net cash used in investing activities         (17,381,833 )       (8,429,758 )
Net cash provided by financing               11,507,540        17,309,399 
activities
Effect of exchange rate changes on cash      (90,254     )      66,614     
and cash equivalents
Increase (decrease) in cash and cash          (3,054,543  )       4,758,169
equivalents
Cash and cash equivalents, beginning of      17,218,899        18,606,030 
period
Cash and cash equivalents, end of           $ 14,164,356       $ 23,364,199 
period
                                                                             

Reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flows,
Non-GAAP Diluted EPS and Non-GAAP Adjusted SG&A
                                                                    
                        Three Months Ended June 30,       Six Months Ended June 30,
                        2013             2014             2013             2014
                                                                           
Operating income        $ 5,830,412      $ 3,396,893      $ 1,994,097      $ 4,934,267
Depreciation and          2,648,396        4,373,798        5,114,063        8,544,514
amortization
Stock-based
compensation              1,080,913        1,252,457        2,054,106        2,648,731
expense
Change in fair
value of contingent       (1,649,389 )     521,669          (1,040,557 )     (173,508    )
consideration
Payments to former
owner of
Productions               (2,521,635 )     -                3,787,025        -
Graphics, net of
cash recovered
Legal fees in
connection with           506,880          -                752,220          -
patent infringement
defense
Restatement-related      -              -               -              2,093,104   
professional fees
Non-GAAP Adjusted       $ 5,895,577     $ 9,544,817      $ 12,660,954    $ 18,047,108  
EBITDA
                                                                           
                                                                           
                        Three Months Ended June 30,       Six Months Ended June 30,
                        2013             2014             2013             2014
                                                                           
Net cash provided
by (used in)            $ 3,752,643      $ 4,220,257      $ 2,910,004      $ (4,188,086  )
operating
activities
Excess tax benefit
from exercise of          115,291          -                1,066,357        -
stock awards *
Cash paid for
settlement for            -                -                900,000          -
preference claim
Net short-term
advances on              -              2,195,909       -              2,195,909   
International
receivables **
Non-GAAP Adjusted
Operating Cash          $ 3,867,934     $ 6,416,166      $ 4,876,361     $ (1,992,177  )
Flows
                                                                           
* 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.
** US GAAP requires classification in financing activities despite inclusion in working
capital on the balance sheet.
                                                                           
                                                                           
                        Three Months Ended June 30,       Six Months Ended June 30,
                        2013             2014             2013             2014
Net income              $ 3,675,521      $ 1,605,372      $ 874,247        $ 1,894,779
Change in fair
value of contingent       (1,202,166 )     593,216          (557,146   )     56,419
consideration, net
of tax
Payments to former
owner of
Productions               (1,746,673 )     -                2,422,383        -
Graphics, net of
cash recovered, net
of tax
Legal fees in
connection with           329,573          -                489,093          -
patent infringement
defense, net of tax
Restatement-related
professional fees,       -              -               -              1,266,328   
net of tax
Adjusted net income     $ 1,056,255      $ 2,198,588      $ 3,228,577      $ 3,217,526
                                                                           
Weighted average
shares outstanding,       51,965,539       53,199,279       52,046,000       52,766,406
diluted
                                                                        
Non-GAAP Diluted        $ 0.02          $ 0.04           $ 0.06          $ 0.06        
EPS
                                                                           
                                                                           
                        Three Months Ended June 30,       Six Months Ended June 30,
                        2013             2014             2013             2014
Selling, general
and administrative      $ 41,347,183     $ 50,634,671     $ 88,458,800     $ 100,206,152
expenses
Restatement-related       -                -                -                (2,093,104  )
professional fees
Legal fees in
connection with           (506,880   )     -                (752,220   )     -
patent infringement
defense
Payments to former
owner of
Productions              2,521,635      -               (3,787,025 )    -           
Graphics, net of
cash recovered
Non-GAAP Adjusted       $ 43,361,938    $ 50,634,671     $ 83,919,555    $ 98,113,048  
SG&A
                                                                                         

Contact:

InnerWorkings, Inc.
Brad Moore, (312) 277-1510
bmoore@inwk.com
 
Press spacebar to pause and continue. Press esc to stop.