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 firstname.lastname@example.org
Press spacebar to pause and continue. Press esc to stop.