CHICAGO--(BUSINESS WIRE)--InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, today announced record revenue and record Non-GAAP earnings for the three months ended September 30, 2015. For all Non-GAAP references, please refer to the Non-GAAP reconciliation table below for more information.
Third Quarter Highlights
- Revenue was $264.7 million as reported and $283.3 million in constant currency, reflecting 12.6% growth in constant currency compared with $251.7 million in the third quarter of 2014.
- Gross profit for the quarter was $63.6 million as reported and $68.0 million in constant currency, reflecting 19.1% growth in constant currency compared with $57.1 million in the third quarter of 2014.
- Non-GAAP Adjusted EBITDA was $17.6 million as reported and $19.4 million in constant currency, reflecting 57.8% growth in constant currency over $12.3 million in the third quarter of 2014.
- Non-GAAP diluted earnings per share were $0.11 on a reported basis and $0.14 in constant currency, compared to Non-GAAP diluted earnings per share of $0.07 in the third quarter of 2014.
- Non-GAAP adjusted operating cash flow was $(9.5) million on a reported basis, compared to Non-GAAP adjusted operating cash flow of $(11.3) million in the third quarter of 2014.
“The record-breaking results we announced today illustrate the momentum we are seeing in our strategy to grow our enterprise business,” said Eric D. Belcher, Chief Executive Officer of InnerWorkings. “Including the two new Fortune 1000 client wins that we’re announcing today, the new enterprise accounts signed during this calendar year are expected to deliver over $115 million in annual revenue once implemented. We are very pleased with the significant growth in our enterprise accounts and expect a strong finish to the year.”
Operational Highlights
InnerWorkings continues to win new enterprise contracts and has signed significant contract renewals and scope expansions with several of its largest clients. Two new clients include:
- A Fortune 1000 services provider to businesses and consumers that signed a multi-year agreement through which InnerWorkings will provide marketing execution services, including direct mail and marketing collateral, to support the company’s business in North America.
- A Fortune 1000 grocery chain with 160+ locations that signed a multi-year agreement through which InnerWorkings will execute marketing activities, including direct mail, loyalty programs, point-of-sale displays and circulars.
“The strong earnings and top-line growth achieved in the quarter underscore the strength of InnerWorkings’ service offerings, the ongoing commitment of our teams and our discipline in ensuring we maintain the appropriate margins to mitigate fluctuations in international currencies,” said Jeffrey P. Pritchett, Chief Financial Officer of InnerWorkings. “We remain on track to achieve our growth targets and deliver earnings within the previously articulated ranges.”
Outlook
The Company reaffirms its revenue guidance of 8% to 11% growth over 2014 in constant currency. The Company also 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 third quarter 2015 results, which will be broadcast live on Thursday, November 5, 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 Jeffrey P. Pritchett, 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, gross profit and Non-GAAP Adjusted EBITDA 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 1,700 individuals, and maintains 62 global offices in 37 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.
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Condensed Consolidated Statements of Income |
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| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Revenue | $ | 264,720,003 | $ | 251,651,521 | $ | 759,042,648 | $ | 753,490,776 | ||||
| Cost of goods sold | 201,108,604 | 194,553,275 | 581,387,018 | 582,881,105 | ||||||||
| Gross profit | 63,611,399 | 57,098,246 | 177,655,630 | 170,609,671 | ||||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative expenses | 47,220,821 | 46,187,034 | 145,304,423 | 146,393,186 | ||||||||
| Depreciation and amortization | 4,485,119 | 4,387,438 | 12,842,347 | 12,931,952 | ||||||||
| Change in fair value of contingent consideration | 701,086 | (1,570,129) | 1,690,743 | (1,743,637) | ||||||||
| Income from operations | 11,204,373 | 8,093,903 | 17,818,117 | 13,028,170 | ||||||||
| Total other expense | (2,214,349) | (1,180,813) | (4,319,468) | (3,354,653) | ||||||||
| Income before income taxes | 8,990,024 | 6,913,090 | 13,498,649 | 9,673,517 | ||||||||
| Income tax expense | 4,006,788 | 1,799,419 | 5,945,532 | 2,665,067 | ||||||||
| Net income | $ | 4,983,236 | $ | 5,113,671 | $ | 7,553,117 | $ | 7,008,450 | ||||
| Basic earnings per share | $ | 0.09 | $ | 0.10 | $ | 0.14 | $ | 0.13 | ||||
| Diluted earnings per share | $ | 0.09 | $ | 0.10 | $ | 0.14 | $ | 0.13 | ||||
| Weighted average shares outstanding, basic | 52,972,500 | 52,655,284 | 52,759,404 | 51,974,408 | ||||||||
| Weighted average shares outstanding, diluted | 53,348,376 | 53,742,472 | 53,456,972 | 52,781,851 | ||||||||
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Condensed Consolidated Balance Sheets |
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| September 30, | December 31, | |||||
| 2015 | 2014 | |||||
| Cash and cash equivalents | $ | 12,637,589 | $ | 22,577,942 | ||
| Accounts receivable, net of allowance for doubtful accounts | 191,045,581 | 179,465,922 | ||||
| Unbilled revenue | 36,463,538 | 31,698,924 | ||||
| Inventories | 40,278,890 | 27,162,642 | ||||
| Prepaid expenses | 14,263,851 | 12,684,237 | ||||
| Other current assets | 41,113,384 | 30,638,030 | ||||
| Total non-current assets | 324,865,808 | 327,022,683 | ||||
| Total assets | $ | 660,668,641 | $ | 631,250,380 | ||
| Accounts payable | $ | 148,515,725 | $ | 144,044,592 | ||
| Other current liabilities | 59,879,554 | 50,107,105 | ||||
| Revolving credit facility | 128,027,431 | 104,538,750 | ||||
| Other non-current liabilities | 26,055,796 | 36,413,364 | ||||
| Total stockholders' equity | 298,190,135 | 296,146,569 | ||||
| Total liabilities and stockholders' equity | $ | 660,668,641 | $ | 631,250,380 | ||
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Cash Flow Data |
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| Nine Months Ended September 30, | ||||||
| 2015 | 2014 | |||||
| Net cash used in operating activities | $ | (7,256,705) | $ | (16,037,736) | ||
| Net cash used in investing activities | (12,125,611) | (11,500,078) | ||||
| Net cash provided by financing activities | 10,255,494 | 31,691,417 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (813,531) | (605,970) | ||||
| (Decrease) increase in cash and cash equivalents | (9,940,353) | 3,547,633 | ||||
| Cash and cash equivalents, beginning of period | 22,577,942 | 18,606,030 | ||||
| Cash and cash equivalents, end of period | $ | 12,637,589 | $ | 22,153,663 | ||
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GAAP to Non-GAAP Reconciliation |
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Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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| 2015 | 2014 | 2015 | 2014 | ||||||||
| Operating income | $ | 11,204,373 | $ | 8,093,903 | $ | 17,818,117 | $ | 13,028,170 | |||
| Depreciation and amortization | 4,485,119 | 4,387,438 | 12,842,347 | 12,931,952 | |||||||
| Stock-based compensation expense | 1,226,490 | 1,374,496 | 4,854,194 | 4,023,227 | |||||||
| Change in fair value of contingent consideration | 701,086 | (1,570,129) | 1,690,743 | (1,743,637) | |||||||
| Restatement-related professional fees | - | - | - | 2,093,104 | |||||||
| Non-GAAP Adjusted EBITDA | $ | 17,617,068 | $ | 12,285,708 | $ | 37,205,401 | $ | 30,332,816 | |||
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Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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| 2015 | 2014 | 2015 | 2014 | ||||||||
| Net cash used in operating activities | $ | (8,243,708) | $ | (11,849,650) | $ | (7,256,705) | $ | (16,037,736) | |||
| Net short-term advances on International receivables * | (1,219,902) | 521,313 | (550,921) | 2,717,222 | |||||||
| Non-GAAP Adjusted Operating Cash Flow | $ | (9,463,610) | $ | (11,328,337) | $ | (7,807,626) | $ | (13,320,514) | |||
| * US GAAP requires classification in financing activities despite inclusion in working capital on the balance sheet. | |||||||||||
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Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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| 2015 | 2014 | 2015 | 2014 | ||||||||
| Net income | $ | 4,983,236 | $ | 5,113,671 | $ | 7,553,117 | $ | 7,008,450 | |||
| Change in fair value of contingent consideration, net of tax | 700,350 | (1,504,985) | 1,679,727 | (1,448,566) | |||||||
| Restatement-related professional fees, net of tax | - | - | - | 1,266,328 | |||||||
| Adjusted net income | $ | 5,683,586 | $ | 3,608,686 | $ | 9,232,844 | $ | 6,826,212 | |||
| Weighted average shares outstanding, diluted | 53,348,376 | 53,742,472 | 53,456,972 | 52,781,851 | |||||||
| Non-GAAP Diluted Earnings Per Share | $ | 0.11 | $ | 0.07 | $ | 0.17 | $ | 0.13 | |||
