InnerWorkings Announces First Quarter 2013 Results

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InnerWorkings Announces First Quarter 2013 Results

Results Impacted by Previously Announced Spending Reduction from Large Customer; New Organic Enterprise Business Continues to Fuel Growth

CHICAGO--(BUSINESS WIRE)-- InnerWorkings, Inc. (NAS: INWK) , a leading global marketing supply chain company, today reported results for the three months ended March 31, 2013.


Quarterly Highlights:

  • Revenue was $204.3 million, compared to $188.5 million in the first quarter of 2012.
  • Non-GAAP Adjusted EBITDA was $5.8 million, compared to Non-GAAP Adjusted EBITDA of $9.6 million in the first quarter of 2012. Please refer to the non-GAAP reconciliation table below for more information.
  • GAAP diluted earnings per share were $0.02, compared to GAAP diluted earnings per share of $0.07 in the first quarter of 2012.
  • Non-GAAP Adjusted Operating Cash Flow was $6.4 million, compared to Non-GAAP Adjusted Operating Cash Outflow of $3.3 million in the first quarter of 2012. Please refer to the non-GAAP reconciliation table below for more information.
  • New organic enterprise account growth was $18.1 million in the first quarter.

"Our team is excited about our global enterprise opportunity," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "Our pipeline is strong and we expect to achieve our new organic enterprise revenue goals again this year."

Additional first quarter 2013 financial and operational highlights include the following:

  • The enterprise channel accounted for 79% of revenue and middle market accounted for 21%, consistent with the revenue mix in the first quarter of 2012.
  • Gross profit margin was 22.5%, compared to 22.0% in the prior year period.
  • DB Studios, a California-based distributor of permanent point-of-purchase displays was acquired in March 2013. DB Studios is expected to generate revenues of approximately $20 million during the period from acquisition date to the end of the year.

"While we continue to realize solid new enterprise growth, we are disappointed by our modest growth in the first quarter due to a decrease in a large customer's spending," said Joseph M. Busky, Chief Financial Officer of InnerWorkings. "Given the new enterprise activity happening across our global footprint, we anticipate stronger results for the balance of the year."

 
Revenue Growth - Comparing 2013 to 2012
   Q1 $(MM) Change   Q1 % Change
New Enterprise Account Growth$1810%
New Middle Market Growth$21%
Same Customer Spend($6)-3%
Acquisitive Growth   $3   1%
Total Revenue Growth   $16   8%
Total Organic Revenue Growth   $13   7%
 

Outlook

The Company reaffirms its recently revised 2013 revenue and EPS guidance. 2013 revenue guidance of $900 million to $930 million represents 13-17% growth over 2012, and 2013 EPS guidance of $0.45 to $0.50 represents 10-22% growth over 2012 adjusted diluted earnings per share.

Conference Call

A conference call to discuss the Company's first quarter 2013 results will be broadcast live on Friday, May 10, 2013, at 10:00 a.m. Central Time (11:00 a.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. (NAS: 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 a "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 March 31,
20122013
Revenue$188,546,402$204,316,125
Cost of goods sold 147,153,019  158,323,630 
Gross profit41,393,38345,992,495
Operating expenses:
Selling, general and administrative expenses33,083,26441,735,789
Depreciation and amortization 2,444,096  2,465,667 
Income from operations 5,866,023  1,791,039 
Total other expense (260,388) (923,936)
Income before income taxes5,605,635867,103
Income tax expense 1,917,947  (28,027)
Net income$3,687,688 $895,130 
 
Basic earnings per share$0.08$0.02
Diluted earnings per share$0.07$0.02
 
Weighted average shares outstanding, basic47,193,32750,338,994
Weighted average shares outstanding, diluted50,013,56952,006,801
 
 
 
 
Consolidated Balance Sheets  
 
December 31,March 31,
20122013
 
Cash and cash equivalents$17,218,899$10,609,171
Accounts receivable, net of allowance for doubtful accounts149,246,568150,492,103
Unbilled revenue30,798,23030,191,086
Inventories17,406,86315,310,762
Prepaid expenses16,210,05319,880,172
Other current assets22,565,32122,456,346
Total long-term assets 268,797,648 309,247,680
Total assets$522,243,582$558,187,320
 
Accounts payable-trade$121,132,051$126,701,960
Other current liabilities44,262,06549,223,149
Revolving credit facility65,000,00070,500,000
Other long-term liabilities68,870,02184,196,997
Total stockholders' equity 222,979,445 227,565,214
 
Total liabilities and stockholders' equity$522,243,582$558,187,320
 
 
 
Cash Flow Data  
 
Three Months Ended March 31,
20122013

Net cash provided by (used in) operating activities

$(7,472,638)$4,552,380
Net cash used in investing activities(3,189,117)(9,148,187)

Net cash provided by (used in) financing activities

 12,886,424  (1,854,875)
Effect of exchange rate changes on cash and cash equivalents 221,918  (159,046)

Increase (decrease) in cash and cash equivalents

2,446,587(6,609,728)
Cash and cash equivalents, beginning of period 13,219,385  17,218,899 
Cash and cash equivalents, end of period$15,665,972 $10,609,171 
 
 
 

Reconciliation of Adjusted EBITDA and Adjusted Operating Cash Flows

  

Three Months Ended March 31,

20122013
 
Operating income$5,866,023$1,791,039
Depreciation and amortization2,444,0962,465,667
Stock-based compensation expense1,047,645973,193
Change in fair value of contingent consideration 200,141  608,832
Adjusted EBITDA$9,557,905 $5,838,731
 

Three Months Ended March 31,

20122013
 

Net cash provided by (used in) operating activities

$(7,472,638)$4,552,380
Excess tax benefit from exercise of stock awards *4,163,793951,066
Cash paid for settlement of preference claim -  900,000

Adjusted net cash provided by (used in) operating activities

$(3,308,845)$6,403,446

* 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.



InnerWorkings, Inc.
Brad Moore, (312) 277-1510
bmoore@inwk.com

KEYWORDS:   United States  North America  Illinois

INDUSTRY KEYWORDS:

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