InnerWorkings Reveals Financials, Forecasts Growth; Signs Callaway Golf Agreement
CHICAGO—February 18, 2014—InnerWorkings Inc., a leading global marketing supply chain company, reported preliminary results for the fourth quarter and fiscal year ended December 31, 2013.
- Record revenue of $245.6 million, an increase of 22 percent compared to $201.9 million in the fourth quarter of 2012. Organic revenue growth totaled $28 million, representing 14 percent growth over the prior year period.
- Record non-GAAP adjusted operating cash flow generated from operations of $27.2 million, an increase of 24 percent compared to $22.0 million in the fourth quarter of 2012.
- Non-GAAP adjusted EBITDA of $6.2 million, compared to $6.3 million in the year-earlier period.
- Non-GAAP diluted earnings per share of ($.02), compared to ($.01) in the fourth quarter of 2012.
Fiscal Year Highlights:
- Record revenue of $893.4 million, an increase of 13 percent compared to $789.6 million in 2012. Organic revenue growth was $72 million, representing 9 percent growth over the prior year.
- Record non-GAAP adjusted operating cash flow generated from operations of $39.0 million, an increase of 88 percent compared to $20.8 million in 2012.
- Non-GAAP adjusted EBITDA of $25.8 million, compared to $37.4 million in 2012, due primarily to the spending reduction by a large retail customer announced in April 2013, as well as the underperformance of the Inside Sales business.
- Non-GAAP diluted earnings per share of $.07, compared to $0.24 in 2012.
“Despite a number of unexpected challenges in 2013, our team was able to drive double-digit top-line growth,” said Eric D. Belcher, CEO of InnerWorkings. “With our focus on our growing core enterprise business, we expect to generate stronger bottom line results and shareholder value in 2014 and beyond.”
8-K Filing Relating to Financial Restatements:
In connection with the previously disclosed potential disputes between the company and the former owner of Productions Graphics, the company initiated a review of the former owner’s conduct relating to certain transactions impacting earn-out payments under the acquisition agreement. Based on the results of the review, the Company concluded that the former owner of Productions Graphics artificially inflated results to meet earn-out targets and induce the Company to make earn-out payments relating to the Productions Graphics acquisition. As a result, the Company filed an 8-K today summarizing estimated adjustments to be made to its prior financial statements, which the Company intends to restate in its upcoming 10-K filing. The estimated aggregate net impact on a GAAP basis of these changes across all affected periods is a net decrease in pre-tax net income of $1.6 million. The net impact on a GAAP basis includes a decrease in pre-tax net income of $0.4 million in 2011; an increase in pre-tax net income of $17.7 million in 2012; and a decrease in pre-tax net income of $18.9 million for the nine months ended September 30, 2013. All financial results included in this release reflect the estimated adjustments included in the 8-K, which are subject to change based on further analysis and review. Please see the 8-K filing for additional information.
Additional Financial and Operational Highlights:
Additional 2013 financial and recent operational highlights include the following:
- 77 percent of the company’s revenue was generated from enterprise sales, with the remaining 23 percent derived from middle market sales, compared to a 76 percent/24 percent mix in 2012.
- The company significantly broadened its relationship with Unilever by signing an agreement to expand services across all branded marketing efforts, including print and point-of-sale experiences.
“We have proactively addressed the areas that impacted our 2013 results,” noted Joseph M. Busky, CFO. “Our enterprise business remains firmly intact, as evidenced by the strong revenue growth in the fourth quarter. We look forward to continued growth and increased profitability in 2014.”
The company anticipates 2014 annual revenue of $965 million to $1 billion, which reflects 8 to 12 percent growth. Non-GAAP diluted earnings per share, which exclude contingent liability impacts, are expected to be $0.23 to $0.27 in 2014, compared to $.07 in 2013.
In other InnerWorkings news, the company has announced that it has signed a new retail management agreement with Callaway Golf Co., a global leader in the manufacturing of premium golf products.
Under this agreement, InnerWorkings will manage innovation, design and execution of Callaway’s marketing retail experiences, including Point of Sale (POS) materials, retail fixtures, temporary displays, and printed items. In addition, InnerWorkings will provide dedicated on-site professionals to serve as an extension of Callaway’s retail marketing team.
“The retail experience for golfers is evolving, and we selected InnerWorkings based on its track record as leaders in retail marketing execution,” said Harry Arnett, senior vice president of marketing at Callaway. “By leveraging the InnerWorkings team and its vendor base, Callaway will continue to differentiate how golfers experience the brand at retail.”
Michael Brown, group president of InnerWorkings also added: “We look forward to continuing Callaway’s strong commitment to innovation and brand control, while enhancing speed to market and expanding budgets through cost savings.”
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, employs approximately 1,500 individuals, and maintains 67 global offices in 30 countries. Among the many industries InnerWorkings services are: retail, financial services, hospitality, non-profits, healthcare, food & beverage, broadcasting and cable, education, transportation and utilities.