InnerWorkings Announces Q1 2017 Results; Expects Another Record Year
CHICAGO — May 9, 2017 — InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, announced financial results for the three months ended March 31, 2017. For all non-GAAP references below, please refer to the non-GAAP reconciliation tables at the end of this release for more information.
Financial and Business Highlights
- Gross revenue was $267.4 million, a decrease of 1% compared to $271.1 million in the first quarter of 2016.
- Gross profit (net revenue) was $64.3 million, or 24.0% of gross revenue in the first quarter of 2017, a 4% increase compared to $61.9 million, or 22.9% of revenue, in the same period of last year.
- Net income for the first quarter of 2017 was $5.5 million, or $0.10 per diluted share, which included $1.0 million of income related to the decreased value of contingent consideration for prior acquisitions.
- Non-GAAP diluted earnings per share for the first quarter was $0.08, a 66% increase compared to the first quarter of 2016.
- Non-GAAP adjusted EBITDA was $12.3 million, reflecting 5% growth as compared to $11.7 million in the first quarter of 2016.
- Cash flow provided by operating activities was $35.2 million for the trailing twelve-month period ended March 31, 2017 and $25.1 million for the prior trailing twelve-month period ended March 31, 2016.
- InnerWorkings has been awarded additional work from new and existing clients so far during 2017, which collectively is expected to exceed $35 million of annual revenue at full run-rate. The largest new client engagements are with Jaguar Land Rover and The Humane Society.
"The investments we have made to build our global capabilities and technology platform are paying off in a meaningful way," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "We have won more new business year-to-date than we had at this time last year, and we expect 2017 to be another record year on the top and bottom line."
"Our net revenue for the first quarter is in line with our expectations while initiatives to improve our bottom line are ahead of plan, prompting us to raise our earnings guidance for 2017," said Jeffrey P. Pritchett, Chief Financial Officer of InnerWorkings. "We are also starting to generate greater cash flow, enabling us to return $10 million to shareholders in the last two months through our stock repurchase program."
Outlook
The Company is raising its guidance for 2017 non-GAAP diluted earnings per share to a range of $0.45 to $0.49, compared to previous guidance of a range of $0.44 to $0.47. Guidance for gross revenue and non-GAAP adjusted EBITDA are unchanged. InnerWorkings expects gross revenue to range between $1.155 billion and $1.185 billion and non-GAAP adjusted EBITDA to be between $65.0 million and $68.0 million.
| Condensed Consolidated Statements of Income
(Unaudited) |
||||||||||
| (in thousands, except per share amounts) | Three Months Ended March 31, | |||||||||
| 2017 | 2016 | |||||||||
| Revenue | $ | 267,390 | $ | 271,073 | ||||||
| Cost of goods sold | 203,113 | 209,127 | ||||||||
| Gross profit | 64,277 | 61,946 | ||||||||
| Operating expenses: | ||||||||||
| Selling, general and administrative expenses | 53,427 | 51,492 | ||||||||
| Depreciation and amortization | 2,904 | 4,596 | ||||||||
| Change in fair value of contingent consideration | (1,040) | 1,911 | ||||||||
| Restructuring and other charges | — | 3,344 | ||||||||
| Income from operations | 8,986 | 603 | ||||||||
| Other income (expense): | ||||||||||
| Interest income | 34 | 14 | ||||||||
| Interest expense | (1,003) | (1,077) | ||||||||
| Other, net | (224) | (161) | ||||||||
| Total other expense | (1,193) | (1,224) | ||||||||
| Income (loss) before income taxes | 7,793 | (621) | ||||||||
| Income tax expense | 2,337 | 2,072 | ||||||||
| Net income (loss) | $ | 5,456 | $ | (2,693) | ||||||
| Basic earnings (loss) per share | $ | 0.10 | $ | (0.05) | ||||||
| Diluted earnings (loss) per share | $ | 0.10 | $ | (0.05) | ||||||
| Weighted-average shares outstanding - basic | 54,056 | 53,145 | ||||||||
| Weighted-average shares outstanding - diluted | 54,729 | 53,145 | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands) | March 31, 2017 | December 31, 2016 | ||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 29,920 | $ | 30,924 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $2,504 and $2,622, respectively | 187,028 | 182,874 | ||||||||
| Unbilled revenue | 35,712 | 32,723 | ||||||||
| Inventories | 30,338 | 31,638 | ||||||||
| Prepaid expenses | 23,912 | 18,772 | ||||||||
| Other current assets | 20,598 | 24,769 | ||||||||
| Total current assets | 327,508 | 321,700 | ||||||||
| Property and equipment, net | 34,000 | 32,656 | ||||||||
| Intangibles and other assets: | ||||||||||
| Goodwill | 203,269 | 202,700 | ||||||||
| Intangible assets, net | 30,452 | 31,538 | ||||||||
| Deferred income taxes | 1,440 | 1,031 | ||||||||
| Other non-current assets | 1,353 | 1,374 | ||||||||
| Total intangibles and other assets | 236,514 | 236,643 | ||||||||
| Total assets | $ | 598,022 | $ | 590,999 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 114,399 | $ | 121,289 | ||||||
| Current portion of contingent consideration | 17,165 | 19,283 | ||||||||
| Due to seller | 1,093 | — | ||||||||
| Accrued expenses | 32,547 | 30,067 | ||||||||
| Other current liabilities | 37,636 | 35,049 | ||||||||
| Total current liabilities | 202,840 | 205,688 | ||||||||
| Revolving credit facility | 113,691 | 107,468 | ||||||||
| Deferred income taxes | 9,848 | 11,291 | ||||||||
| Other non-current liabilities | 2,060 | 1,926 | ||||||||
| Total liabilities | 328,439 | 326,373 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Common stock, par value $0.0001 per share, 200,000 and 200,000 shares authorized, 63,438 and 63,391 shares issued, and 53,565 and 54,088 shares outstanding, respectively | 6 | 6 | ||||||||
| Additional paid-in capital | 228,106 | 224,480 | ||||||||
| Treasury stock at cost, 9,872 and 9,303 shares, respectively | (54,949) | (49,458) | ||||||||
| Accumulated other comprehensive loss | (18,820) | (20,799) | ||||||||
| Retained earnings | 115,240 | 110,397 | ||||||||
| Total stockholders' equity | 269,583 | 264,626 | ||||||||
| Total liabilities and stockholders' equity | $ | 598,022 | $ | 590,999 | ||||||
| Condensed Consolidated Statement of Cash Flows
(Unaudited) |
||||||||||
| (in thousands) | Three Months Ended March 31, | |||||||||
| 2017 | 2016 | |||||||||
| Cash flows from operating activities | ||||||||||
| Net income (loss) | $ | 5,456 | $ | (2,693) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||
| Depreciation and amortization | 2,904 | 4,596 | ||||||||
| Stock-based compensation expense | 1,419 | 1,241 | ||||||||
| Deferred income taxes | (16) | (389) | ||||||||
| Bad debt provision | 175 | 656 | ||||||||
| Change in fair value of contingent consideration | (1,040) | 1,911 | ||||||||
| Other operating activities | 52 | 52 | ||||||||
| Change in assets: | ||||||||||
| Accounts receivable and unbilled revenue | (7,318) | (16,256) | ||||||||
| Inventories | 1,300 | (1,388) | ||||||||
| Prepaid expenses and other assets | (979) | 16,382 | ||||||||
| Change in liabilities: | ||||||||||
| Accounts payable | (6,890) | (40,196) | ||||||||
| Accrued expenses and other liabilities | 5,057 | 11,518 | ||||||||
| Net cash provided by (used in) operating activities | 120 | (24,566) | ||||||||
| Cash flows from investing activities | ||||||||||
| Purchases of property and equipment | (3,042) | (3,987) | ||||||||
| Net cash used in investing activities | (3,042) | (3,987) | ||||||||
| Cash flows from financing activities | ||||||||||
| Net borrowings from revolving credit facilities | 6,519 | 19,358 | ||||||||
| Net short-term secured borrowings | (801) | (1,803) | ||||||||
| Repurchases of common stock | (4,342) | — | ||||||||
| Payments of contingent consideration | — | (525) | ||||||||
| Proceeds from exercise of stock options | 189 | 984 | ||||||||
| Other financing activities | (95) | 382 | ||||||||
| Net cash provided by financing activities | 1,470 | 18,396 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | 448 | 331 | ||||||||
| Decrease in cash and cash equivalents | (1,004) | (9,826) | ||||||||
| Cash and cash equivalents, beginning of period | 30,924 | 30,755 | ||||||||
| Cash and cash equivalents, end of period | $ | 29,920 | $ | 20,929 | ||||||
| Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP Diluted Earnings Per Share
(Unaudited) |
||||||||||
| (in thousands) | Three Months Ended March 31, | |||||||||
| 2017 | 2016 | |||||||||
| Net income (loss) | $ | 5,456 | $ | (2,693) | ||||||
| Income tax expense | 2,337 | 2,072 | ||||||||
| Interest income | (34) | (14) | ||||||||
| Interest expense | 1,003 | 1,077 | ||||||||
| Other, net | 224 | 161 | ||||||||
| Depreciation and amortization | 2,904 | 4,596 | ||||||||
| Stock-based compensation expense | 1,419 | 1,241 | ||||||||
| Change in fair value of contingent consideration | (1,040) | 1,911 | ||||||||
| Restructuring and other charges | — | 3,344 | ||||||||
| Non-GAAP Adjusted EBITDA | $ | 12,269 | $ | 11,695 | ||||||
| (in thousands, except per share amounts) | Three Months Ended March 31, | |||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Net income (loss) | $ | 5,456 | $ | (2,693) | ||||||||||||
| Change in fair value of contingent consideration | (1,040) | 1,911 | ||||||||||||||
| Restructuring and other charges, net of tax | — | 2,964 | ||||||||||||||
| Restatement-related professional fees, net of tax | — | 397 | ||||||||||||||
| Adjusted net income | $ | 4,416 | $ | 2,579 | ||||||||||||
| Weighted-average shares outstanding, diluted | 54,729 | 54,688 | ||||||||||||||
| Non-GAAP Diluted Earnings Per Share | $ | 0.08 | $ | 0.05 | ||||||||||||
The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of Printing Impressions.
- Companies:
- InnerWorkings Inc.
