InnerWorkings Reveals Q3 Increase, Lowers 2013 Revenue Guidance

CHICAGO—November 6, 2013—InnerWorkings has reported results for the three months ended September 30, 2013.

Quarterly Highlights:

• Revenue increased 16 percent to $232.6 million, compared to $199.8 million in the third quarter of 2012. New enterprise account growth was $20 million, representing 10 percent growth over the prior year period.
• Non-GAAP Adjusted EBITDA was $8.5 million, compared to $11.3 million in the third quarter of 2012, due primarily to lower profitability from Productions Graphics and the spending reduction by a large retail customer announced in the first quarter of 2013.
• Non-GAAP Adjusted Operating Cash Flow was $1.6 million, compared to Non-GAAP Adjusted Operating Cash Flow of $1.4 million in the third quarter of 2012.
• A restructuring and write down charge of $4.3 million, or a $0.05 impact to GAAP diluted earnings per share, was incurred to transition the Inside Sales division to a new customer acquisition strategy.
• Non-GAAP diluted earnings per share were $0.05, compared to $0.10 in the third quarter of 2012. Approximately $0.05 of the Non-GAAP diluted earnings per share underperformance is attributable to the Productions Graphics business versus the same period in 2012. GAAP diluted earnings per share were $0.14 compared to $0.10 in the third quarter of 2012, due primarily to a $0.87 impact from a contingent liability release related to the performance of Productions Graphics, partially offset by a related European goodwill impairment charge of $0.73.

“While our core enterprise business continues to drive our growth globally, the performance of Productions Graphics in Europe and the restructuring of our Inside Sales division resulted in lower profitability for the quarter,” said Eric D. Belcher, CEO of InnerWorkings. “We have already taken action to proactively address these areas of our business. In Europe, we have installed new leadership and, with our Inside Sales division, we are pivoting towards a new customer acquisition strategy through a channel partnership.” Additional third quarter 2013 financial and recent operational highlights include the following:

• 78 percent of the company’s revenues were generated from the enterprise channel, with the remaining 22 percent derived from the middle market channel.
• An enterprise agreement was signed with a new global consumer package goods company to manage their permanent in-store display program, in addition to providing traditional print management services. The company estimates this new agreement will generate approximately $15 million of annual revenue once it is fully implemented.
• New agreements have been signed with several existing clients to expand into new geographies around the world. Most recently, the company became the global provider of print and promotional materials for Intercontinental Hotel Group by expanding its relationship into Europe and the Middle East.
• New client agreements were signed with two large charitable organizations to manage direct mail campaigns and other fundraising materials. These agreements further establish the company’s growing presence in the non-profit sector.

“While we are disappointed by the results of Productions Graphics, we remain confident in our long-term growth in Europe,” noted Joseph M. Busky, CFO. “Our year-over-year organic growth in the region was 10 percent in the third quarter and the European-based businesses we have acquired this year have exceeded our expectations.”

Outlook
The company is lowering its 2013 revenue guidance from a range of $910 to $940 million to a range of $865 to $880 million, representing nine to 10 percent revenue growth over 2012. The company is lowering its 2013 GAAP diluted earnings per share guidance from a range of $0.45 to $0.50 to a range of $0.16 to $0.20. The revisions are due primarily to the performance of Productions Graphics.

About InnerWorkings
InnerWorkings (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 60 global offices. Among the many industries InnerWorkings services are: retail, financial services, hospitality, non-profits, healthcare, food and beverage, broadcasting and cable, education, transportation and utilities.

Source: InnerWorkings.