InnerWorkings Announces First Quarter 2017 Results
Raising 2017 earnings guidance
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 endedMarch 31, 2017 and$25.1 million for the prior trailing twelve-month period endedMarch 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 withJaguar 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
"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
Outlook
The Company is raising its guidance for 2017 non-GAAP diluted earnings
per share to a range of
Conference Call
The phone number to access the conference call is (877) 771-7024. A live audio webcast of the call will be available through InnerWorkings' website at http://investor.inwk.com/events.cfm. A replay of the webcast will be available later today at the same location.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as
"non-GAAP financial measures" by the
The Company has not quantitatively reconciled its guidance for non-GAAP adjusted EBITDA or non-GAAP diluted earnings per share to their most comparable GAAP measure because the Company does not provide specific guidance for the various reconciling items as certain items that impact these measures have not occurred, are out of the Company's control, or cannot be reasonably predicted, including potential changes in contingent consideration value. Accordingly, a reconciliation to the nearest GAAP financial metric is not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the Company's results.
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
About
Condensed Consolidated Statements of Income (Unaudited) |
||||||||||
(in thousands, except per share amounts) |
Three Months Ended |
|||||||||
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) |
|
|
||||||||
(unaudited) | ||||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 29,920 | $ | 30,924 | ||||||
Accounts receivable, net of allowance for doubtful accounts of
|
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: | ||||||||||
|
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 |
6 | 6 | ||||||||
Additional paid-in capital | 228,106 | 224,480 | ||||||||
|
(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 |
|||||||||
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 |
|||||||||
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 |
|||||||||||||||
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 |
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312.589.5613
bfreas@inwk.com
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