InnerWorkings Announces Fourth Quarter and Full Year 2014 Results
- Achieves record revenue and adjusted EBITDA for full year;
- Forecasts revenue to increase 8% to 11% on a constant currency basis and Non-GAAP diluted EPS to grow 25% to 35% in 2015;
- Announces share repurchase authorization
Fourth Quarter Highlights:
-
Revenue of
$246.6 million , an increase of 2% year-over-year (4% on a constant currency basis). -
Record Non-GAAP Adjusted EBITDA of
$12.5 million , an increase of 127% year-over-year (129% on a constant currency basis). -
Non-GAAP diluted earnings per share of
$0.07 on a reported and constant currency basis, up from a$0.02 loss in the fourth quarter of 2013. -
Non-GAAP Adjusted Cash Flow of
$3.6 million , compared to$27.1 million in the same period last year, primarily attributable to timing of accounts payable.
Fiscal Year Highlights:
-
Record revenue of
$1.0 billion , an increase of 12% on a year-over-year basis (13% on a constant currency basis). Over two thirds of the revenue growth in 2014 was organic. Please refer to the revenue growth table below for more information. -
Record Non-GAAP Adjusted EBITDA of
$42.8 million , an increase of 59% compared to$26.9 million in 2013 (60% growth on a constant currency basis). -
Non-GAAP diluted earnings per share of
$0.20 , an increase of 122% over 2013. Full year Non-GAAP diluted earnings per share on a constant currency basis were$0.21 . -
Non-GAAP Adjusted Cash Flow of
$(9.7) million , compared to$33.5 million in 2013, primarily attributable to timing of accounts payable.
"2014 was a very successful year for
Additional Highlights
-
Today, the Company announces a new four-year client agreement signed
in
January 2015 with a Fortune 500 consumer packaged goods company. With this addition,InnerWorkings is under long-term contracts with seven of the largest CPG companies in the world. -
This win adds to an impressive roster of new clients launched in 2014,
which includes Callaway, Energizer, FedEx, Novartis,
Pizza Hut , Sanofi and Staples. -
The
North America segment accounted for 68% of revenue and international segments accounted for 32% in 2014, compared to a 74%/26% mix in 2013.
Revenue Growth - Comparing 2014 to 2013 | |||||||||
Reported Currency | Constant Currency | ||||||||
$(MM) | % Change | $(MM) | % Change | ||||||
Organic Enterprise Account Growth |
|
8% |
|
9% | |||||
Loss of Spend from Large Customer 1 |
( |
-1% |
( |
-1% | |||||
Acquisitive Growth |
|
5% |
|
5% | |||||
Total Revenue Growth |
|
12% |
|
13% | |||||
1 Includes loss of spending from large retail
customer previously announced in |
Share Repurchase Authorization
InnerWorkings also announced today that its Board of Directors authorized a share repurchase program. Under the program, InnerWorkings is authorized to repurchase up to $20 million of its outstanding common stock over the next two years. The timing and amount of any share repurchases will be determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time. Repurchases will be made in compliance with SEC rules and other legal requirements.
"The share repurchase program gives us the option to capitalize on opportunities provided by the market to create additional shareholder value, while maintaining the flexibility to invest in our growth," Belcher commented.
Outlook
The Company expects 2015 annual revenue to range between
Belcher concluded, "In the year ahead, we will continue our focus on driving organic growth by acquiring new customers and expanding existing relationships, while demonstrating increased operating leverage as we grow our profitability faster than the top-line. We are proud of the many new Fortune 500 clients that have adopted our solution, and we are very excited about the opportunity ahead."
Conference Call
A conference call will be broadcast live on
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 "Events & Presentations" section of InnerWorkings' website at investor.inwk.com/events.cfm.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as
"non-GAAP financial measures" by the
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 | ||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Revenue | $ | 242,877,133 | $ | 246,641,995 | $ | 890,959,963 | $ | 1,000,132,771 | ||||||||
Cost of goods sold | 188,558,680 | 187,792,177 | 688,933,899 | 770,673,282 | ||||||||||||
Gross profit | 54,318,453 | 58,849,818 | 202,026,064 | 229,459,489 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 50,259,656 | 48,613,035 | 183,443,438 | 195,006,221 | ||||||||||||
Depreciation and amortization | 4,669,365 | 4,791,541 | 13,663,859 | 17,723,493 | ||||||||||||
Change in fair value of contingent consideration | (663,005 | ) | (36,129,951 | ) | (31,330,567 | ) | (37,873,588 | ) | ||||||||
Goodwill impairment charge | - | - | 37,908,000 | - | ||||||||||||
Intangible asset impairment charges | - | 2,710,435 | - | 2,710,435 | ||||||||||||
Restructuring and other charges | - | - | 4,321,862 | - | ||||||||||||
Income (loss) from operations | 52,437 | 38,864,758 | (5,980,528 | ) | 51,892,928 | |||||||||||
Total other expense | (1,095,006 | ) | (1,763,205 | ) | (3,235,749 | ) | (5,117,858 | ) | ||||||||
Income (loss) before income taxes | (1,042,569 | ) | 37,101,553 | (9,216,277 | ) | 46,775,070 | ||||||||||
Income tax expense (benefit) | (574,043 | ) | (351,922 | ) | (555,928 | ) | 2,313,145 | |||||||||
Net income (loss) | $ | (468,526 | ) | $ | 37,453,475 | $ | (8,660,349 | ) | $ | 44,461,925 | ||||||
Basic earnings (loss) per share | $ | (0.01 | ) | $ | 0.71 | $ | (0.17 | ) | $ | 0.85 | ||||||
Diluted earnings (loss) per share | $ | (0.01 | ) | $ | 0.69 | $ | (0.17 | ) | $ | 0.84 | ||||||
Weighted average shares outstanding, basic | 52,125,182 | 52,805,370 | 50,875,131 | 52,095,481 | ||||||||||||
Weighted average shares outstanding, diluted | 52,125,182 | 53,976,304 | 50,875,131 | 53,103,943 |
Condensed Consolidated Balance Sheets | ||||||
|
|
|||||
2013 | 2014 | |||||
Cash and cash equivalents | $ | 18,606,030 | $ | 22,577,942 | ||
Accounts receivable, net of allowance for doubtful accounts | 171,832,907 | 179,465,922 | ||||
Unbilled revenue | 27,483,544 | 31,698,924 | ||||
Inventories | 26,473,732 | 27,162,642 | ||||
Prepaid expenses | 11,746,965 | 12,684,237 | ||||
Other current assets | 23,528,025 | 31,228,064 | ||||
Total long-term assets | 334,995,575 | 327,022,683 | ||||
Total assets | $ | 614,666,778 | $ | 631,840,414 | ||
Accounts payable-trade | $ | 169,243,349 | $ | 144,044,592 | ||
Other current liabilities | 49,655,185 | 50,668,747 | ||||
Revolving credit facility | 69,000,000 | 104,538,750 | ||||
Other long-term liabilities | 81,326,670 | 36,441,756 | ||||
Total stockholders' equity | 245,441,574 | 296,146,569 | ||||
Total liabilities and stockholders' equity | $ | 614,666,778 | $ | 631,840,414 |
Cash Flow Data | ||||||||
Year Ended |
||||||||
2013 | 2014 | |||||||
Net cash provided by (used in) operating activities | $ | 37,370,935 | $ | (12,048,138 | ) | |||
Net cash used in investing activities | (31,526,947 | ) | (14,710,655 | ) | ||||
Net cash provided by (used in) financing activities |
(4,647,458 | ) | 31,789,409 | |||||
Effect of exchange rate changes on cash and cash equivalents | 190,601 | (1,058,704 | ) | |||||
Increase in cash and cash equivalents | 1,387,131 | 3,971,912 | ||||||
Cash and cash equivalents, beginning of period | 17,218,899 | 18,606,030 | ||||||
Cash and cash equivalents, end of period | $ | 18,606,030 | $ | 22,577,942 |
Reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow, Non-GAAP Diluted Earnings Per Share and Non-GAAP Adjusted SG&A | ||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Operating income (loss) |
$ | 52,437 | $ | 38,864,758 | $ | (5,980,528 | ) | $ | 51,892,928 | |||||||
Depreciation and amortization | 4,669,365 | 4,791,541 | 13,663,859 | 17,723,493 | ||||||||||||
Stock-based compensation expense | 1,696,843 | 1,328,345 | 4,733,031 | 5,351,572 | ||||||||||||
Change in fair value of contingent consideration | (663,005 | ) | (36,129,951 | ) | (31,330,567 | ) | (37,873,588 | ) | ||||||||
Payments to former owner of Productions Graphics, net of cash recovered | (252,156 | ) | - | 2,624,059 | - | |||||||||||
Goodwill impairment charge | - | - | 37,908,000 | - | ||||||||||||
Intangible asset impairment charges | - | 2,710,435 | - | 2,710,435 | ||||||||||||
Restructuring and other charges | - | - | 4,321,862 | - | ||||||||||||
Legal fees in connection with patent infringement defense | - | - | 961,295 | - | ||||||||||||
Restatement-related professional fees | - | - | - | 2,093,104 | ||||||||||||
Secured asset reserve | - | 940,367 | - | 940,367 | ||||||||||||
Non-GAAP Adjusted EBITDA | $ | 5,503,484 | $ | 12,505,495 | $ | 26,901,011 | $ | 42,838,311 | ||||||||
Three Months Ended |
Year Ended |
|||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Net cash provided by (used in) operating activities | $ | 27,907,085 | $ | 3,989,598 | $ | 37,370,935 | $ | (12,048,138 | ) | |||||||
Excess tax benefit from exercise of stock awards * | (850,502 | ) | (147,380 | ) | (2,618,779 | ) | (147,380 | ) | ||||||||
Refund of VAT assessment in |
- | - | (2,166,664 | ) | - | |||||||||||
Cash paid for settlement for preference claim | - | - | 900,000 | - | ||||||||||||
Net short-term advances on International receivables *** | - | (233,320 | ) | - | 2,483,902 | |||||||||||
Non-GAAP Adjusted Operating Cash Flow | $ | 27,056,583 | $ | 3,608,898 | $ | 33,485,492 | $ | (9,711,616 | ) | |||||||
* 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. | ||||||||||||||||
** Represents a payment made to Her Majesty's Revenue and Customers
for VAT assessments in the |
||||||||||||||||
*** US GAAP requires classification in financing activities despite inclusion in working capital on the balance sheet. | ||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Net income (loss) |
$ | (468,526 | ) | $ | 37,453,475 | $ | (8,660,349 | ) | $ | 44,461,925 | ||||||
Change in fair value of contingent consideration, net of tax | (610,877 | ) | (36,122,230 | ) | (29,657,518 | ) | (37,570,797 | ) | ||||||||
Payments to former owner of Productions Graphics, net of cash recovered, net of tax | (174,662 | ) | - | 1,616,825 | - | |||||||||||
Goodwill impairment charge | - | - | 37,908,000 | - | ||||||||||||
Intangible asset impairment charges | - | 1,656,693 | - | 1,656,693 | ||||||||||||
Restructuring and other charges | - | - | 2,614,726 | - | ||||||||||||
Legal fees in connection with patent infringement defense, net of tax | - | - | 625,034 | - | ||||||||||||
Restatement-related professional fees, net of tax | - | - | - | 1,266,328 | ||||||||||||
Secured asset reserve, net of tax | - | 567,982 | - | 567,982 | ||||||||||||
Adjusted net income | $ | (1,254,065 | ) | $ | 3,555,920 | $ | 4,446,718 | $ | 10,382,131 | |||||||
Weighted average shares outstanding, diluted | 52,125,182 | 53,976,304 | 50,875,131 | 53,103,943 | ||||||||||||
Non-GAAP Diluted Earnings Per Share | $ | (0.02 | ) | $ | 0.07 | $ | 0.09 | $ | 0.20 | |||||||
Three Months Ended |
Year Ended |
|||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Selling, general and administrative expenses | $ | 50,259,656 | $ | 48,613,035 | $ | 183,443,438 | $ | 195,006,221 | ||||||||
Restatement-related professional fees | - | - | - | (2,093,104 | ) | |||||||||||
Legal fees in connection with patent infringement defense | - | - | (961,295 | ) | - | |||||||||||
Payments to former owner of Productions Graphics, net of cash recovered | 252,156 | - | (2,624,059 | ) | - | |||||||||||
Secured asset reserve | - | (940,367 | ) | - | (940,367 | ) | ||||||||||
Non-GAAP Adjusted SG&A | $ | 50,511,812 | $ | 47,672,668 | $ | 179,858,084 | $ | 191,972,750 |
312-277-1510
bmoore@inwk.com
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