InnerWorkings Announces Preliminary Fourth Quarter and Full Year 2013 Results and 2014 Guidance
Announces record revenue and adjusted operating cash flow in the fourth quarter and full year; forecasts 8 to 12 percent revenue growth in 2014
Quarterly Highlights:
-
Record revenue of
$245.6 million , an increase of 22% compared to$201.9 million in the fourth quarter of 2012. Organic revenue growth totaled$28 million , representing 14% growth over the prior year period. Please refer to the revenue growth table below for more information. -
Record non-GAAP adjusted operating cash flow generated from operations
of
$27.2 million , an increase of 24% compared to$22.0 million in the fourth quarter of 2012. Please refer to the non-GAAP reconciliation table below for more information. -
Non-GAAP adjusted EBITDA of
$6.2 million , compared to$6.3 million in the year-earlier period. Please refer to the non-GAAP reconciliation table below for more information. -
Non-GAAP diluted earnings per share of (
$.02 ), compared to ($.01 ) in the fourth quarter of 2012. Please refer to the non-GAAP reconciliation table below for more information.
Fiscal Year Highlights:
-
Record revenue of
$893.4 million , an increase of 13% compared to$789.6 million in 2012. Organic revenue growth was$72 million , representing 9% growth over the prior year. Please refer to the revenue growth table below for more information. -
Record non-GAAP adjusted operating cash flow generated from operations
of
$39.0 million , an increase of 88% compared to$20.8 million in 2012. Please refer to the non-GAAP reconciliation table below for more information. -
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 inApril 2013 , as well as the underperformance of the Inside Sales business. Please refer to the non-GAAP reconciliation table below for more information. -
Non-GAAP diluted earnings per share of
$.07 , compared to$0.24 in 2012. Please refer to the non-GAAP reconciliation table below for more information.
"Despite a number of unexpected challenges in 2013, our team was able to
drive double-digit top-line growth," said
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
Additional Financial and Operational Highlights:
Additional 2013 financial and recent operational highlights include the following:
- 77% of the Company's revenue was generated from enterprise sales, with the remaining 23% derived from middle market sales, compared to a 76% / 24% 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," said
| Revenue Growth - Comparing 2013 to 2012 | ||||||||||||
| Q4 $(MM) | Q4 % | FY'13 (MM) | FY'13 % | |||||||||
| Change | Change | Change | Change | |||||||||
| Organic New Enterprise Growth |
|
10% |
|
10% | ||||||||
| Organic Middle Market Growth |
( |
(2%) |
( |
0% | ||||||||
| Same Customer Spend |
|
6% |
( |
0% | ||||||||
| Loss of Spend from Large Customer 1 |
( |
(5%) |
( |
(4%) | ||||||||
| Acquisitive Growth |
|
13% |
|
8% | ||||||||
| Total Revenue Growth |
|
22% |
|
13% | ||||||||
| Total Organic Revenue Growth 2 |
|
14% |
|
9% | ||||||||
|
1 Includes loss of spending from large retail
customer previously announced in |
||||||||||||
|
2 Excludes Acquisitive Growth & Loss of Spend from Large Customer. |
||||||||||||
Outlook
The Company anticipates 2014 annual revenue of
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
| Consolidated Statements of Income | ||||||||||||||||||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
| 2012 | 2013 | 2012 | 2013 | |||||||||||||||
| Revenue | $ | 201,852,083 | $ | 245,599,528 | $ | 789,565,872 | $ | 893,421,067 | ||||||||||
| Cost of goods sold | 158,683,629 | 191,150,497 | 611,992,663 | 691,684,285 | ||||||||||||||
| Gross profit | 43,168,454 | 54,449,031 | 177,573,209 | 201,736,782 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Selling, general and administrative expenses | 39,842,949 | 49,969,019 | 145,775,957 | 183,695,203 | ||||||||||||||
| Depreciation and amortization | 2,713,120 | 4,669,365 | 10,790,452 | 13,663,859 | ||||||||||||||
| Change in fair value of contingent consideration | (28,486,250 | ) | (838,547 | ) | (27,688,774 | ) | (31,506,109 | ) | ||||||||||
| Preference claim settlement charge | 1,099,386 | - | 1,099,386 | - | ||||||||||||||
| VAT settlement charge | 1,485,088 | - | 1,485,088 | - | ||||||||||||||
| Goodwill impairment charge | - | - | - | 37,908,000 | ||||||||||||||
| Restructuring and asset write down charges | - | - | - | 4,321,862 | ||||||||||||||
| Income (loss) from operations | 26,514,161 | 649,194 | 46,111,100 | (6,346,033 | ) | |||||||||||||
| Total other expense | (159,936 | ) | (1,095,006 | ) | (1,081,138 | ) | (3,235,749 | ) | ||||||||||
| Income (loss) before income taxes | 26,354,225 | (445,812 | ) | 45,029,962 | (9,581,782 | ) | ||||||||||||
| Income tax expense | 17,652 | (435,814 | ) | 6,398,310 | (304,592 | ) | ||||||||||||
| Net income (loss) | $ | 26,336,573 | $ | (9,998 | ) | $ | 38,631,652 | $ | (9,277,190 | ) | ||||||||
| Basic earnings (loss) per share | $ | 0.53 | $ | (0.00 | ) | $ | 0.79 | $ | (0.18 | ) | ||||||||
| Diluted earnings (loss) per share | $ | 0.51 | $ | (0.00 | ) | $ | 0.75 | $ | (0.18 | ) | ||||||||
| Weighted average shares outstanding, basic | 50,012,513 | 51,264,934 | 48,811,218 | 50,875,131 | ||||||||||||||
| Weighted average shares outstanding, diluted | 51,612,009 | 52,125,182 | 51,240,076 | 52,186,994 | ||||||||||||||
| Consolidated Balance Sheets | ||||||||
|
|
||||||||
| 2012 | 2013 | |||||||
| Cash and cash equivalents | $ | 17,218,899 | $ | 18,755,841 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 142,059,473 | 174,878,823 | ||||||
| Unbilled revenue | 30,798,230 | 25,798,546 | ||||||
| Inventories | 18,362,282 | 26,123,000 | ||||||
| Prepaid expenses | 15,947,013 | 12,334,943 | ||||||
| Other current assets | 22,600,945 | 25,351,884 | ||||||
| Total long-term assets | 268,706,648 | 332,938,721 | ||||||
| Total assets | $ | 515,693,490 | $ | 616,181,758 | ||||
| Accounts payable-trade | $ | 122,087,470 | $ | 166,799,798 | ||||
| Other current liabilities | 32,834,796 | 49,648,225 | ||||||
| Revolving credit facility | 65,000,000 | 69,000,000 | ||||||
| Other long-term liabilities | 53,112,550 | 86,129,585 | ||||||
| Total stockholders' equity | 242,658,674 | 244,604,150 | ||||||
| Total liabilities and stockholders' equity | $ | 515,693,490 | $ | 616,181,758 | ||||
|
|
||||||||||
|
Twelve Months Ended |
||||||||||
| 2012 | 2013 | |||||||||
| Net cash provided by operating activities | $ | 9,411,735 | $ | 37,520,747 | ||||||
| Net cash used in investing activities | (14,706,533 | ) | (31,526,947 | ) | ||||||
| Net cash provided by (used in) financing activities | 9,583,488 | (4,647,458 | ) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (289,176 | ) | 190,600 | |||||||
| Increase in cash and cash equivalents | 3,999,514 | 1,536,942 | ||||||||
| Cash and cash equivalents, beginning of period | 13,219,385 | 17,218,899 | ||||||||
| Cash and cash equivalents, end of period | $ | 17,218,899 | $ | 18,755,841 | ||||||
| Reconciliation of Adjusted EBITDA, Adjusted Operating Cash Flows and Adjusted Diluted EPS | ||||||||||||||||||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
| 2012 | 2013 | 2012 | 2013 | |||||||||||||||
| Operating income (loss) | $ | 26,514,161 | $ | 649,194 | $ | 46,111,100 | $ | (6,346,033 | ) | |||||||||
| Depreciation and amortization | 2,713,120 | 4,669,365 | 10,790,452 | 13,663,859 | ||||||||||||||
| Stock-based compensation expense | 3,021,797 | 1,696,843 | 6,192,870 | 4,733,031 | ||||||||||||||
| Change in fair value of contingent consideration | (28,486,250 | ) | (838,547 | ) | (27,688,774 | ) | (31,506,109 | ) | ||||||||||
| Preference claim settlement charge | 1,099,386 | - | 1,099,386 | - | ||||||||||||||
| VAT settlement charge | 1,485,088 | - | 1,485,088 | - | ||||||||||||||
| Payments to former owner of Productions Graphics, net of cash recovered | - | - | (598,345 | ) | 2,068,799 | |||||||||||||
| Goodwill impairment charge | - | - | - | 37,908,000 | ||||||||||||||
| Restructuring and asset write down charges | - | - | - | 4,321,862 | ||||||||||||||
| Legal fees in connection with patent infringement defense | - | - | - | 961,295 | ||||||||||||||
| Adjusted EBITDA | $ | 6,347,302 | $ | 6,176,855 | $ | 37,391,777 | $ | 25,804,704 | ||||||||||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
| 2012 | 2013 | 2012 | 2013 | |||||||||||||||
| Net cash provided by operating activities | $ | 23,636,924 | $ | 28,056,897 | $ | 9,411,735 | $ | 37,520,747 | ||||||||||
| Excess tax benefit from exercise of stock awards * | (1,685,306 | ) | (850,502 | ) | 6,666,884 | (2,618,779 | ) | |||||||||||
| Cash paid for settlement of preference claim | - | - | - | 900,000 | ||||||||||||||
|
Prepayment (refund) of VAT assessment in |
- | - | 3,604,866 | (2,166,664 | ) | |||||||||||||
| Cash payment to former owner of Productions Graphics | - | - | 1,124,705 | 5,395,019 | ||||||||||||||
| Adjusted net cash provided by operating activities | $ | 21,951,618 | $ | 27,206,395 | $ | 20,808,190 | $ | 39,030,323 | ||||||||||
| * 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 |
||||||||||||||||||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
| 2012 | 2013 | 2012 | 2013 | |||||||||||||||
| Net income (loss) | $ | 26,336,573 | $ | (9,998 | ) | $ | 38,631,652 | $ | (9,277,190 | ) | ||||||||
| Change in fair value of contingent consideration, net of tax | (28,468,621 | ) | (786,419 | ) | (27,718,771 | ) | (29,833,060 | ) | ||||||||||
| Preference claim settlement charge, net of tax | 668,449 | - | 668,449 | - | ||||||||||||||
| VAT settlement charge, net of tax | 1,121,241 | - | 1,121,241 | - | ||||||||||||||
| Payments to former owner of Productions Graphics, net of cash recovered, net of tax | - | - | (448,759 | ) | 1,551,599 | |||||||||||||
| Goodwill impairment charge | - | - | - | 37,908,000 | ||||||||||||||
| Restructuring and asset write down charges, net of tax | - | - | - | 2,614,726 | ||||||||||||||
| Legal fees in connection with patent infringement defense, net of tax | - | - | - | 625,033 | ||||||||||||||
| Adjusted net income (loss) | $ | (342,358 | ) | $ | (796,417 | ) | $ | 12,253,812 | $ | 3,589,108 | ||||||||
| Weighted average shares outstanding, diluted | 51,612,009 | 52,125,182 | 51,240,076 | 52,186,994 | ||||||||||||||
| Adjusted Diluted EPS | $ | (0.01 | ) | $ | (0.02 | ) | $ | 0.24 | $ | 0.07 | ||||||||
bmoore@inwk.com
Source:
News Provided by Acquire Media