InnerWorkings Announces Second Quarter 2009 Results

Press Release


<< Back
Aug 5, 2009
InnerWorkings Announces Second Quarter 2009 Results

CHICAGO, Aug 5, 2009 (GlobeNewswire via COMTEX News Network) -- InnerWorkings, Inc. (Nasdaq:INWK), a leading global provider of managed print and promotional solutions to corporate clients, today reported results for the three months ended June 30, 2009.

Highlights:

* The Company generated second quarter revenue of $100.1 million and diluted earnings per share of $0.05, including $0.01 per share from the sale of Echo Global Logistics, Inc. common stock.

* Nine new enterprise contracts were signed during the quarter, including two major contracts each expected to yield in excess of $10.0 million in annual revenue.

* Revenue from new accounts of $11.0 million in the quarter and $21.0 million year-to-date.

* Apart from customer bankruptcy and credit issues, the Company has retained 24 of its top 25 clients in the past 12 months.

* Cash flow from operations in the quarter was $0.4 million, bringing year-to-date operating cash flow to $8.0 million.

"The continued momentum in our enterprise segment is driving our market share gains at an increasing rate," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "While this is being overshadowed by the current pressure on printing budgets, we believe we are poised for significant growth as new customers come online and marketing budgets rebound."

Revenue for the second quarter was $100.1 million compared to revenue of $105.3 million in the year-earlier period. Despite a decline in same-customer revenue of 23%, revenue for the quarter only decreased five percent driven by the Company's gains in market share. Second quarter net income was $2.1 million or $0.05 per diluted share. Adjusted EBITDA was $5.7 million for the quarter, a $1.2 million decrease versus $6.9 million in the year-earlier period.

Additional second quarter 2009 financial and operational highlights include:

* Sales to enterprise clients accounted for 65 percent of second quarter revenue, with the remaining 35 percent derived from transactional clients.

* Customer concentration for the top ten accounts decreased to 31 percent of total revenue, compared to 39 percent in the second quarter of 2008.

* The Company sold 94,444 shares of common stock in Echo Global Logistics, Inc. for $850,000 in cash. The sale was in line with its plan to monetize the remaining 1.3 million share investment over time.

* The Company has drawn $42.2 million on its $75.0 million bank credit facility and has an additional $19 million of cash and short-term investments (not including the 1.3 million shares of Echo mentioned above).

Although InnerWorkings still expects a seasonally stronger second half, it has yet to see any significant movement up in same-customer volume. To prepare for potential continued organic revenue declines, the Company will reduce costs by an additional $1.2 million during the second half of the year through salary reductions and mandatory unpaid furloughs.

"In response to a slower than expected rebound in organic growth, we will take costs out of the business in the third and fourth quarters," said Joseph M. Busky, Chief Financial Officer of InnerWorkings. "We believe adjusting our flexible cost structure is prudent in this environment and encourage investors to look to our customer retention and steady order flow as an indication of our strength in 2010 and beyond."

Conference Call

A conference call will be broadcast live on Wednesday, August 5, 2009, at 4:30 p.m. Central Time (5:30 p.m. Eastern Time). The live webcast discussion, which will include a Q&A session, will be hosted by Eric D. Belcher, Chief Executive Officer, and Joseph M. Busky, Chief Financial Officer. Interested parties are invited to listen to the live webcast by visiting the Investor "Events & Presentations" section of InnerWorkings' website at www.inwk.com. A replay of the webcast will be available later that day in the same section of the website.

About InnerWorkings, Inc.

InnerWorkings, Inc. (Nasdaq:INWK) is a leading global provider of managed print and promotional solutions to corporate clients across a wide range of industries. With proprietary technology, an extensive supplier network, and domain expertise, the Company procures, manages, and delivers printed materials and promotional products as part of a comprehensive outsourced enterprise solution. The Company is based in Chicago with other offices in the United States and in the United Kingdom. For more information on InnerWorkings, visit: www.inwk.com.

The InnerWorkings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5277

Non-GAAP Information for Adjusted EBITDA

Adjusted EBITDA included in this press release is a non-GAAP (generally accepted accounting principles) financial measure that represents net income (loss) excluding the effects of interest, taxes, depreciation, amortization, and stock-based compensation costs. Adjusted EBITDA, as defined above, may not be similar to adjusted EBITDA measures used by other companies and is not a measurement under GAAP.

Though management finds EBITDA useful for evaluating aspects of the Company's business, its reliance on this measure is limited because excluded items often have a material effect on the Company's earnings and earnings per common share calculated in accordance with GAAP. Therefore, management uses adjusted EBITDA in conjunction with GAAP earnings and earnings per common share measures. The Company believes that adjusted EBITDA provides investors with an additional tool for evaluating the Company's core performance, which management uses in its own evaluation of performance, and as a base line for assessing the future earnings potential of the Company. While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental metric since, with reconciliation to GAAP, it may provide greater insight into the Company's financial 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 SEC filings, including the "Risk Factors" section of our most recently filed Form 10-K.



 Consolidated Statements of Income (Unaudited)


                                          Three months ended June 30,
                                        -----------------------------
                                             2008            2009
                                        -------------   -------------
 Revenue                                $ 105,346,429   $ 100,097,510
 Cost of goods sold                        79,568,042      75,358,000
                                        -------------   -------------
 Gross profit                              25,778,387      24,739,510
 Operating expenses:
  Selling, general, and administrative
   expenses                                19,499,236      20,025,090
  Depreciation and amortization             1,147,080       2,219,071
                                        -------------   -------------
 Income from operations                     5,132,071       2,495,349
 Total other income                         4,917,062         522,495
                                        -------------   -------------
 Income before taxes                       10,049,133       3,017,844
 Income tax expense                         3,943,838         870,568
                                        -------------   -------------
 Net income                             $   6,105,295   $   2,147,276
                                        =============   =============

 Basic earnings per share               $        0.13   $        0.05
 Diluted earnings per share             $        0.12   $        0.05

 Weighted average shares outstanding,
  basic                                    48,053,002      45,526,074
 Weighted average shares outstanding,
  diluted                                  50,187,075      47,164,741


                                           Six months ended June 30,
                                        -----------------------------
                                             2008            2009
                                        -------------   -------------
 Revenue                                $ 192,538,015   $ 194,374,943
 Cost of goods sold                       145,191,402     146,625,277
                                        -------------   -------------
 Gross profit                              47,346,613      47,749,666
 Operating expenses:
  Selling, general, and administrative
   expenses                                34,549,791      40,644,206
  Depreciation and amortization             1,870,003       3,714,446
                                        -------------   -------------
 Income from operations                    10,926,819       3,391,014
 Total other income                         5,491,975          30,394
                                        -------------   -------------
 Income before taxes                       16,418,794       3,421,408
 Income tax expense                         6,455,483       1,025,721
                                        -------------   -------------
 Net income                             $   9,963,311   $   2,395,687
                                        =============   =============

 Basic earnings per share               $        0.21   $        0.05
 Diluted earnings per share             $        0.20   $        0.05

 Weighted average shares outstanding,
  basic                                    48,040,574      45,463,559
 Weighted average shares outstanding,
  diluted                                  50,228,387      47,099,588


 Consolidated Balance Sheets

                                         December 31,      June 30,
                                            2008             2009
                                        -------------   -------------
                                                         (unaudited)

 Balance Sheet Data
 Cash and cash equivalents              $   4,011,855   $   2,968,244
 Short-term investments                            --      15,774,697
 Accounts receivable, net of allowance
  for doubtful accounts                    73,628,112      71,526,189
 Unbilled revenue                          27,802,667      23,737,500
 Inventories                                7,539,870       8,229,353
 Prepaid expenses                           9,257,086      10,452,632
 Other current assets                       8,081,553       9,738,887
 Total long-term assets                   123,501,173     113,917,800
                                        -------------   -------------
 Total assets                           $ 253,822,316   $ 256,345,302
                                        =============   =============

 Accounts payable-trade                 $  54,084,430   $  58,741,969
 Other current liabilities                 65,854,864      54,076,280
 Capital lease obligations, less
  current maturities                          144,993          80,589
 Other long-term liabilities                       --       4,900,000
 Total stockholders' equity               133,738,029     138,546,464
                                        -------------   -------------
 Total liabilities and
  stockholders' equity                  $ 253,822,316   $ 256,345,302
                                        =============   =============


 Cash Flow Data (Unaudited)

                                           Six Months Ended June 30,
                                             2008             2009
                                         ----------------------------
 Cash flows from operating activities
 Net cash provided by operating
  activities                               11,094,355       8,039,235
 Net cash used in investing activities    (13,333,734)     (8,813,488)
 Net cash used in financing activities     (4,888,348)       (211,809)
                                        -------------   -------------
 Effect of exchange rate changes on
  cash and cash equivalents                    28,723         (57,549)
                                        -------------   -------------
 Decrease in cash and cash equivalents     (7,099,004)     (1,043,611)
 Cash and cash equivalents, beginning
  of period                                26,716,239       4,011,855
                                        -------------   -------------
 Cash and cash equivalents,
  end of period                         $  19,617,235   $   2,968,244
                                        =============   =============


 InnerWorkings, Inc.
 2nd Quarter 2009
 Adjusted EBITDA

                          Three months ended       Six months ended
                               June 30,                June 30,
                        ----------------------  ----------------------
                           2008        2009        2008         2009
                        ----------------------  ----------------------
 Operating Income        5,132,071   2,495,349  10,926,819   3,391,014
 Depreciation and
  amortization           1,147,080   2,219,071   1,870,003   3,714,446
 Stock based
  compensation             659,905   1,015,843   1,234,722   1,935,598
                        ----------  ----------  ----------  ----------
     Adjusted EBITDA     6,939,056   5,730,263  14,031,544   9,041,058

(inwk-e)

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: InnerWorkings, Inc.

InnerWorkings, Inc.
Inquiries:
Thea Howell
312-784-2635
thowell@inwk.com

(C) Copyright 2009 GlobeNewswire, Inc. All rights reserved.

News Provided by COMTEX