InnerWorkings Announces Third Quarter 2019 Results
Record
Adjusted EBITDA up 15% year to date
“We are successfully executing our strategy to achieve profitable growth,” said Chief Executive Officer
Financial and Business Highlights
-
Gross revenue was
$286.5 million in the third quarter of 2019, an increase of 6% compared to$270.9 million in the third quarter of 2018. Excluding currency impact, third quarter gross revenue increased 7% compared to the same period of last year. -
Gross profit (net revenue) was
$68.2 million , or 23.8% of gross revenue in the third quarter of 2019, compared to$64.0 million , or 23.6% of gross revenue, in the same period of last year. Third quarter gross profit (net revenue) increased 6% over the prior period and 7% excluding currency impact. -
Net loss for the third quarter of 2019 was
$(2.2) million , or$(0.04) per diluted share, compared to net loss of$(44.9) million , or$(0.87) per diluted share in the third quarter of 2018. -
Adjusted diluted earnings per share for the third quarter of 2019 was
$0.05 , compared to$0.04 in the third quarter of 2018. Year-to-date adjusted diluted earnings per share was$0.12 , compared to$0.03 in the same period of 2018. -
Adjusted EBITDA was
$11.6 million in the third quarter of 2019, compared to$12.2 million in the third quarter of 2018. Year-to-date adjusted EBITDA was$31.8 million , an increase of 15% compared to the same period of 2018. -
Additional work from new and existing clients awarded to date in 2019 amounts to approximately
$142 million of annual revenue at full run-rate.
“We have already surpassed 2018's full-year adjusted EBITDA only three quarters into 2019,” said
Outlook
The Company is adjusting its guidance for gross revenue primarily to reflect approximately
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
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 adjusted EBITDA and adjusted diluted earnings per share to their most comparable GAAP measures because certain of the reconciling items that impact these measures, including restructuring charges, stock-based compensation expense and control remediation-related fees affecting the period, have not occurred, are outside the Company’s control, or cannot be reasonably predicted. Accordingly, reconciliations to the nearest GAAP financial measures are 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 Operations (In thousands, except per share data) (unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Revenue |
$ |
286,525 |
|
|
$ |
270,850 |
|
|
$ |
837,816 |
|
|
$ |
827,356 |
|
|
Cost of goods sold |
218,356 |
|
|
206,808 |
|
|
639,385 |
|
|
632,376 |
|
||||
|
Gross profit |
68,169 |
|
|
64,042 |
|
|
198,431 |
|
|
194,980 |
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
|
Selling, general and administrative expenses |
59,938 |
|
|
56,142 |
|
|
174,404 |
|
|
176,312 |
|
||||
|
Depreciation and amortization |
3,090 |
|
|
3,265 |
|
|
8,939 |
|
|
10,438 |
|
||||
|
Goodwill impairment |
— |
|
|
27,887 |
|
|
— |
|
|
27,887 |
|
||||
|
Intangible and other asset impairments |
— |
|
|
16,818 |
|
|
— |
|
|
16,818 |
|
||||
|
Restructuring charges |
3,055 |
|
|
3,142 |
|
|
10,687 |
|
|
3,142 |
|
||||
|
Income (loss) from operations |
2,086 |
|
|
(43,212 |
) |
|
4,401 |
|
|
(39,617 |
) |
||||
|
Other income (expense): |
|
|
|
|
|
|
|
||||||||
|
Interest income |
37 |
|
|
19 |
|
|
239 |
|
|
135 |
|
||||
|
Interest expense |
(4,376 |
) |
|
(1,769 |
) |
|
(9,608 |
) |
|
(4,854 |
) |
||||
|
Other expense |
(1,736 |
) |
|
(301 |
) |
|
(2,196 |
) |
|
(1,734 |
) |
||||
|
Total other expense |
(6,075 |
) |
|
(2,051 |
) |
|
(11,565 |
) |
|
(6,453 |
) |
||||
|
Loss before income taxes |
(3,989 |
) |
|
(45,263 |
) |
|
(7,164 |
) |
|
(46,070 |
) |
||||
|
Income tax expense (benefit) |
(1,815 |
) |
|
(326 |
) |
|
(1,359 |
) |
|
851 |
|
||||
|
Net loss |
$ |
(2,174 |
) |
|
$ |
(44,937 |
) |
|
$ |
(5,805 |
) |
|
$ |
(46,921 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Basic and diluted net loss per share |
$ |
(0.04 |
) |
|
$ |
(0.87 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.90 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average shares outstanding – basic |
53,320 |
|
|
51,688 |
|
|
53,235 |
|
|
52,384 |
|
||||
|
Weighted-average shares outstanding – diluted |
53,320 |
|
|
51,688 |
|
|
53,235 |
|
|
52,384 |
|
||||
|
Condensed Consolidated Balance Sheets (In thousands) |
|||||||
|
|
September 30, 2019 |
|
December 31, 2018 |
||||
|
|
(unaudited) |
|
|
||||
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
38,488 |
|
|
$ |
26,770 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $4,247 and $4,880, respectively |
190,992 |
|
|
193,253 |
|
||
|
Unbilled revenue |
65,584 |
|
|
46,474 |
|
||
|
Other receivables |
39,317 |
|
|
23,727 |
|
||
|
Inventories |
64,136 |
|
|
56,001 |
|
||
|
Prepaid expenses |
13,973 |
|
|
16,982 |
|
||
|
Other current assets |
13,271 |
|
|
10,379 |
|
||
|
Total current assets |
425,761 |
|
|
373,586 |
|
||
|
Property and equipment, net |
36,714 |
|
|
82,933 |
|
||
|
Intangibles and other assets: |
|
|
|
||||
|
Goodwill |
152,191 |
|
|
152,158 |
|
||
|
Intangible assets, net |
8,230 |
|
|
9,828 |
|
||
|
Right of use assets, net |
51,726 |
|
|
— |
|
||
|
Deferred income taxes |
1,112 |
|
|
1,195 |
|
||
|
Other non-current assets |
4,333 |
|
|
2,976 |
|
||
|
Total intangibles and other assets |
217,592 |
|
|
166,157 |
|
||
|
Total assets |
$ |
680,067 |
|
|
$ |
622,676 |
|
|
Liabilities and stockholders' equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable |
169,173 |
|
|
158,449 |
|
||
|
Accrued expenses |
44,096 |
|
|
35,474 |
|
||
|
Deferred revenue |
18,526 |
|
|
17,614 |
|
||
|
Revolving credit facility - current |
4,585 |
|
|
142,736 |
|
||
|
Term loan - current |
6,250 |
|
|
— |
|
||
|
Other current liabilities |
32,325 |
|
|
26,231 |
|
||
|
Total current liabilities |
274,955 |
|
|
380,504 |
|
||
|
Lease liabilities |
47,094 |
|
|
— |
|
||
|
Revolving credit facility - non-current |
76,829 |
|
|
— |
|
||
|
Term loan - non-current |
89,991 |
|
|
— |
|
||
|
Deferred income taxes |
8,257 |
|
|
8,178 |
|
||
|
Other non-current liabilities |
2,486 |
|
|
50,903 |
|
||
|
Total liabilities |
499,612 |
|
|
439,585 |
|
||
|
Commitments and contingencies |
|
|
|
||||
|
Stockholders' equity: |
|
|
|
||||
|
Common stock |
6 |
|
|
6 |
|
||
|
Additional paid-in capital |
243,706 |
|
|
239,960 |
|
||
|
Treasury stock at cost |
(81,471 |
) |
|
(81,471 |
) |
||
|
Accumulated other comprehensive loss |
(25,045 |
) |
|
(24,309 |
) |
||
|
Retained earnings |
43,259 |
|
|
48,905 |
|
||
|
Total stockholders' equity |
180,455 |
|
|
183,091 |
|
||
|
Total liabilities and stockholders' equity |
$ |
680,067 |
|
|
$ |
622,676 |
|
|
Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited) |
|||||||
|
|
Nine Months Ended September 30, |
||||||
|
|
2019 |
|
2018 |
||||
|
|
|
|
|
||||
|
Cash flows from operating activities |
|
|
|
||||
|
Net loss |
$ |
(5,805 |
) |
|
$ |
(46,921 |
) |
|
Adjustments to reconcile net loss to net cash from operating activities: |
|
|
|
||||
|
Depreciation and amortization |
8,939 |
|
|
10,438 |
|
||
|
Stock-based compensation expense |
4,219 |
|
|
3,624 |
|
||
|
Bad debt provision |
1,447 |
|
|
888 |
|
||
|
Implementation cost amortization |
250 |
|
|
344 |
|
||
|
Goodwill impairment |
— |
|
|
27,887 |
|
||
|
Intangible and long-lived asset impairment |
— |
|
|
16,818 |
|
||
|
Change in fair value of warrant |
950 |
|
|
— |
|
||
|
Change in fair value of embedded derivative |
(97 |
) |
|
— |
|
||
|
Unrealized foreign exchange loss |
986 |
|
|
— |
|
||
|
Other operating activities |
705 |
|
|
(189 |
) |
||
|
Change in assets: |
|
|
|
||||
|
Accounts receivable and unbilled revenue |
(21,245 |
) |
|
5,810 |
|
||
|
Inventories |
(8,767 |
) |
|
(16,469 |
) |
||
|
Prepaid expenses and other assets |
(29,141 |
) |
|
(7,903 |
) |
||
|
Change in liabilities: |
|
|
|
||||
|
Accounts payable |
12,403 |
|
|
20,350 |
|
||
|
Accrued expenses and other liabilities |
25,378 |
|
|
(4,572 |
) |
||
|
Net cash (used in) provided by operating activities |
(9,778 |
) |
|
10,105 |
|
||
|
|
|
|
|
||||
|
Cash flows from investing activities |
|
|
|
||||
|
Purchases of property and equipment |
(10,012 |
) |
|
(7,835 |
) |
||
|
Payments for acquisition, net of cash acquired |
(390 |
) |
|
— |
|
||
|
Net cash used in investing activities |
(10,402 |
) |
|
(7,835 |
) |
||
|
|
|
|
|
||||
|
Cash flows from financing activities |
|
|
|
||||
|
Net borrowings (repayments) from old revolving credit facility |
(142,583 |
) |
|
23,230 |
|
||
|
Net borrowings (repayments) from new revolving credit facility |
81,472 |
|
|
— |
|
||
|
Net short-term secured (repayments) borrowings |
(833 |
) |
|
55 |
|
||
|
Proceeds from term loan |
100,000 |
|
|
— |
|
||
|
Payments on term loan |
(1,250 |
) |
|
— |
|
||
|
Repurchases of common stock |
— |
|
|
(25,689 |
) |
||
|
Proceeds from exercise of stock options |
63 |
|
|
416 |
|
||
|
Payment of debt issuance costs |
(5,488 |
) |
|
(545 |
) |
||
|
Other financing activities |
(242 |
) |
|
(746 |
) |
||
|
Net cash provided by (used in) financing activities |
31,139 |
|
|
(3,279 |
) |
||
|
|
|
|
|
||||
|
Effect of exchange rate changes on cash and cash equivalents |
759 |
|
|
(1,958 |
) |
||
|
Increase (Decrease) in cash and cash equivalents |
11,718 |
|
|
(2,967 |
) |
||
|
Cash and cash equivalents, beginning of period |
26,770 |
|
|
30,562 |
|
||
|
Cash and cash equivalents, end of period |
$ |
38,488 |
|
|
$ |
27,595 |
|
|
Reconciliation of Adjusted EBITDA and Adjusted Diluted Earnings Per Share (In thousands, except per share amounts) (Unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net loss |
$ |
(2,174 |
) |
|
$ |
(44,937 |
) |
|
$ |
(5,805 |
) |
|
$ |
(46,921 |
) |
|
Income tax (benefit) expense |
(1,815 |
) |
|
(326 |
) |
|
(1,359 |
) |
|
851 |
|
||||
|
Interest income |
(37 |
) |
|
(19 |
) |
|
(239 |
) |
|
(135 |
) |
||||
|
Interest expense |
4,376 |
|
|
1,769 |
|
|
9,608 |
|
|
4,854 |
|
||||
|
Other expense |
1,736 |
|
|
301 |
|
|
2,196 |
|
|
1,734 |
|
||||
|
Depreciation and amortization |
3,090 |
|
|
3,265 |
|
|
8,939 |
|
|
10,438 |
|
||||
|
Stock-based compensation expense |
1,783 |
|
|
801 |
|
|
3,924 |
|
|
3,624 |
|
||||
|
Stock appreciation rights marked to market |
248 |
|
|
— |
|
|
294 |
|
|
— |
|
||||
|
Goodwill impairment |
— |
|
|
27,887 |
|
|
— |
|
|
27,887 |
|
||||
|
Intangible and long-lived asset impairment |
— |
|
|
16,818 |
|
|
— |
|
|
16,818 |
|
||||
|
Restructuring charges |
3,055 |
|
|
3,142 |
|
|
10,687 |
|
|
3,142 |
|
||||
|
Professional fees related to ASC 606 implementation |
— |
|
|
— |
|
|
— |
|
|
1,092 |
|
||||
|
Senior leadership transition and other employee-related costs |
— |
|
|
1,153 |
|
|
— |
|
|
1,153 |
|
||||
|
Obsolete retail inventory |
— |
|
|
950 |
|
|
— |
|
|
950 |
|
||||
|
Executive search fees |
— |
|
|
— |
|
|
80 |
|
|
235 |
|
||||
|
Control remediation-related fees |
378 |
|
|
1,358 |
|
|
918 |
|
|
1,895 |
|
||||
|
Sales and use tax audit |
— |
|
|
— |
|
|
1,235 |
|
|
— |
|
||||
|
Other professional fees |
967 |
|
|
81 |
|
|
1,343 |
|
|
162 |
|
||||
|
Adjusted EBITDA |
$ |
11,607 |
|
|
$ |
12,243 |
|
|
$ |
31,821 |
|
|
$ |
27,779 |
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net loss |
$ |
(2,174 |
) |
|
$ |
(44,937 |
) |
|
$ |
(5,805 |
) |
|
$ |
(46,921 |
) |
|
Goodwill impairment |
— |
|
|
27,887 |
|
|
— |
|
|
27,887 |
|
||||
|
Intangible and long-lived asset impairment, net of tax |
— |
|
|
14,037 |
|
|
— |
|
|
14,037 |
|
||||
|
Restructuring charges, net of tax |
2,401 |
|
|
2,584 |
|
|
8,203 |
|
|
2,584 |
|
||||
|
Senior leadership transition and other employee-related costs, net of tax |
— |
|
|
844 |
|
|
— |
|
|
844 |
|
||||
|
Obsolete inventory, net of tax |
— |
|
|
769 |
|
|
— |
|
|
769 |
|
||||
|
Professional fees related to ASC 606 implementation, net of tax |
— |
|
|
— |
|
|
— |
|
|
819 |
|
||||
|
Executive search fees, net of tax |
— |
|
|
— |
|
|
60 |
|
|
176 |
|
||||
|
Control remediation-related fees, net of tax |
281 |
|
|
984 |
|
|
683 |
|
|
1,387 |
|
||||
|
Sales and use tax audit, net of tax |
— |
|
|
— |
|
|
920 |
|
|
— |
|
||||
|
Other professional fees, net of tax |
721 |
|
|
59 |
|
|
1,001 |
|
|
119 |
|
||||
|
Fair value of warrants and derivatives |
853 |
|
|
— |
|
|
853 |
|
|
— |
|
||||
|
Foreign exchange loss |
773 |
|
|
— |
|
|
773 |
|
|
— |
|
||||
|
Adjusted net income |
$ |
2,855 |
|
|
$ |
2,227 |
|
|
$ |
6,688 |
|
|
$ |
1,701 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP Weighted-average shares outstanding – diluted |
53,320 |
|
|
51,688 |
|
|
53,235 |
|
|
52,384 |
|
||||
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
||||||||
|
Employee stock options and restricted common shares |
4 |
|
|
304 |
|
|
280 |
|
|
633 |
|
||||
|
Adjusted Weighted-average shares outstanding – diluted |
53,324 |
|
|
51,992 |
|
|
53,515 |
|
|
53,017 |
|
||||
|
Adjusted diluted earnings per share |
$ |
0.05 |
|
|
$ |
0.04 |
|
|
$ |
0.12 |
|
|
$ |
0.03 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005954/en/
Source:
InnerWorkings, Inc.
Bridget Freas
312.589.5613
bfreas@inwk.com