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Innerworkings Inc – ‘8-K’ for 8/8/19 – ‘EX-99.1’

On:  Thursday, 8/8/19, at 5:10pm ET   ·   For:  8/8/19   ·   Accession #:  1628280-19-10496   ·   File #:  0-52170

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 8/08/19  Innerworkings Inc                 8-K:2,9     8/08/19    2:302K                                   Workiva Inc Wde… FA01/FA

Current Report   —   Form 8-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     19K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    108K 


‘EX-99.1’   —   Miscellaneous Exhibit


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  Exhibit  


InnerWorkings Announces Second Quarter 2019 Results
Highest quarterly profitability in nearly two years; Raising EBITDA guidance
$135M in new business awarded to date in 2019

CHICAGO, IL - August 8, 2019 - InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, today announced financial results for the three and six months ended June 30, 2019. For all non-GAAP references below, please refer to the non-GAAP reconciliation tables at the end of this release for more information.

“We have taken bold steps to improve our profitability, including sustainable cost actions and optimizing our client relationships to ensure they meet our return thresholds. These actions have given us greater confidence in our profitability expectations for this year, enabling us to raise our EBITDA guidance range,” said Chief Executive Officer Rich Stoddart. “We expect to ramp more new revenue in the second half of 2019 on the back of record year-to-date contract signings as well as onboarding additional revenue from the recently announced acquisition of Madden Communications' marketing execution business.”

Financial and Business Highlights

Gross revenue was $284.1 million in the second quarter of 2019, an increase of 1% compared to $282.0 million in the second quarter of 2018. Excluding currency impact, second quarter gross revenue increased 3% compared to the same period of last year.
Gross profit (net revenue) was $69.1 million, or 24.3% of gross revenue in the second quarter of 2019, compared to $64.9 million, or 23.0% of gross revenue, in the same period of last year. Second quarter gross profit (net revenue) increased 6% over the prior period and 8% excluding currency impact.
Net loss for the second quarter of 2019 was $(1.2) million, or $(0.02) per diluted share, compared to net loss of $(0.3) million, or $(0.01) per diluted share in the second quarter of 2018.
Non-GAAP diluted earnings per share for the second quarter of 2019 was $0.06, compared to $0.01 in the second quarter of 2018. Year-to-date non-GAAP diluted earnings per share was $0.07, compared to a loss of $(0.01) in the same period of 2018.
Adjusted EBITDA was $13.6 million in the second quarter of 2019, compared to $8.2 million in the second quarter of 2018. Year-to-date adjusted EBITDA was $20.2 million, an increase of 30% compared to the same period of 2018.
Additional work from new and existing clients awarded to date in 2019 amounts to approximately $135 million of annual revenue at full run-rate. The latest of these wins includes a major expansion of our relationship with a global sportswear company and a new partnership supporting one of the world's leading beverage brands.
The acquisition of Madden Communications' marketing execution business on August 1, 2019 adds to InnerWorkings' capabilities in logistics and creative services and brings key clients in the beer, wine, and spirits vertical.
“Our second quarter adjusted EBITDA was more than twice the amount generated in the first quarter, reaching the highest level in almost 2 years,” said Don Pearson, Chief Financial Officer. “We expect to show positive momentum in the second half of 2019 as we begin to realize the benefits of our $15 million cost reduction plan announced in March. We expect to realize a minimum of $3 million in cost savings from the annual run rate of at least $9 million in cost savings initiatives being actioned this year, with the balance to be actioned next year. Looking further ahead, we expect the realization of these benefits combined with the high quality revenue of recent client wins to provide significant sustainable profitable growth in 2020 and beyond.”

Outlook

The Company is maintaining its revenue and non-GAAP diluted earnings per share guidance and raising its adjusted EBITDA guidance for 2019. Revenue is expected to be in a range of $1.15 to $1.18 billion, which represents growth of 3% to 5% compared to 2018. Adjusted EBITDA is expected to be in a range of $44 to $47 million, which compares to prior guidance of $42 to $46 million. Non-GAAP diluted earnings per share guidance for 2019 is expected to be $0.20 to $0.24.

Conference Call

Rich Stoddart, Chief Executive Officer, and Don Pearson, Chief Financial Officer, will host a conference call to discuss the results today at 4:00 p.m. Central time (5:00 p.m. Eastern time).







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. 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 SEC: adjusted EBITDA, non-GAAP diluted earnings per share and constant currency revenue. The Company believes these measures provide useful information to investors because they provide further insights into the Company’s financial performance. These measures are also used by management in its financial and operational decision-making and evaluation of overall performance. With respect to constant currency, we believe such presentation allows investors to measure our financial performance exclusive of foreign currency exchange fluctuations more clearly. Constant currency revenue is calculated by retranslating current period revenue at a consistent rate with the prior period results. This approach is based on the pricing currency for each country, which is typically the functional currency. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, please see the reconciliation of adjusted EBITDA, non-GAAP diluted earnings per share, and constant currency included in this release.

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.

About InnerWorkings

InnerWorkings, Inc. (NASDAQ: INWK) is the leading global marketing execution firm serving Fortune 1000 brands across a wide range of industries. As a comprehensive outsourced enterprise solution, the Company leverages proprietary technology, an extensive supplier network and deep domain expertise to streamline the production of branded materials and retail experiences across geographies and formats. InnerWorkings is headquartered in Chicago, IL and employs 2,000 individuals to support global clients in the execution of multi-faceted brand campaigns in every major market around the world. InnerWorkings serves many industries, including: retail, financial services, hospitality, consumer packaged goods, nonprofit, healthcare, food & beverage, broadcasting & cable, automotive, and transportation. For more information visit: www.inwk.com.
CONTACT:
InnerWorkings, Inc.
Bridget Freas
312.589.5613
bfreas@inwk.com






Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Revenue
$
284,053

 
$
281,967

 
$
551,291

 
$
556,506

Cost of goods sold
214,986

 
217,096

 
421,029

 
425,568

Gross profit
69,067

 
64,871

 
130,262

 
130,938

Operating expenses:
 
 
 

 
 
 
 
Selling, general and administrative expenses
58,661

 
59,002

 
114,466

 
120,169

Depreciation and amortization
3,233

 
3,514

 
5,849

 
7,173

Restructuring charges
3,698

 

 
7,632

 

Income from operations
3,475

 
2,355

 
2,315

 
3,596

Other income (expense):
 

 
 

 
 
 
 
Interest income
104

 
54

 
202

 
115

Interest expense
(2,486
)
 
(1,517
)
 
(5,232
)
 
(3,085
)
Other income (expense), net
279

 
(588
)
 
(460
)
 
(1,433
)
Total other expense
(2,103
)
 
(2,051
)
 
(5,490
)
 
(4,403
)
Income (loss) before income taxes
1,372

 
304

 
(3,175
)
 
(807
)
Income tax expense
2,541

 
603

 
456

 
1,176

Net loss
$
(1,169
)
 
$
(299
)
 
$
(3,631
)
 
$
(1,983
)
 
 
 
 
 
 
 
 
Basic loss per share
$
(0.02
)
 
$
(0.01
)
 
$
(0.07
)
 
$
(0.04
)
Diluted loss per share
$
(0.02
)
 
$
(0.01
)
 
$
(0.07
)
 
$
(0.04
)
 
 
 
 
 
 
 
 
Weighted-average shares outstanding – basic
51,883

 
51,770

 
51,857

 
52,738

Weighted-average shares outstanding – diluted
51,883

 
51,770

 
51,857

 
52,738

 




Condensed Consolidated Balance Sheets
(In thousands)
 
 
 
(unaudited)
 
 
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
33,999

 
$
26,770

Accounts receivable, net
188,687

 
193,253

Unbilled revenue
60,911

 
46,474

Inventories
51,553

 
56,001

Prepaid expenses
15,132

 
16,982

Other current assets
28,707

 
34,106

Total current assets
378,989

 
373,586

Property and equipment, net
36,466

 
82,933

Intangibles and other assets:
 

 
 

Goodwill
152,203

 
152,158

Intangible assets, net
8,774

 
9,828

Right of use assets, net
50,460

 

Deferred income taxes
1,091

 
1,195

Other non-current assets
3,613

 
2,976

Total intangibles and other assets
216,141

 
166,157

Total assets
$
631,596

 
$
622,676

Liabilities and stockholders' equity
 

 
 

Current liabilities:
 
 
 
Accounts payable
140,492

 
158,449

Accrued expenses
37,446

 
35,474

Deferred revenue
21,532

 
17,614

Revolving credit facility - current
157,675

 
142,736

Other current liabilities
34,877

 
26,231

Total current liabilities
392,022

 
380,504

Lease liabilities
46,615

 

Deferred income taxes
8,295

 
8,178

Other non-current liabilities
1,995

 
50,903

Total liabilities
448,927

 
439,585

Stockholders' equity:
 
 
 
Common stock
6

 
6

Additional paid-in capital
242,010

 
239,960

Treasury stock at cost
(81,471
)
 
(81,471
)
Accumulated other comprehensive loss
(23,309
)
 
(24,309
)
Retained earnings
45,433

 
48,905

Total stockholders' equity
182,669

 
183,091

Total liabilities and stockholders' equity
$
631,596

 
$
622,676

 




Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
 
Six Months Ended June 30,
 
2019
 
2018
 
 
 
 
Cash flows from operating activities
 
 
 
Net loss
$
(3,631
)

$
(1,983
)
Adjustments to reconcile net loss to net cash from operating activities:
 


 

Depreciation and amortization
5,849


7,173

Stock-based compensation expense
2,141


2,823

Bad debt provision
689


630

Implementation cost amortization
213


263

Other operating activities
224


(154
)
Change in assets:
 


 

Accounts receivable and unbilled revenue
(10,225
)

21,643

Inventories
4,488


(87
)
Prepaid expenses and other assets
(4,318
)

9,424

Change in liabilities:
 


 

Accounts payable
(17,670
)

(18,735
)
Accrued expenses and other liabilities
23,529


1,643

Net cash provided by operating activities
1,289


22,640

 
 
 
 
Cash flows from investing activities
 
 
 

Purchases of property and equipment
(6,881
)
 
(5,490
)
Net cash used in investing activities
(6,881
)
 
(5,490
)
 
 
 
 
Cash flows from financing activities
 
 
 

Net borrowings from revolving credit facility
14,908

 
8,629

Net short-term secured repayments
(833
)
 
(578
)
Repurchases of common stock

 
(25,689
)
Proceeds from exercise of stock options
63

 
284

Payment of debt issuance costs
(935
)
 

Other financing activities
(156
)
 
(695
)
Net cash provided by (used in) financing activities
13,047

 
(18,049
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(226
)
 
(1,397
)
Increase (Decrease) in cash and cash equivalents
7,229

 
(2,296
)
Cash and cash equivalents, beginning of period
26,770

 
30,562

Cash and cash equivalents, end of period
$
33,999

 
$
28,266






Reconciliation of Adjusted EBITDA and Non-GAAP Diluted Earnings (Loss) Per Share
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Net loss
$
(1,169
)
 
$
(299
)
 
$
(3,631
)
 
$
(1,983
)
Income tax expense
2,541

 
603

 
456

 
1,176

Interest income
(104
)
 
(54
)
 
(202
)
 
(115
)
Interest expense
2,486

 
1,517

 
5,232

 
3,085

Other income (expense), net
(279
)
 
588

 
460

 
1,433

Depreciation and amortization
3,233

 
3,514

 
5,849

 
7,173

Stock-based compensation expense
1,402

 
1,406

 
2,141

 
2,823

Stock appreciation rights marked to market
46

 

 
46

 

Restructuring charges
3,698

 

 
7,632

 

Professional fees related to ASC 606 implementation

 
60

 

 
1,092

Executive search fees

 
234

 
80

 
234

Control remediation-related fees
175

 
537

 
540

 
537

Sales and use tax audit
1,235

 

 
1,235

 

Other professional fees
376

 
80

 
376

 
80

Adjusted EBITDA
$
13,640

 
$
8,186

 
$
20,214

 
$
15,535

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Net loss
$
(1,169
)
 
$
(299
)
 
$
(3,631
)
 
$
(1,983
)
Restructuring charges, net of tax
2,772

 

 
5,802

 

Control remediation-related fees
130

 
403

 
402

 
403

Executive search fees, net of tax

 
176

 
60

 
176

Professional fees related to ASC 606 implementation, net of tax

 
45

 

 
819

Sales and use tax audit, net of tax
920

 

 
920

 

Other professional fees, net of tax
280

 
60

 
280

 
60

Adjusted net income (loss)
$
2,933

 
$
385

 
3,833

 
$
(525
)
Weighted-average shares outstanding, diluted
52,038

 
52,528

 
51,961

 
52,738

Non-GAAP diluted earnings (loss) per share
$
0.06

 
$
0.01

 
$
0.07

 
$
(0.01
)





Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
Filed on / For Period end:8/8/19
8/1/19
6/30/19
12/31/1810-K,  10-K/A,  4,  NT 10-K
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