InnerWorkings Announces Fourth Quarter and Full Year 2012 Results and 2013 Guidance
Announces record quarterly revenue, adjusted EBITDA and adjusted
operating cash flow; forecasts 2013 organic revenue growth of 16 to 20
percent and EPS growth of 39 to 49 percent
CHICAGO--(BUSINESS WIRE)--
InnerWorkings,
Inc. (NASDAQ: INWK), a leading global marketing supply chain
company, today reported results for the fourth quarter and fiscal year
ended December 31, 2012.
Quarterly Highlights:
Record revenue of $208.0 million, an increase of 19% compared to
revenue of $175.2 million in the fourth quarter of 2011. Growth was
driven by 16% organic growth in this quarter versus the fourth quarter
of 2011.
Record adjusted cash flow generated from operations of $21.9 million,
an increase of 94% compared to $11.3 million in the fourth quarter of
2011. Please refer to the non-GAAP reconciliation table below for more
information.
Adjusted diluted earnings per share increased by 25% to $0.15 per
diluted share in the fourth quarter, compared to $0.12 per adjusted
diluted share in the year-earlier period. Please refer to the non-GAAP
reconciliation table below for more information.
Record adjusted EBITDA of $12.5 million, compared to $11.2 million in
the year-earlier period. Please refer to the non-GAAP reconciliation
table below for more information.
Fiscal Year Highlights:
Record revenue for fiscal year 2012 of $797.7 million, an increase of
26% compared to revenue of $633.8 million in fiscal year 2011. Growth
was driven by 19% organic growth year-over-year.
Adjusted cash flow generated from operations of $20.7 million in 2012,
compared to $29.0 million in fiscal year 2011. Please refer to the
non-GAAP reconciliation table below for more information.
Full year adjusted diluted earnings per share increased by 17% to
$0.41 in 2012 compared to $0.35 in 2011. Please refer to the non-GAAP
reconciliation table below for more information.
Adjusted EBITDA was $45.3 million, an increase of 20% compared to
$37.6 million in fiscal year 2011. Please refer to the non-GAAP
reconciliation table below for more information.
Full year 2012 enterprise account growth was 30% driven by the
successful ramp-up of several new large enterprise client contracts
and full year middle market account growth was 15% driven primarily by
strong inside sales results.
“2012 was a record year for InnerWorkings, driven by over $100 million
of organic revenue from new enterprise clients,” said Eric D. Belcher,
Chief Executive Officer of InnerWorkings. “We invested wisely in our
global platform last year, built up our inside sales business, and added
the necessary leadership across our international organization to drive
our future growth. We enter this year with a strong sense of confidence
in our ability to win new large contracts that will again drive strong
organic growth in 2013 and beyond.”
Additional fourth quarter 2012 financial and operational highlights
include the following:
80% of the Company’s revenue was generated from domestic sales, while
20% was derived from international sales activity. Enterprise clients
accounted for 75% of sales with middle market clients accounting for
25% of sales.
The Company had a net benefit on the change in fair value of
contingent consideration of $3.5 million related to acquisitions in
Europe, which was recorded in the fourth quarter of 2012. All
InnerWorkings acquisitions are structured under a contingent
consideration arrangement, pursuant to which earn-out payments will
not be made unless certain performance measures are met. Due to the
softness in Europe, some of the applicable performance measures were
not met in the fourth quarter of 2012, and as a result, the Company
recorded a net benefit to release a portion of its contingent
consideration obligations. Please refer to the non-GAAP reconciliation
table below for more information.
The Company also recorded an incremental non-cash stock-based
compensation expense of $2.0 million due to a better than forecasted
employee retention rate than was assumed at the date of equity grant.
Net debt declined by 26% sequentially and stood at $47.8 million at
the end of the fourth quarter. The debt-to-leverage ratio was at a
four year low of 1.4 times trailing twelve month adjusted EBITDA at
the end of the fourth quarter.
“We were not only able to maintain our growth and execute against our
strategy by investing in the business over the past year, but we also
made significant contributions to strengthen our balance sheet,” said
Joseph M. Busky, Chief Financial Officer. “We look forward to seeing our
strategic 2012 investments in inside sales, Brazil and China turn
profitable in 2013.”
Revenue Growth - Comparing 2012 to 2011
Q4 $(MM)
Q4 %
FY’12 $(MM)
FY’12 %
Change
Change
Change
Change
New Enterprise Account Growth
$25
14%
$102
16%
New Middle Market Growth
$4
2%
$14
2%
Same Customer Spend
$0
0%
$3
1%
2011-2012 Acquisitive Growth
$4
2%
$45
7%
Total Revenue Growth
$33
19%
$164
26%
Total Organic Revenue Growth
$29
16%
$120
19%
Outlook
The Company anticipates 2013 annual revenue of $930 million to $960
million, which reflects 16 to 20 percent organic growth. GAAP diluted
earnings per share are expected to range between $0.57 to $0.61 in 2013,
which reflects growth of 39 to 49 percent versus 2012 adjusted diluted
earnings per share excluding legal settlement expense of $0.41.
Conference Call
A conference call will be broadcast live on Wednesday, February 13, 2013
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.
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.
About InnerWorkings, Inc.
InnerWorkings,
Inc. (NASDAQ: INWK) is a leading global marketing supply chain
company servicing corporate clients across a wide range of industries.
With proprietary technology, an extensive supplier network and deep
domain expertise, the Company procures, manages and delivers printed
materials and promotional products as part of a comprehensive outsourced
enterprise solution. InnerWorkings is based in Chicago, IL, employs
approximately 1,300 individuals, and maintains 46 global offices. Among
the many industries
InnerWorkings services are: retail, financial services, hospitality,
non-profits, healthcare, food & beverage, broadcasting & cable,
education, transportation and utilities.
This press release includes the following financial measures defined as
“non-GAAP financial measures” by the Securities and Exchange Commission:
Non-GAAP Adjusted EBITDA, which represents income from operations with
the addition of depreciation and amortization, stock-based
compensation expense, any change in the fair value of contingent
consideration liabilities, and excluding legal settlement expense;
Non-GAAP Adjusted Operating Cash Flow, which represents net cash
provided by (used in) operating activities, excluding the adjustment
for cash tax benefits arising from option exercises and the
pre-payment of VAT assessments in the United Kingdom; and
Non-GAAP Earnings per Diluted Share, which represents earnings per
diluted share, excluding legal settlement expense.
We believe that Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating
Cash Flow and Non-GAAP Earnings per Diluted Share provide useful
information to investors because they provide information about the
estimated financial performance of the Company's ongoing business.
Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and
Non-GAAP Earnings per Diluted Share are used by management in its
financial and operational decision-making and evaluation of overall
operating performance. Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted
Operating Cash Flow and Non-GAAP Earnings per Diluted Share may be
different from similar measures used by other companies. 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 reconciliations of these non-GAAP financial
measures to the nearest comparable GAAP measures, see "Reconciliation of
Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and
Non-GAAP Earnings per Diluted Share" 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.
Consolidated Statements of Income
Three Months Ended December 31,
Twelve Months Ended December 31,
2011
2012
2011
2012
Revenue
$
175,234,543
$
207,986,321
$
633,846,120
$
797,698,870
Cost of goods sold
132,634,714
158,683,629
484,483,592
612,275,393
Gross profit
42,599,829
49,302,692
149,362,528
185,423,477
Operating expenses:
Selling, general and administrative expenses
32,258,617
36,320,495
115,624,276
143,632,284
Depreciation and amortization
2,781,934
2,713,120
10,171,758
10,790,452
Preference claim settlement charge
-
1,099,386
950,000
1,099,386
VAT settlement charge
-
1,485,088
-
1,485,088
Income from operations
7,559,278
7,684,603
22,616,494
28,416,267
Total other income (expense)
582,779
(159,936
)
1,879,122
(1,081,138
)
Income before taxes
8,142,057
7,524,667
24,495,616
27,335,129
Income tax expense
2,377,452
1,551,211
8,102,609
8,223,241
Net income
$
5,764,605
$
5,973,456
$
16,393,007
$
19,111,888
Basic earnings per share
$
0.12
$
0.12
$
0.35
$
0.39
Diluted earnings per share
$
0.12
$
0.12
$
0.34
$
0.37
Weighted average shares outstanding, basic
46,658,537
50,012,513
46,428,443
48,811,218
Weighted average shares outstanding, diluted
49,188,391
51,781,752
48,826,958
51,409,819
Consolidated Balance Sheets
December 31,
2011
2012
Cash and cash equivalents
$
13,219,385
$
17,218,899
Short-term investments
1,129,757
-
Accounts receivable, net of allowance for doubtful accounts
124,946,621
149,246,568
Unbilled revenue
28,318,751
30,798,230
Inventories
14,201,606
17,406,863
Prepaid expenses
11,066,451
16,210,053
Other current assets
15,605,267
22,565,321
Total long-term assets
249,165,348
268,797,648
Total assets
$
457,653,186
$
522,243,582
Accounts payable-trade
$
102,290,443
$
121,132,051
Other current liabilities
46,091,094
52,260,288
Revolving credit facility
60,000,000
65,000,000
Other long-term liabilities
67,769,862
60,689,936
Total stockholders' equity
181,501,787
223,161,307
Total liabilities and stockholders' equity
$
457,653,186
$
522,243,582
Cash Flow Data
Twelve Months Ended December 31,
2011
2012
Net cash provided by operating activities
$
27,830,536
$
8,200,443
Net cash used in investing activities
(33,575,352
)
(14,706,533
)
Net cash provided by financing activities
14,067,712
10,794,780
Effect of exchange rate changes on cash and cash equivalents
(362,783
)
(289,176
)
Increase (decrease) in cash and cash equivalents
7,960,113
3,999,514
Cash and cash equivalents, beginning of period
5,259,272
13,219,385
Cash and cash equivalents, end of period
$
13,219,385
$
17,218,899
Reconciliation of Adjusted EBITDA, Adjusted Operating Cash Flows
and Adjusted Diluted earnings per share
Three Months Ended December 31,
Twelve Months Ended December 31,
2011
2012
2011
2012
Operating income
$
7,559,278
$
7,684,603
$
22,616,494
$
28,416,267
Depreciation and amortization
2,781,934
2,713,120
10,171,758
10,790,452
Stock-based compensation expense
1,087,157
3,021,797
3,976,187
6,192,870
Preference claim settlement charge
-
1,099,386
950,000
1,099,386
VAT settlement charge
-
1,485,088
-
1,485,088
Change in fair value of contingent consideration
(255,223
)
(3,522,454
)
(147,529
)
(2,724,978
)
Adjusted EBITDA
$
11,173,146
$
12,481,540
$
37,566,910
$
45,259,085
Three Months Ended December 31,
Twelve Months Ended December 31,
2011
2012
2011
2012
Net cash provided by operating activities
$
10,807,280
$
21,300,927
$
27,830,536
$
8,200,443
Excess tax benefit from exercise of stock awards *
477,629
570,433
1,144,345
8,922,623
Prepayment of VAT assessment in United Kingdom **
-
-
-
3,604,866
Adjusted net cash provided by operating activities
$
11,284,909
$
21,871,360
$
28,974,881
$
20,727,932
* 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 which the company is close to settling.
Three Months Ended December 31,
Twelve Months Ended December 31,
2011
2012
2011
2012
Net income
$
5,764,605
$
5,973,456
$
16,393,007
$
19,111,888
Preference claim settlement charge, net of tax
-
668,449
577,619
668,449
VAT settlement charge, net of tax
-
1,121,241
-
1,121,241
Net income, excluding legal settlement expense
$
5,764,605
$
7,763,146
$
16,970,626
$
20,901,578
Weighted average shares outstanding, diluted
49,188,391
51,781,752
48,826,958
51,409,819
Adjusted Diluted EPS, excluding legal settlements
$
0.12
$
0.15
$
0.35
$
0.41
InnerWorkings, Inc. Patti K. Doyle, (312) 784-2607 pdoyle@inwk.com
Press Release $INWK InnerWorkings Inc.
Announces record quarterly revenue, adjusted EBITDA and adjusted operating cash flow; forecasts 2013 organic revenue growth of 16 to 20 percent and EPS growth of 39 to 49 percent
CHICAGO--(BUSINESS WIRE)-- InnerWorkings, Inc. (NASDAQ: INWK), a leading global marketing supply chain company, today reported results for the fourth quarter and fiscal year ended December 31, 2012.
Quarterly Highlights:
Fiscal Year Highlights:
“2012 was a record year for InnerWorkings, driven by over $100 million of organic revenue from new enterprise clients,” said Eric D. Belcher, Chief Executive Officer of InnerWorkings. “We invested wisely in our global platform last year, built up our inside sales business, and added the necessary leadership across our international organization to drive our future growth. We enter this year with a strong sense of confidence in our ability to win new large contracts that will again drive strong organic growth in 2013 and beyond.”
Additional fourth quarter 2012 financial and operational highlights include the following:
“We were not only able to maintain our growth and execute against our strategy by investing in the business over the past year, but we also made significant contributions to strengthen our balance sheet,” said Joseph M. Busky, Chief Financial Officer. “We look forward to seeing our strategic 2012 investments in inside sales, Brazil and China turn profitable in 2013.”
Outlook
The Company anticipates 2013 annual revenue of $930 million to $960 million, which reflects 16 to 20 percent organic growth. GAAP diluted earnings per share are expected to range between $0.57 to $0.61 in 2013, which reflects growth of 39 to 49 percent versus 2012 adjusted diluted earnings per share excluding legal settlement expense of $0.41.
Conference Call
A conference call will be broadcast live on Wednesday, February 13, 2013 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.
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.
About InnerWorkings, Inc.
InnerWorkings, Inc. (NASDAQ: INWK) is a leading global marketing supply chain company servicing corporate clients across a wide range of industries. With proprietary technology, an extensive supplier network and deep domain expertise, the Company procures, manages and delivers printed materials and promotional products as part of a comprehensive outsourced enterprise solution. InnerWorkings is based in Chicago, IL, employs approximately 1,300 individuals, and maintains 46 global offices. Among the many industries InnerWorkings services are: retail, financial services, hospitality, non-profits, healthcare, food & beverage, broadcasting & cable, education, transportation and utilities.
For more information visit: www.inwk.com.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission:
We believe that Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and Non-GAAP Earnings per Diluted Share provide useful information to investors because they provide information about the estimated financial performance of the Company's ongoing business. Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and Non-GAAP Earnings per Diluted Share are used by management in its financial and operational decision-making and evaluation of overall operating performance. Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and Non-GAAP Earnings per Diluted Share may be different from similar measures used by other companies. 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 reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures, see "Reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Cash Flow and Non-GAAP Earnings per Diluted Share" 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.
Preference claim settlement charge
Net cash provided by operating activities
$
$
Net cash provided by operating activities
Adjusted net cash provided by operating activities
InnerWorkings, Inc.
Patti K. Doyle, (312) 784-2607
pdoyle@inwk.com
Source: InnerWorkings, Inc.