CHICAGO, Nov. 5, 2009 (GLOBE NEWSWIRE) -- 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 September 30, 2009.
Quarterly Highlights:
* Revenue generated during the third quarter was $98.2 million,
including a $5.7 million one-time correction of a 2008 revenue
accrual related to one customer. Adjusted revenue excluding this
one-time correction is $103.9 million. Please refer to the non-
GAAP reconciliation table below for more information.
* Reported net income and earnings per share for the third quarter
was $1.7 million and $0.04 per diluted share. Excluding the
one-time correction, adjusted net income and earnings per share
are $2.3 million and $0.05 per diluted share. Please refer to the
non-GAAP reconciliation table below for more information.
* Seven new enterprise contracts were signed during the quarter,
including agreements with InterContinental Hotels Group,
The Scotts Company and Bayer.
* Revenue from new accounts was $14.6 million in the quarter and
$35.3 million year-to-date.
* Cash flow generated from operations was $2.0 million in the
third quarter.
"In terms of the size and quality of our new enterprise wins, the third quarter was among the best we've had," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "We believe we have seen the bottom with respect to marketing budgets and print spends and continue to gain confidence that our markets are improving."
Additional third quarter 2009 financial and operational highlights include the following:
* For the third quarter of 2009, 65 percent of the Company's
revenue was generated from sales to enterprise clients, with the
remaining 35 percent derived from transactional clients.
* Customer concentration from the Company's top 10 accounts
decreased to 33 percent of total revenue compared to 35 percent
in the year-earlier period.
* The Company conducted business with 24 of its top 25 customers
from the year-earlier period.
* As of the end of the third quarter the Company has an outstanding
balance of $42.3 million on its bank credit facility and retains
cash and short-term investments of $25.8 million.
"We are continuing to manage expenses prudently and reduce costs as we seek an optimization of our resources," said Joseph M. Busky, Chief Financial Officer of InnerWorkings. "We believe that further productivity initiatives, along with sustained financial discipline and our healthy balance sheet and cash flow generation will position us well to benefit as market conditions continue to improve. As sales begin to recover in earnest, we expect to strengthen our operating leverage and improve our financial performance."
2008 Revenue Accrual Correction
As noted above, InnerWorkings recorded a one time, non-cash correction of a 2008 revenue accrual for one customer account in the quarter. The adjustment relates primarily to the second and third quarters of 2008. The out-of-period adjustment in the third quarter of 2009 was for $5.7 million in revenue, $0.9 million of gross profit and $0.6 million of net income. This adjustment is confined to one customer. InnerWorkings identified and addressed the issue and additional safeguards and controls have been implemented in an effort to prevent anything similar from reoccurring. We have concluded that no prior periods are materially misstated and that no restatement is required for any prior period as a result of this correction.
Conference Call
A conference call will be broadcast live on Thursday, November 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.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission: adjusted revenue, adjusted net income and adjusted earnings per share. These measures may be different from non-GAAP financial 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 a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, see "Reconciliation of Adjusted Revenue, Net Income and Earnings Per Share" included in this press 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.
(inwk-e)
Consolidated Statements of Income (unaudited)
Three months ended
September 30,
---------------------------
2008 2009
------------ ------------
Revenue $122,016,248 $ 98,206,204
Cost of goods sold 92,540,770 73,304,494
------------ ------------
Gross profit 29,475,478 24,901,710
Operating expenses:
Selling, general, and administrative
expenses 20,305,114 20,034,045
Depreciation and amortization 1,337,901 2,041,801
------------ ------------
Income from operations 7,832,463 2,825,864
Total other income (expense) 1,387,327 (119,108)
------------ ------------
Income before taxes 9,219,790 2,706,756
Income tax expense 3,540,699 977,181
------------ ------------
Net income $ 5,679,091 $ 1,729,575
============ ============
Basic earnings per share $ 0.12 $ 0.04
Diluted earnings per share $ 0.12 $ 0.04
Weighted average shares outstanding,
basic 47,097,230 45,580,606
Weighted average shares outstanding,
diluted 49,136,416 47,175,594
Nine months ended
September 30,
---------------------------
2008 2009
------------ ------------
Revenue $314,554,263 $292,581,147
Cost of goods sold 237,732,172 219,929,771
------------ ------------
Gross profit 76,822,091 72,651,376
Operating expenses:
Selling, general, and administrative
expenses 54,854,905 60,678,251
Depreciation and amortization 3,207,904 5,756,247
------------ ------------
Income from operations 18,759,282 6,216,878
Total other income (expense) 6,879,302 (88,714)
------------ ------------
Income before taxes 25,638,584 6,128,164
Income tax expense 9,996,182 2,002,902
------------ ------------
Net income $ 15,642,402 $ 4,125,262
============ ============
Basic earnings per share $ 0.33 $ 0.09
Diluted earnings per share $ 0.31 $ 0.09
Weighted average shares outstanding,
basic 47,723,840 45,504,137
Weighted average shares outstanding,
diluted 49,862,159 47,122,499
Consolidated Balance Sheets
December 31, September 30,
2008 2009
------------ ------------
(unaudited)
Balance Sheet Data
Cash and cash equivalents $ 4,011,855 $ 1,348,745
Short-term investments -- 24,451,256
Accounts receivable, net of allowance
for doubtful accounts 73,628,112 76,086,409
Unbilled revenue 27,802,667 21,074,416
Inventories 7,539,870 13,132,841
Prepaid expenses 9,257,086 10,742,623
Other current assets 8,081,553 7,783,172
Total long-term assets 123,501,173 111,656,030
------------ ------------
Total assets $253,822,316 $266,275,492
============ ============
Accounts payable-trade $ 54,084,430 $ 64,683,388
Other current liabilities 65,854,864 52,982,772
Capital lease obligations, less current
maturities 144,993 46,422
Other long-term liabilities -- 2,924,917
Total stockholders' equity 133,738,029 145,637,993
------------ ------------
Total liabilities and stockholders'
equity $253,822,316 $266,275,492
============ ============
Cash Flow Data (unaudited)
Nine Months Ended
September 30,
---------------------------
2008 2009
------------ ------------
Net cash provided by operating
activities $ 14,279,298 $ 10,082,930
Net cash used in investing activities (33,728,170) (12,601,332)
Net cash provided by (used) in financing
activities 10,574,457 (61,832)
------------ ------------
Effect of exchange rate changes on cash
and cash equivalents 144,130 (82,876)
------------ ------------
Decrease in cash and cash equivalents (8,730,285) (2,663,110)
Cash and cash equivalents, beginning of
period 26,716,239 4,011,855
------------ ------------
Cash and cash equivalents, end of period $ 17,985,954 $ 1,348,745
============ ============
Reconciliation of Adjusted Revenue, Net Income and Earnings Per Share
(unaudited) (in millions, except per share amounts)
Three months ended September 30,
-----------------------------------------
Reported One-time Adjusted
2008 2009 Adjustment 2009
------- -------- ---------- --------
Revenue $122.0 $98.2 $5.7 $103.9
Cost of goods sold 92.5 73.3 4.8 78.1
------- -------- ---------- --------
Gross profit 29.5 24.9 0.9 25.8
Selling, general, and
administrative expenses 20.4 20.1 -- 20.1
Depreciation and
amortization 1.3 2.0 -- 2.0
------- -------- ---------- --------
Income from operations 7.8 2.8 0.9 3.7
Total other income (expense) 1.4 (0.1) -- (0.1)
------- -------- ---------- --------
Income before taxes 9.2 2.7 0.9 3.6
Income tax expense 3.5 1.0 0.3 1.3
------- -------- ---------- --------
Net income $5.7 $ 1.7 $ 0.6 $ 2.3
======= ======== ========== ========
Basic earnings per share $0.12 $0.04 $ 0.01 $ 0.05
Diluted earnings per share $0.12 $0.04 $ 0.01 $ 0.05
Nine months ended September 30,
----------------------------------------
Reported One-time Adjusted
2008 2009 Adjustment 2009
------ -------- ---------- --------
Revenue $314.6 $292.6 $ 5.7 $298.3
Cost of goods sold 237.8 219.9 4.8 224.7
------ -------- ---------- --------
Gross profit 76.8 72.7 0.9 73.6
Selling, general, and
administrative expenses 54.8 60.7 -- 60.7
Depreciation and amortization 3.2 5.8 -- 5.8
------ -------- ---------- --------
Income from operations 18.8 6.2 0.9 7.1
Total other income (expense) 6.8 (0.1) -- (0.1)
------ -------- ---------- --------
Income before taxes 25.6 6.1 0.9 7.0
Income tax expense 10.0 2.0 0.3 2.3
------ -------- ---------- --------
Net income $ 15.6 $ 4.1 $ 0.6 $ 4.7
====== ======== ========== ========
Basic earnings per share $ 0.33 $ 0.09 $0.01 $ 0.10
Diluted earnings per share $ 0.31 $ 0.09 $0.01 $ 0.10