Delaware (State or other jurisdiction of incorporation) | 000-52170 (Commission File Number) | 20-5997364 (I.R.S. Employer Identification No.) | ||||||||
600 West Chicago Avenue Suite 850 Chicago, Illinois | 60654 | |||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||
(312) 642-3700 (Registrant’s telephone number, including area code) | ||||||||||
N/A | ||||||||||
(Former name or former address, if changed since last report) |
Exhibit No. | Description | |
Press Release dated March 12, 2018. |
INNERWORKINGS, INC. | |||
Dated: March 12, 2018 | By: | /s/ Charles Hodgkins | |
Name: | Charles Hodgkins | ||
Title: | Interim Chief Financial Officer |
• | Record gross revenue was $301.0 million in the fourth quarter, an increase of 11% compared with $270.4 million in the fourth quarter of 2016. |
• | Gross profit (net revenue) was $71.3 million, or 23.7% of gross revenue, in the fourth quarter, an increase of 4% compared to $68.7 million, or 25.4% of revenue, in the same period of 2016. |
• | Net income for the fourth quarter was $1.5 million, or $0.03 per diluted share, compared to $5.0 million, or $0.09 per diluted share, in the prior year period. |
• | Non-GAAP adjusted EBITDA was $14.6 million in the fourth quarter, compared to $15.7 million in the fourth quarter of 2016. |
• | Non-GAAP diluted earnings per share for the fourth quarter was $0.06, compared to $0.12 in the fourth quarter of 2016. |
• | Gross revenue was $1,136.3 million in 2017, an increase of 4% compared with $1,090.7 million in 2016. |
• | Gross profit (net revenue) was $278.3 million, or 24.5% of gross revenue, in 2017, a 6% increase compared to $263.5 million, or 24.2% of revenue, in 2016. |
• | Net income in 2017 was $19.0 million, or $0.35 per diluted share, compared to $4.4 million, or $0.08 per diluted share, in 2016. |
• | Non-GAAP adjusted EBITDA was $62.3 million in 2017, reflecting growth of 5% compared to $59.2 million in 2016. |
• | Non-GAAP diluted earnings per share for 2017 was $0.41, compared to $0.38 in 2016. |
• | Cash flow from operations was $16.1 million in 2017, compared to $10.5 million in the year before. |
• | InnerWorkings signed new client contracts during 2017 totaling $130 million of annual revenue at full run-rate. This growth is a blend of expansions with existing accounts as well as the addition of a number of first time clients. |
• | In 2018 to date, InnerWorkings has already signed several new client contracts totaling $41 million of annual revenue at full run-rate. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenue | $ | 300,950 | $ | 270,418 | $ | 1,136,256 | $ | 1,090,704 | |||||||
Cost of goods sold | 229,639 | 201,691 | 857,921 | 827,156 | |||||||||||
Gross profit | 71,311 | 68,727 | 278,335 | 263,548 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 60,091 | 54,456 | 225,738 | 209,967 | |||||||||||
Depreciation and amortization | 3,987 | 3,534 | 13,390 | 17,916 | |||||||||||
Change in fair value of contingent consideration | — | 442 | 677 | 10,417 | |||||||||||
Intangible asset impairment charges | — | 70 | — | 70 | |||||||||||
Restructuring and other charges | — | 1,181 | — | 5,615 | |||||||||||
Income from operations | 7,233 | 9,044 | 38,530 | 19,563 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 20 | 23 | 97 | 86 | |||||||||||
Interest expense | (1,491 | ) | (918 | ) | (4,729 | ) | (4,171 | ) | |||||||
Other, net | (826 | ) | (168 | ) | (1,788 | ) | (153 | ) | |||||||
Total other expense | (2,297 | ) | (1,064 | ) | (6,420 | ) | (4,238 | ) | |||||||
Income before income taxes | 4,936 | 7,980 | 32,110 | 15,325 | |||||||||||
Income tax expense | 3,437 | 2,933 | 13,131 | 10,955 | |||||||||||
Net income | $ | 1,499 | $ | 5,047 | $ | 18,979 | $ | 4,370 | |||||||
Basic earnings per share | $ | 0.03 | $ | 0.09 | $ | 0.35 | $ | 0.08 | |||||||
Diluted earnings per share | $ | 0.03 | $ | 0.09 | $ | 0.35 | $ | 0.08 | |||||||
Weighted-average shares outstanding – basic | 54,113 | 54,025 | 53,851 | 53,607 | |||||||||||
Weighted-average shares outstanding – diluted | 55,175 | 55,019 | 54,944 | 54,460 |
(in thousands) | December 31, 2017 | December 31, 2016 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 30,562 | $ | 30,924 | |||
Accounts receivable, net | 206,712 | 182,874 | |||||
Unbilled revenue | 49,389 | 32,723 | |||||
Inventories | 34,807 | 31,638 | |||||
Prepaid expenses | 19,638 | 18,772 | |||||
Other current assets | 32,694 | 24,769 | |||||
Total current assets | 373,802 | 321,700 | |||||
Property and equipment, net | 36,714 | 32,656 | |||||
Intangibles and other assets: | |||||||
Goodwill | 207,162 | 202,700 | |||||
Intangible assets, net | 27,563 | 31,538 | |||||
Deferred income taxes | 612 | 1,031 | |||||
Other non-current assets | 1,382 | 1,374 | |||||
Total intangibles and other assets | 236,719 | 236,643 | |||||
Total assets | $ | 647,235 | $ | 590,999 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | 134,609 | 121,289 | |||||
Current portion of contingent consideration | — | 19,283 | |||||
Accrued expenses | 33,694 | 30,067 | |||||
Other current liabilities | 39,538 | 35,049 | |||||
Total current liabilities | 207,841 | 205,688 | |||||
Revolving credit facility | 128,398 | 107,468 | |||||
Deferred income taxes | 12,348 | 11,291 | |||||
Other non-current liabilities | 1,874 | 1,926 | |||||
Total liabilities | 350,461 | 326,373 | |||||
Stockholders' equity: | |||||||
Common stock | 6 | 6 | |||||
Additional paid-in capital | 235,199 | 224,480 | |||||
Treasury stock at cost | (55,873 | ) | (49,458 | ) | |||
Accumulated other comprehensive loss | (11,863 | ) | (20,799 | ) | |||
Retained earnings | 129,305 | 110,397 | |||||
Total stockholders' equity | 296,774 | 264,626 | |||||
Total liabilities and stockholders' equity | $ | 647,235 | $ | 590,999 | |||
(in thousands) | Year Ended December 31, | |||||||
2017 | 2016 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 18,979 | $ | 4,370 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 13,390 | 17,916 | ||||||
Stock-based compensation expense | 6,820 | 5,572 | ||||||
Deferred income taxes | 3,752 | 4,084 | ||||||
Change in fair value of contingent consideration liability | 677 | 10,417 | ||||||
Intangible asset impairment charges | — | 70 | ||||||
Bad debt provision | 454 | 2,171 | ||||||
Excess tax benefit from exercise of stock awards | — | (4,030 | ) | |||||
Other operating activities | 210 | 210 | ||||||
Change in assets, net of acquisitions: | ||||||||
Accounts receivable and unbilled revenue | (40,959 | ) | 1,809 | |||||
Inventories | (3,169 | ) | 1,690 | |||||
Prepaid expenses and other assets | (8,989 | ) | 2,442 | |||||
Change in liabilities, net of acquisitions: | ||||||||
Accounts payable | 13,320 | (48,955 | ) | |||||
Accrued expenses and other liabilities | 11,662 | 12,759 | ||||||
Net cash provided by operating activities | 16,147 | 10,525 | ||||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (12,483 | ) | (13,319 | ) | ||||
Net cash used in investing activities | (12,483 | ) | (13,319 | ) | ||||
Cash flows from financing activities | ||||||||
Net short-term secured borrowings (repayments) | (867 | ) | 405 | |||||
Payments of contingent consideration | (15,345 | ) | (11,374 | ) | ||||
Net borrowing of revolving credit facility | 20,709 | 8,739 | ||||||
Proceeds from exercise of stock options | 2,663 | 2,636 | ||||||
Repurchases of common stock | (10,976 | ) | — | |||||
Excess tax benefit from exercise of stock awards | — | 4,030 | ||||||
Other financing activities | (1,156 | ) | (866 | ) | ||||
Net cash provided by (used) in financing activities | (4,972 | ) | 3,570 | |||||
Effect of exchange rate changes on cash and cash equivalents | 947 | (607 | ) | |||||
Increase (decrease) in cash and cash equivalents | (362 | ) | 169 | |||||
Cash and cash equivalents, beginning of period | 30,924 | 30,755 | ||||||
Cash and cash equivalents, end of period | $ | 30,562 | $ | 30,924 |
(in thousands) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 1,499 | $ | 5,047 | $ | 18,979 | $ | 4,370 | ||||||||
Income tax expense | 3,437 | 2,933 | 13,131 | 10,955 | ||||||||||||
Interest income | (20 | ) | (23 | ) | (97 | ) | (86 | ) | ||||||||
Interest expense | 1,491 | 918 | 4,729 | 4,171 | ||||||||||||
Other, net | 826 | 168 | 1,788 | 153 | ||||||||||||
Depreciation and amortization | 3,987 | 3,534 | 13,390 | 17,916 | ||||||||||||
Stock-based compensation expense | 1,524 | 1,474 | 6,820 | 5,572 | ||||||||||||
Change in fair value of contingent consideration | — | 442 | 677 | 10,417 | ||||||||||||
Intangible asset impairment charges | — | 70 | — | 70 | ||||||||||||
Restructuring and other charges | — | 1,181 | — | 5,615 | ||||||||||||
Professional fees related to ASC 606 implementation | 529 | — | 829 | — | ||||||||||||
Business development realignment | — | — | 715 | — | ||||||||||||
CEO search costs | 454 | — | 454 | — | ||||||||||||
Czech currency impact on procurement margin | 860 | — | 860 | — | ||||||||||||
Non-GAAP Adjusted EBITDA | $ | 14,587 | $ | 15,745 | $ | 62,275 | $ | 59,153 |
(in thousands, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 1,499 | $ | 5,047 | $ | 18,979 | $ | 4,370 | ||||||||
Change in fair value of contingent consideration, net of tax | — | 442 | 677 | 10,417 | ||||||||||||
Intangible asset impairment charges, net of tax | — | 56 | — | 56 | ||||||||||||
Restructuring and other charges, net of tax | — | 909 | — | 4,873 | ||||||||||||
Realignment-related income tax charges | — | 282 | — | 1,179 | ||||||||||||
Czech exit from exchange rate commitment, net of tax | — | — | 294 | — | ||||||||||||
Business development realignment, net of tax | — | — | 875 | — | ||||||||||||
Professional fees related to ASC 606 implementation, net of tax | 324 | — | 528 | — | ||||||||||||
CEO search costs, net of tax | 282 | — | 282 | — | ||||||||||||
Czech currency impact on procurement margin, net of tax | 697 | — | 697 | — | ||||||||||||
Accelerated depreciation of internal use software, net of tax | 246 | — | 246 | — | ||||||||||||
Adjusted net income | $ | 3,048 | $ | 6,736 | $ | 22,578 | $ | 20,895 | ||||||||
Weighted average shares outstanding, diluted | 55,175 | 55,019 | 54,944 | 54,460 | ||||||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.06 | $ | 0.12 | $ | 0.41 | $ | 0.38 |