Delaware (State or other jurisdiction of incorporation) | 000-52170 (Commission File Number) | 20-5997364 (I.R.S. Employer Identification No.) | ||||||||
203 North LaSalle Street Suite 1800 Chicago, Illinois | 60601 | |||||||||
(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) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Common Stock, $0.0001 par value | INWK | Nasdaq Global Market |
Exhibit No. | Description | |
Press Release dated August 8, 2019. |
INNERWORKINGS, INC. | |||
Dated: August 8, 2019 | By: | /s/ Donald W. Pearson | |
Name: | Donald W. Pearson | ||
Title: | Chief Financial Officer |
• | 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. |
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 |
June 30, 2019 | December 31, 2018 | ||||||
(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 |
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 |
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 | ) |