InnerWorkings Announces Third Quarter 2018 Results
CHICAGO--(BUSINESS WIRE)--Nov 8, 2018--InnerWorkings, Inc. (NASDAQ: INWK), the leading global marketing execution firm, today announced financial results for the three and nine months ended September 30, 2018. For all non-GAAP references below, please refer to the non-GAAP reconciliation tables at the end of this release for more information.
“While we are experiencing greater revenue declines than expected in transactional and small accounts, we are encouraged by the momentum we continue to build in new enterprise wins,” said Chief Executive Officer Rich Stoddart. “With the new contract we are announcing today, our total new business signings to date surpass the amount of work we were awarded in all of last year. This success is the result of our efforts to focus more intently on growing our core enterprise business, particularly in long-term, comprehensive partnerships with global brands. With this momentum we fully expect to return to our long-term pattern of organic growth in 2019.”
Financial and Business HighlightsGross revenue was $270.9 million in the third quarter of 2018, a decrease of 6% compared to $288.5 million in the third quarter of 2017. Excluding currency impacts, third quarter gross revenue decreased 5% compared to the same period of last year. Year-to-date gross revenue was $827.4 million, a decrease of 1% compared to $833.0 million in the same period of 2017. Gross profit (net revenue) was $64.0 million, or 23.6% of gross revenue in the third quarter of 2018, compared to $71.9 million, or 24.9% of revenue, in the same period of last year. Excluding the impact of an inventory writeoff related to our retail environments business, our gross margin was 24.0% in the third quarter of 2018. Net loss for the third quarter of 2018 was $(44.9) million, or $(0.87) per diluted share, compared to net income of $7.1 million, or $0.13 per diluted share in the third quarter of 2017. Third quarter net loss includes goodwill and intangible asset impairment charges of $41.9 million. Non-GAAP diluted earnings per share for the third quarter of 2018 was $0.04, compared to $0.15 in the third quarter of 2017. Non-GAAP adjusted EBITDA was $12.2 million in the third quarter of 2018, compared to $18.1 million in the third quarter of 2017. Additional work from new and existing clients awarded so far during 2018 is expected to drive approximately $134 million of annual revenue at full run-rate. This includes a major client expansion announced today, a global partnership with a Fortune 100 food and beverage company.
“As planned, we have actioned $11 million of the $20 million in previously announced cost reduction measures as of October 1st,” said Chip Hodgkins, Interim Chief Financial Officer of InnerWorkings. “We are focused on implementing the remaining $9 million and we believe additional cost reductions beyond the original scope are possible and necessary to drive shareholder value. In partnership with third-party experts, we are also scoping further profit enhancement initiatives to drive near-term sustainable margin improvement and will provide an update in tandem with our fourth quarter results.”
The Company is lowering its 2018 guidance for gross revenue to a range of $1.120 billion to $1.135 billion, down from previous guidance of a range of $1.155 billion to $1.190 billion. The decrease in guidance primarily results from a larger than expected decrease from transactional and small accounts, as the Company has strategically focused its efforts on its larger enterprise relationships. Due to the lower expected gross revenue, the Company is also lowering its guidance for non-GAAP adjusted EBITDA and non-GAAP diluted earnings per share for 2018. Non-GAAP adjusted EBITDA is expected to be between $43 million and $46 million, down from previous guidance of between $50 million and $53 million for 2018. The Company forecasts 2018 non-GAAP diluted earnings per share to be $0.17 to $0.20, down from previous guidance of $0.30 to $0.33.
Rich Stoddart, Chief Executive Officer, and Chip Hodgkins, Interim 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: non-GAAP 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 non-GAAP adjusted EBITDA and non-GAAP diluted earnings per share included in this release.
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/A.
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 2,100 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.
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CONTACT: InnerWorkings, Inc.
KEYWORD: UNITED STATES NORTH AMERICA ILLINOIS
INDUSTRY KEYWORD: SMALL BUSINESS MANUFACTURING PACKAGING PROFESSIONAL SERVICES CONSULTING RETAIL COMMUNICATIONS ADVERTISING MARKETING OTHER RETAIL
SOURCE: InnerWorkings, Inc.
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PUB: 11/08/2018 04:15 PM/DISC: 11/08/2018 04:15 PM