Exhibit 99.1
InnerWorkings, Inc. Announces Third Quarter 2006 Results
Company’s innovative business model delivers 78% top-line growth
Chicago, IL, November 7, 2006 – InnerWorkings, Inc. (Nasdaq: INWK), a leading provider of print procurement solutions to corporate clients in the United States, today reported record third quarter fiscal year 2006, ended September 30, 2006.
Highlights:
| • | Revenue grew to a record of $41.8 million, an increase of over 78 percent versus the fiscal 2005 third quarter. |
| • | Income from operations increased 128 percent year over year. |
| • | Growth strategy execution through the addition of 23 account executives and five new enterprise clients during the three months ended September 30, 2006. |
| • | Full year 2006 revenue and net income guidance to the ranges of $145 million to $147 million and $7.6 million to $7.8 million, respectively. |
Revenue for the quarter was $41.8 million, an increase of 78 percent compared to revenue of $23.5 million in the prior year quarter. For the 2006 third quarter, income from operations was $3.6 million, an increase of 128 percent from $1.6 million during the same quarter of 2005. Income from operations was 8.7 percent of revenue during the current year quarter, up from 6.8 percent during the same quarter of the prior year.
“We are pleased to deliver record results in our first quarter as a public company,” commented Steve Zuccarini, Chief Executive Officer of InnerWorkings. “Our strong performance reaffirms the value we deliver to our customers, our innovative business model and opportunities to drive continued revenue growth.”
For the three months ended September 30, 2006, net income was $2.4 million, an increase of 48 percent from $1.6 million during the third quarter of 2005. Year over year comparisons were impacted by the effect of corporate income taxes, which were not part of the Company’s 2005 results due to its structure as a limited liability company. During the three months ended September 30, 2006, income before taxes increased by 144 percent from the same quarter of the prior year. For the third quarter, fully diluted EPS was $.05.
InnerWorkings Inc. Announces Third Quarter 2006 Results
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“Our performance during the quarter shows our commitment to profitable growth and highlights the operational and financial efficiency of our business model,” stated Nick Galassi, Chief Financial Officer of InnerWorkings. “We were able to increase revenues without ratably increasing our operating costs, which produced record earnings for the quarter.”
Additional third quarter fiscal year 2006 financial and operational highlights include the following:
| • | 75 percent of the Company’s revenue was generated from sales to enterprise, or contract, clients, with the remaining 25 percent coming from transactional clients. |
| • | The Company completed an initial public offering in August 2006, raising $46.8 million net of underwriter fees and preferred dividend payments. |
| • | The Company had $44.3 million of cash, cash equivalents and marketable securities as of September 30, 2006. |
| • | The Company’s balance sheet contains no debt as of the period ended September 30, 2006. |
| • | The Company added 23 sales executives during the fiscal 2006 third quarter, bringing the quarter-end total to 114. |
| • | The Company signed five new enterprise clients during the three months ended September 30, 2006, resulting in a quarter-end total of 86 enterprise accounts. |
| • | The Company acquired CoreVision Group, a provider of print management services, in September 2006. CoreVision added 15 sales executives during the quarter in Michigan, Missouri and Illinois. |
Outlook
The Company anticipates revenue for fiscal year 2006 in the range of $145 million to $147 million with resulting net income and fully-diluted earnings per share in the ranges of $7.6 million to $7.8 million and $0.17 to $0.18, respectively. The Company’s diluted earnings per share reflect the new capital structure as of its IPO.
“We continue to see the strength of our business model as we expand our base of enterprise and transactional clients and make selective acquisitions,” Zuccarini concluded. “Our proprietary technology and database, deep domain knowledge, and long standing supplier relationships create a differentiated solution that positions us as a long-term value-added partner for our clients in managing their print procurement needs.”
InnerWorkings Inc. Announces Third Quarter 2006 Results
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Conference Call
A conference call will be broadcast live on Wednesday, November 8, 2006, at 10:00 a.m. Central Time (11:00 a.m. Eastern). Interested parties are invited to listen to the live webcast by visiting the Investor section of InnerWorkings’ website atwww.iwprint.com. A replay of the webcast will be available later that day in the same section of the website.
About InnerWorkings, Inc.
Chicago-based InnerWorkings, Inc. is a leading provider of print procurement solutions to corporate clients in the United States. InnerWorkings creates a competitive bid process to procure, purchase and deliver printed products as part of a comprehensive outsourced enterprise solution and in individual transactions. InnerWorkings procures printed products for clients across a wide range of industries, such as advertising, consumer products, publishing and retail. For more information on InnerWorkings, visit:www.iwprint.com.
Forward-Looking Statements
This release contains statements relating to projections or future results. These statements are forward-looking statements under the federal securities laws. We can give no assurance that any projections or 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 the prospectus we recently filed with the SEC.
FOR FURTHER INFORMATION:
InnerWorkings, Inc.
Mark Desky, 312-604-5470
mdesky@iwprint.com
Tables Follow
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InnerWorkings Inc. Announces Third Quarter 2006 Results
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InnerWorkings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2005 | 2006 | 2005 | 2006 | |||||||||||||
Revenue | $ | 23,467,034 | $ | 41,784,814 | $ | 54,625,921 | $ | 99,361,724 | ||||||||
Cost of goods sold | 18,669,715 | 32,239,588 | 43,359,033 | 78,227,822 | ||||||||||||
Gross profit | 4,797,319 | 9,545,226 | 11,266,888 | 21,133,902 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general, and administrative expenses | 3,096,873 | 5,665,111 | 7,711,180 | 12,770,496 | ||||||||||||
Depreciation and amortization | 105,190 | 240,123 | 255,547 | 574,016 | ||||||||||||
Income from operations | 1,595,256 | 3,639,992 | 3,300,161 | 7,789,390 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 18,829 | 314,897 | 54,035 | 492,231 | ||||||||||||
Interest expense | (7,678 | ) | (64,050 | ) | (72,188 | ) | (148,539 | ) | ||||||||
Minority interest | — | — | 58,244 | — | ||||||||||||
Other, net | (2,396 | ) | (2,394 | ) | (7,186 | ) | (4,784 | ) | ||||||||
Total other income (expense) | 8,755 | 248,453 | 32,905 | 338,908 | ||||||||||||
Income before taxes | 1,604,011 | 3,888,445 | 3,333,066 | 8,128,298 | ||||||||||||
Income tax expense | — | (1,521,225 | ) | — | (3,215,327 | ) | ||||||||||
Net income | 1,604,011 | 2,367,220 | 3,333,066 | 4,912,971 | ||||||||||||
Dividends on preferred shares | (170,625 | ) | (293,740 | ) | (583,789 | ) | (1,408,740 | ) | ||||||||
Net income applicable to common shareholders | $ | 1,433,386 | $ | 2,073,480 | $ | 2,749,277 | $ | 3,504,231 | ||||||||
Basic earnings per share | $ | 0.04 | $ | 0.06 | $ | 0.09 | $ | 0.13 | ||||||||
Diluted earnings per share | $ | 0.04 | $ | 0.05 | $ | 0.09 | $ | 0.13 | ||||||||
InnerWorkings, Inc.
Condensed Consolidated Balance Sheets
| December 31, 2005 | September 30, 2006 | |||||||
| (Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,962,740 | $ | 34,283,536 | ||||
Marketable securities | — | 9,969,356 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $173,839 in 2005 and $285,302 in 2006 | 14,520,055 | 29,535,931 | ||||||
Unbilled revenue | 1,974,920 | 6,530,966 | ||||||
Prepaid expenses | 2,612,752 | 5,332,651 | ||||||
Advances to related parties | 124,534 | — | ||||||
Deferred income taxes | — | 729,709 | ||||||
Other current assets | 1,486,407 | 824,359 | ||||||
Total current assets | 23,681,408 | 87,206,508 | ||||||
Property and equipment, net | 1,538,794 | 2,399,395 | ||||||
Intangibles and other assets: | ||||||||
Goodwill | 352,954 | 5,128,981 | ||||||
Intangible assets, net of accumulated amortization of $236,711 in 2005 and $429,550 in 2006 | 930,774 | 3,443,935 | ||||||
Deposits | 12,176 | 76,505 | ||||||
Investment | 125,000 | 125,000 | ||||||
Deferred income taxes | — | 5,699,740 | ||||||
Other assets | 43,559 | 36,373 | ||||||
| 1,464,463 | 14,510,534 | |||||||
Total assets | $ | 26,684,665 | $ | 104,116,437 | ||||
Liabilities and stockholders’ deficit/members’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable – trade | $ | 13,488,237 | $ | 19,092,994 | ||||
Due to seller | — | 1,070,000 | ||||||
Distribution payable | 2,987,000 | — | ||||||
Outstanding line of credit | 2,923,511 | — | ||||||
Current maturities of capital lease obligations | 109,185 | 74,094 | ||||||
Customer deposits | 284,407 | 1,432,188 | ||||||
Other liabilities | 51,697 | 41,504 | ||||||
Deferred revenue | — | 489,247 | ||||||
Accrued expenses | 297,310 | 3,144,563 | ||||||
Total current liabilities | 20,141,347 | 25,344,590 | ||||||
Capital lease obligations, less current maturities | 283,645 | 238,424 | ||||||
Commitments and contingencies | — | — | ||||||
Total liabilities | 20,424,992 | 25,583,014 | ||||||
Class D, convertible redeemable preferred shares, $3.125 par value, 1,600,000 shares authorized, 1,600,000 shares issued and outstanding in 2005; liquidation preference of $5,000,000 | 5,007,525 | — | ||||||
Stockholders’ deficit/members’ equity: | ||||||||
Class B, convertible preferred shares, $.80 par value, 937,500 shares authorized, 937,500 shares issued and outstanding in 2005; liquidation preference of $1,500,000 | 770,625 | — | ||||||
Class A, common shares, $0 par value, 60,000,000 shares authorized, 31,926,375 shares issued and outstanding in 2005 | 2,635,091 | — | ||||||
Common Stock, par value $0.00001 per share, no shares authorized, no shares issued and outstanding; 200,000,000 shares authorized, 44,014,319 shares issued and outstanding | 115,344,105 | |||||||
Member receivable | (188,469 | ) | — | |||||
Additional paid-in capital | 46,500 | 5,322,591 | ||||||
Treasury stock at cost | — | (40,000,000 | ) | |||||
Unrealized loss on marketable securities | — | (30,644 | ) | |||||
Retained earnings (deficit) | (2,011,599 | ) | (2,102,629 | ) | ||||
Total stockholders’ deficit/members’ equity | 1,252,148 | 78,533,423 | ||||||
Total liabilities and stockholders’ deficit/members’ equity | $ | 26,684,665 | $ | 104,116,437 | ||||
InnerWorkings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2005 | 2006 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 3,333,066 | $ | 4,912,971 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Minority interest | (58,244 | ) | — | |||||
Deferred income taxes | — | 174,629 | ||||||
Depreciation and amortization | 255,547 | 575,531 | ||||||
Noncash stock compensation expense | 87,500 | 311,230 | ||||||
Bad debt provision | 27,939 | 111,463 | ||||||
Deferred financing expense | 7,186 | 7,186 | ||||||
Change in assets: | ||||||||
Accounts receivable | (1,203,213 | ) | (10,711,332 | ) | ||||
Unbilled revenue | (1,270,838 | ) | (3,618,186 | ) | ||||
Prepaid expenses and other | (3,469,345 | ) | (316,651 | ) | ||||
Change in liabilities: | ||||||||
Accounts payable | 4,855,418 | 557,487 | ||||||
Customer deposits | 597,568 | (3,175,288 | ) | |||||
Accrued expenses and other | 42,893 | 3,252,725 | ||||||
Net cash provided by (used in) operating activities | 3,205,477 | (7,918,235 | ) | |||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (706,964 | ) | (980,300 | ) | ||||
Purchase of marketable securities | (762,220 | ) | (10,000,000 | ) | ||||
Investment in Echo | (125,000 | ) | — | |||||
Purchase of Graphography | — | (2,975,929 | ) | |||||
Purchase of CoreVision | (37,500 | ) | (10,000 | ) | ||||
Net cash used in investing activities | (1,631,684 | ) | (13,966,229 | ) | ||||
Cash flows from financing activities | ||||||||
Net repayments of note payable, bank | (678,154 | ) | (4,796,414 | ) | ||||
Collection of member receivable | — | 188,469 | ||||||
Principal payments on capital lease obligations | (40,079 | ) | (80,312 | ) | ||||
Tax benefit of stock options exercised | — | 370,213 | ||||||
Advances to related parties | (188,038 | ) | 124,534 | |||||
Payments of distributions | (1,399,853 | ) | (3,107,634 | ) | ||||
Payment of dividends on preferred shares | (821,642 | ) | (1,646,136 | ) | ||||
Preference payments on preferred shares | — | (5,500,000 | ) | |||||
Issuance of shares | 2,160,000 | 110,294,066 | ||||||
Payment of issuance costs | — | (2,641,526 | ) | |||||
Payments for share repurchase | — | (40,000,000 | ) | |||||
Net cash provided by (used in) financing activities | (967,766 | ) | 53,205,260 | |||||
Increase in cash and cash equivalents | 606,027 | 31,320,796 | ||||||
Cash and cash equivalents, beginning of period | 1,475,791 | 2,962,740 | ||||||
Cash and cash equivalents, end of period | $ | 2,081,818 | $ | 34,283,536 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid during the period for interest | $ | 55,435 | $ | 86,125 | ||||
Non-cash investing activity | ||||||||
Settlement of advances to related parties as part of Insight acquisition | $ | 313,438 | $ | — | ||||
Issuance of options in connection with Insight acquisition | 46,500 | — | ||||||
Due to seller in connection with CoreVision acquisition | 1,070,000 | |||||||
Non-cash financing activity | ||||||||
Unrealized loss on available for sale investments | $ | — | $ | 30,644 | ||||