Investor Day November 20, 2008 Exhibit 99.1 |
Safe Harbor This presentation 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 presentation. For a discussion of important factors that could affect our actual results, please refer to the most recent Form 10-K, including the "Risk Factors" section, we filed with the SEC. |
Investor Day Agenda Introductions / Welcome Strategic Overview Growth Strategy Panel: Customer and Supplier Technology Financial Performance |
Speakers Steven Zuccarini Chief Executive Officer Eric Belcher President and Chief Operating Officer Joe Busky Chief Financial Officer Ryan Irwin Executive Vice President, Sales |
Key Messages • Innovative low-cost / high-service business model gaining traction in increasingly cost focused marketplace • Track record of strong financial results and effective capital allocation • Significant market opportunity in $170B and growing U.S. print industry • Proprietary technology and broad, diverse supplier network • Deep domain knowledge and procurement management expertise • Near- and long-term future bright as companies seek to maximize print related budgets |
Strategic Overview Eric Belcher President and Chief Operating Officer |
Strategic Overview • Company Snapshot • Market Overview • Core Differentiation: Technology and People • Shareholder Value |
InnerWorkings will be the first multi-billion dollar business process outsourcing company dedicated solely to handling clients’ print procurement and print management activities Company Characteristics Technology-driven professional services firm » Headquarters: Chicago » Offices: 25 » Employees: 768 » Founded: November 2001 » IPO: August 2006 » Revenue CAGR of more than 100 percent since beginning operations in 2002 Customer Value Proposition » Outsource non-core business function » Low-cost provider with quality focus » Proprietary technology and database » Dedicated support with domain expertise » Across 60+ categories of print and print-related products and services InnerWorkings Snapshot |
$170 Billion North America Commercial Print Market » 39,300 highly customized print manufacturing plants in the U.S. » Top 10 printers account for less than 17% of market share » 30% of industry capacity unused » “1/3-1/3-1/3” concept dominates » Outsourcing non-core business activities continues to gain market acceptance » Enterprise print management is in its infancy » As low-cost provider, current economic conditions create additional opportunity for InnerWorkings Large and Inefficient Market InnerWorkings Addressable Market (>$100B) Small Office Home Office Long-Run Gravure |
Core Differentiation Combination of Technology and People » Domain expertise • Over 60 categories » Extensive print procurement experience • Over 300 procurement experts with average 10 years experience » On-site presence • 51 FTEs at clients’ locations » Aligns specifications to small group of optimal suppliers in overall network (7,000+ total) » Capitalizes on open capacity pricing through targeted bidding system |
Commitment to Shareholder Value |
Sales Growth Strategy Ryan Irwin Executive Vice President, Sales |
InnerWorkings’ solutions address outsourced print procurement and management needs of companies of all sizes Transactional » Primarily small- and medium-sized companies » Sold on job-by-job basis » Higher margins, higher commissions » Sales reps have strong print backgrounds and a keen focus on establishing lasting relationships with print buyers Enterprise Sales Focus Enterprise » Large, complex corporations with decentralized spend » Contract-based terms (recurring revenue) » Lower margins, lower commissions » Business development professionals have very sophisticated sales skills and focus on C-level executives INWK Emphasis Going Forward |
Company Evolution Transactional Focus Company founded 2001 2009+ 2003 2005 2007 John Deere becomes first major enterprise account (3 on-site FTEs) Separate Business Development Department formed 2008 Focus on expanding market coverage within major corporations Large Corporation Enterprise Focus 2002 2004 2006 Operations begin First clients are small- and middle-market companies Many new major corporations sign BPO contracts Business model refined, validated |
Enterprise Performance Currently 137 enterprise, contract-based customers 3 6 7 10 13 17 20 22 22 27 28 34 36 43 51 0 10 20 30 40 50 60 On-Site Personnel Number of Customers Generating Revenue of Over $1 Million Annually 0 10 20 30 40 50 60 70 2004 2005 2006 2007 2008 Est 52-58 40 25 14 6 |
Enterprise Performance: What to Expect Going Forward • Expectation for quarterly enterprise wins to increase from 4-6 to 6-8 • Continued aggressive expansion of Business Development team • Significant increase in coverage of large corporations • Additional on-site physical presence at major corporations throughout the United States, Canada and the United Kingdom • Long-term, organic enterprise sales revenue growth rate of approximately 20 percent per year |
Acquisition Strategy Eric Belcher President and Chief Operating Officer |
Why Acquire? • Regional print distributors are the best source of talent Procurement backgrounds versus manufacturing Strong local customer relationships Entrepreneurial energy • InnerWorkings is the only credible active buyer in the marketplace Highly selective Focus on small distributors which are easily integrated Accelerate “acquired” company’s profitable growth when combined with our scale and resources • Structure of these relationships places activity somewhere between M&A and recruiting |
Location Overview: Today InnerWorkings offices On-site location Fulfillment Center Memphis Davenport Durham Pittsburgh Richmond Akron Fort Wayne Toronto Phoenix Minneapolis New York Grand Rapids Maui Honolulu Los Angeles San Francisco Kansas City Chicago Dallas Carol Stream Philadelphia Birmingham Naperville Hilo East Brunswick Grover Beach Monterey Sacramento Santa Clara Detroit Santa Rosa Quality Control Staff Hong Kong Beijing Shanghai Atlanta Greenville Des Plaines |
Location Overview: Future InnerWorkings offices On-site location Fulfillment Center Memphis Davenport Durham Pittsburgh Richmond Akron Fort Wayne Toronto Phoenix Minneapolis New York Grand Rapids Maui Honolulu Los Angeles San Francisco Kansas City Chicago Dallas Carol Stream Philadelphia Birmingham Naperville Hilo East Brunswick Grover Beach Monterey Sacramento Santa Clara Detroit Santa Rosa Quality Control Staff Hong Kong Beijing Shanghai Atlanta Greenville Des Plaines |
Integration Critical to Success Integration Activity Timing of Implementation Joint Sales Calls Begin Immediately Financial Controls Begin Immediately PPM4 Technology 3-4 months Rebranding to InnerWorkings Within 1 year Cultural Integration Ongoing 1 2 3 4 5 |
“Acquisition” Performance • Outstanding results to-date Have historically paid approximately 5.0x EBITDA with 40-60% down at time of purchase On average, “acquired” companies have yielded 20% better bottom-line performance under our leadership • Healthy pipeline Contact with over 400 companies to date More than 200 are sizable regional players |
Technology |
Differentiated Technology Solution • Procurement tool Only one of its kind in the world • Two primary databases Detailed supplier equipment profiles Massive historical pricing repository • Barriers to entry Patent-protection Volume of data (would take years to replicate) |
PPM4: Key Functions Supplier Recommendations Equipment Search PPM4Caster All modules leverage and contribute to one of the largest independent repositories of equipment profiles and price data for print suppliers Supplier Portal |
PPM4 Technology: Recent Initiatives Recent Initiatives • New platform released in June allows for virtually unlimited scalability • Historical baseline module to establish job-by-job savings analysis • Customer-facing applications for order submission and placement and job status • Staff of over 30 developers (associated CAPEX less than 1% of revenue) Development Priorities • Short-term: PPM4 to generate automated bid based on historical pricing database • Longer-term: Dictate (versus solicit) market prices on a per-job basis |
Financial Performance Joe Busky Chief Financial Officer |
Demonstrating Consistent Quarterly Performance FYE: December 31 Revenue ($MM) 3Q 2008 » Record revenue: $122.0 million » Revenue growth over 3Q 2007: 69% » Seven new enterprise accounts » Gross margin: 24.2% » Net income: $5.8 million $22.4 $58.9 $87.2 $35.1 $67.3 $105.3 $41.8 $72.1 $122.0 $22.2 $61.2 $90.0 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 $110.0 $120.0 $130.0 $140.0 1Q06 1Q07 1Q08 2Q06 2Q07 2Q08 3Q06 3Q07 3Q08 4Q05 4Q06 4Q07 |
Solid Balance Sheet 2005 2006 Liquidity at September 30, 2008: $72.2 Growing Cashflow from Operations Cash conversion rate: 28 days Summary Financial Condition Use of Cash » Acquire complementary businesses » Expand sales force » Working capital to fund our organic growth » Early pay discounts with certified supplier program ($MM) Strong return on invested capital of 13% Low CAPEX As % of Revenue 2007 2008 YTD $0.8 ($9.7) $8.2 $14.7 1.3% 0.8% 0.8% 1.4% |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions • Guidance reflects organic growth only |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions • Guidance reflects organic growth only • Acquisitive growth will be additive |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions • Guidance reflects organic growth only • Acquisitive growth will be additive • Run-rate at the end of 2008 will be approximately $500 million |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions • Guidance reflects organic growth only • Acquisitive growth will be additive • Run-rate at the end of 2008 will be approximately $500 million • Assumes current difficult macroeconomic conditions throughout 2009 |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions • Guidance reflects organic growth only • Acquisitive growth will be additive • Run-rate at the end of 2008 will be approximately $500 million • Assumes current difficult macroeconomic conditions throughout 2009 • As such, organic growth in 2009 is assumed to be 10 percent |
2009 Revenue Guidance • Growth strategy remains unchanged: Enterprise organic sales focus Small, regional tuck-in acquisitions • Guidance reflects organic growth only • Acquisitive growth will be additive • Run-rate at the end of 2008 will be approximately $500 million • Assumes current difficult macroeconomic conditions throughout 2009 • As such, organic growth in 2009 is assumed to be 10 percent Our 2009 revenue guidance is $530 million to $560 million. |
2009 EPS Guidance • Represents an approximate 20 percent increase over 2008 operational EPS • Assumptions: Net interest expense increases significantly versus 2008 due to new capital structure D&A increases versus 2008 due to acquisitions made in 2008 Impeded by difficult macroeconomic conditions Our 2009 EPS guidance is $0.41 to $0.44 per share. |
Key Messages • Innovative low-cost / high-service business model gaining traction in increasingly cost focused marketplace • Track record of strong financial results and effective capital allocation • Significant market opportunity in $170B and growing U.S. print industry • Proprietary technology and broad, diverse supplier network • Deep domain knowledge and procurement management expertise • Near- and long-term future bright as companies seek to maximize print related budgets |