Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 02, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | INNERWORKINGS INC | |
Entity Central Index Key | 1,350,381 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | INWK | |
Entity Common Stock, Shares Outstanding | 53,908,764 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenue | $ 264,720,003 | $ 251,651,521 | $ 759,042,648 | $ 753,490,776 |
Cost of goods sold | 201,108,604 | 194,553,275 | 581,387,018 | 582,881,105 |
Gross profit | 63,611,399 | 57,098,246 | 177,655,630 | 170,609,671 |
Operating expenses: | ||||
Selling, general and administrative expenses | 47,220,821 | 46,187,034 | 145,304,423 | 146,393,186 |
Depreciation and amortization | 4,485,119 | 4,387,438 | 12,842,347 | 12,931,952 |
Change in fair value of contingent consideration | 701,086 | (1,570,129) | 1,690,743 | (1,743,637) |
Income from operations | 11,204,373 | 8,093,903 | 17,818,117 | 13,028,170 |
Other income (expense): | ||||
Interest income | 6,241 | 17,448 | 54,563 | 35,125 |
Interest expense | (1,131,502) | (1,079,013) | (3,382,163) | (3,082,297) |
Other, net | (1,089,088) | (119,248) | (991,868) | (307,481) |
Total other expense | (2,214,349) | (1,180,813) | (4,319,468) | (3,354,653) |
Income before income taxes | 8,990,024 | 6,913,090 | 13,498,649 | 9,673,517 |
Income tax expense | 4,006,788 | 1,799,419 | 5,945,532 | 2,665,067 |
Net income | $ 4,983,236 | $ 5,113,671 | $ 7,553,117 | $ 7,008,450 |
Basic earnings per share (in dollars per share) | $ 0.09 | $ 0.10 | $ 0.14 | $ 0.13 |
Diluted earnings per share (in dollars per share) | $ 0.09 | $ 0.10 | $ 0.14 | $ 0.13 |
Comprehensive income | $ 3,118,069 | $ 525,386 | $ 1,344,204 | $ 3,243,783 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 12,637,589 | $ 22,577,942 |
Accounts receivable, net of allowance for doubtful accounts of $1,224,211 and $2,685,497, respectively | 191,045,581 | 179,465,922 |
Unbilled revenue | 36,463,538 | 31,698,924 |
Inventories | 40,278,890 | 27,162,642 |
Prepaid expenses | 14,263,851 | 12,684,237 |
Deferred income taxes | 2,082,279 | 1,819,139 |
Other current assets | 39,031,105 | 28,818,891 |
Total current assets | 335,802,833 | 304,227,697 |
Property and equipment, net | 33,173,094 | 29,763,583 |
Intangibles and other assets: | ||
Goodwill | 244,845,343 | 246,947,900 |
Intangible assets, net | 39,687,457 | 44,919,573 |
Deferred income taxes | 4,442,840 | 3,903,937 |
Other non-current assets | 2,717,074 | 1,487,690 |
Total intangibles and other assets | 291,692,714 | 297,259,100 |
Total assets | 660,668,641 | 631,250,380 |
Current liabilities: | ||
Accounts payable | 148,515,725 | 144,044,592 |
Current portion of contingent consideration | 11,007,104 | 9,078,138 |
Due to seller | 1,636,259 | 402,499 |
Other liabilities | 36,349,200 | 30,636,505 |
Accrued expenses | 10,886,991 | 9,989,963 |
Total current liabilities | 208,395,279 | 194,151,697 |
Revolving credit facility | 128,027,431 | 104,538,750 |
Deferred income taxes | 9,917,811 | 9,967,039 |
Contingent consideration, net of current portion | 13,255,757 | 23,504,436 |
Other non-current liabilities | 2,882,228 | 2,941,889 |
Total liabilities | $ 362,478,506 | $ 335,103,811 |
Commitments and contingencies (See Note 10) | ||
Stockholders' equity: | ||
Common stock, par value $0.0001 per share, 200,000,000 and 200,000,000 shares authorized, 62,522,859 and 61,851,709 shares issued, 52,793,498 and 52,830,842 shares outstanding, respectively | $ 6,252 | $ 6,185 |
Additional paid-in capital | 212,675,441 | 207,428,962 |
Treasury stock at cost, 9,729,361 and 9,020,867 shares, respectively | (54,269,995) | (49,996,166) |
Accumulated other comprehensive loss | (11,610,048) | (5,401,135) |
Retained earnings | 151,388,485 | 144,108,723 |
Total stockholders' equity | 298,190,135 | 296,146,569 |
Total liabilities and stockholders' equity | $ 660,668,641 | $ 631,250,380 |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 1,224,211 | $ 2,685,497 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 62,522,859 | 61,851,709 |
Common stock, shares outstanding | 52,793,498 | 52,830,842 |
Treasury stock at cost, shares | 9,729,361 | 9,020,867 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net income | $ 7,553,117 | $ 7,008,450 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 12,842,347 | 12,931,952 |
Stock-based compensation expense | 4,854,194 | 4,023,227 |
Deferred income taxes | 613,381 | 1,208,931 |
Bad debt provision | 1,214,166 | 651,543 |
Change in fair value of contingent consideration | 1,690,743 | (1,743,637) |
Other operating activities | 157,281 | 310,929 |
Change in assets: | ||
Accounts receivable and unbilled revenue | (17,558,439) | (18,057,683) |
Inventories | (13,116,248) | (14,728,826) |
Prepaid expenses and other assets | (13,436,443) | (11,604,972) |
Change in liabilities: | ||
Accounts payable | 4,471,133 | (3,442,578) |
Accrued expenses and other liabilities | 3,458,063 | 7,404,928 |
Net cash used in operating activities | (7,256,705) | (16,037,736) |
Cash flows from investing activities | ||
Purchases of property and equipment | (12,125,611) | (10,905,871) |
Other investing activities | 0 | (594,207) |
Net cash used in investing activities | (12,125,611) | (11,500,078) |
Cash flows from financing activities | ||
Net borrowings from revolving credit facility | 23,488,681 | 34,500,000 |
Net short-term secured borrowings | (550,921) | 2,717,222 |
Repurchases of common stock | (4,897,184) | 0 |
Payments of contingent consideration | (8,009,775) | (5,768,591) |
Proceeds from exercise of stock options | 650,409 | 407,483 |
Payments of Debt Issuance Costs | 0 | (623,364) |
Other financing activities | (425,716) | 458,667 |
Net cash provided by financing activities | 10,255,494 | 31,691,417 |
Effect of exchange rate changes on cash and cash equivalents | (813,531) | (605,970) |
(Decrease) increase in cash and cash equivalents | (9,940,353) | 3,547,633 |
Cash and cash equivalents, beginning of period | 22,577,942 | 18,606,030 |
Cash and cash equivalents, end of period | $ 12,637,589 | $ 22,153,663 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation of Interim Financial Statements The accompanying unaudited consolidated financial statements of InnerWorkings, Inc. and subsidiaries (the “Company”) included herein have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying unaudited financial statements have been included, and all adjustments are of a normal and recurring nature. The operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015 . These condensed interim consolidated financial statements and notes should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto as of and for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2015. Description of the Business The Company was incorporated in the state of Delaware on January 3, 2006. The Company is a leading global marketing execution firm for Fortune 1000 companies 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 creation, production, and distribution of marketing and promotional materials, signage and displays, retail experiences, events and promotions, and packaging across every major market worldwide. The items the Company sources are generally procured through the marketing supply chain, and are referred to collectively as marketing materials. The Company’s technology and database of information is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional marketing and manufacturing supply chain to obtain favorable pricing and to deliver high-quality products and services. The Company is organized and managed as three business segments, North America, Latin America and EMEA, and is viewed as three operating segments by the chief operating decision maker for purposes of resource allocation and assessing performance. See Note 13 for further information about the Company’s reportable segments. Reclassifications Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications have not been material and have not affected net income. Preparation of Financial Statements and Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates, including those related to product returns, allowance for doubtful accounts, inventories and inventory valuation, valuation and impairments of goodwill and long-lived assets, income taxes, contingencies, stock-based compensation and litigation. The Company bases its estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of assets and liabilities when those values are not readily apparent from other sources. Actual results can differ from those estimates. Foreign Currency Translation The Company determines the functional currency for its parent company and each of its subsidiaries by reviewing the currencies in which their respective operating activities occur. Assets and liabilities of these operations are translated into U.S. currency at the rates of exchange at the balance sheet date. Income and expense items are translated at average monthly rates of exchange. The resulting translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders’ equity. Transaction gains and losses arising from activities in other than the applicable functional currency are calculated using average exchange rates for the applicable period and reported in net income as a non-operating item in each period. Non-monetary balance sheet items denominated in a currency other than the applicable functional currency are translated using the historical rate. Revenue Recognition The Company recognizes revenue upon meeting all of the following revenue recognition criteria, which are typically met upon shipment or delivery of its products to customers: (i) persuasive evidence of an arrangement exists through customer contracts and orders, (ii) the customer takes title and assumes the risks and rewards of ownership, (iii) the sales price charged is fixed or determinable as evidenced by customer contracts and orders, and (iv) collectability is reasonably assured. Unbilled revenue relates to shipments that have been made to customers for which the related account receivable has not yet been billed. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-45, Revenue Recognition – Principal Agent Considerations , the Company generally reports revenue on a gross basis because the Company is the primary obligor in its arrangements to procure marketing materials and other products for its customers. Under these arrangements, the Company is responsible for the fulfillment, including the acceptability, of the marketing materials and other products. In addition, the Company (i) determines which suppliers are included in its network, (ii) has discretion to select from among the suppliers within its network, (iii) is obligated to pay its suppliers regardless of whether it is paid by its customers, and (iv) has reasonable latitude to establish exchange price. In some transactions, the Company also has general inventory risk and is involved in the determination of the nature or characteristics of the marketing materials and products. When the Company is not the primary obligor, revenues are reported net. The Company recognizes revenue for creative and other services provided to its customers which may be delivered in conjunction with the procurement of marketing materials at the time when delivery and customer acceptance occur and all other revenue recognition criteria are met. The Company recognizes revenue for creative and other services provided on a stand-alone basis upon completion of the service. Service revenue has not been material to the Company’s overall revenue to date. Stock-Based Compensation The Company accounts for stock-based compensation awards to employees and directors in accordance with ASC 718, Compensation – Stock Compensation . Compensation expense is measured by determining the fair value using the Black-Scholes option valuation model and is then recognized over the requisite service period of the awards, which is generally the vesting period, on a straight-line basis for the entire award. Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest. Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company recorded $1.2 million and $1.4 million in stock-based compensation expense for the three months ended September 30, 2015 and 2014 , respectively, and $4.9 million and $4.0 million for the nine months ended September 30, 2015 and 2014 , respectively. During the first quarter of 2015, $0.4 million of stock-based compensation expense was recognized related to the modification of a former executive’s award agreements in connection with his transition agreement. Recent Accounting Pronouncements In September 2015, the FASB issued Accounting Standards Update 2015-15, Business Combinations (Topic 805) (“ASU 2015-16”). The amendments in ASU 2015-16 require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments are to be applied prospectively to adjustments to provisional amounts that occur after the effective date of ASU 2015-16 with earlier application permitted for financial statements that have not been issued. The Company is currently evaluating the impact of adopting ASU 2015-16 on its consolidated financial statements . In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-9”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ( “ ASU 2015-14 ” ) which defers the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of adopting these standards on its consolidated financial statements . In July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ( “A SU 2015-11 ” ). ASU 2015-11 applies to inventory that is measured using first-in, first-out (FIFO) or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out (LIFO). The standard is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting ASU 2015-11 on its consolidated financial statements . In April 2015, the FASB issued Accounting Standards Update 2015-5, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-5”). This update provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. This guidance is effective for public companies for fiscal years and interim periods beginning after December 15, 2015. The new guidance is to be applied either prospectively to new cloud computing arrangements or retrospectively. The Company does not expect ASU 2015-5 to have a material impact on its consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update 2015-3, Interest – Imputation of Interest (Subtopic 835-30) (“ASU 2015-3”), which simplifies the presentation of debt issuance costs. This guidance requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with debt discounts. The standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The new guidance should be applied on a retrospective basis. The Company does not expect ASU 2015-3 to have a material impact on its consolidated financial statements. In January 2015, the FASB issued Accounting Standards Update 2015-1, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20) (“ASU 2015-1”). ASU 2015-1 eliminates from GAAP the concept of extraordinary items. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted provided that guidance is applied from the beginning of the fiscal period of adoption. The Company may also apply the amendments retrospectively to all prior periods presented in the financial statements. The Company does not expect ASU 2015-1 to have a material impact on its consolidated financial statements. In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements – Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern and to provide disclosures in certain circumstances. The standard is effective for annual and interim periods beginning after December 15, 2016. The Company does not expect ASU 2014-15 to have a material impact on its consolidated financial statements. In April 2014, the FASB issued Accounting Standards Update 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-8”). ASU 2014-8 provides a narrower definition of discontinued operations than currently exists under GAAP. The standard requires that only disposals of components of an entity (or groups of components) that represent a strategic shift that has or will have a major effect on the reporting entity’s operations are reported in the financial statements as discontinued operations. The standard also provides guidance on the financial statement presentations and disclosures of discontinued operations. The standard is effective prospectively for disposals (or classifications of businesses as held-for-sale) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. The Company adopted ASU 2014-8 on January 1, 2015, and it did not have an effect on its consolidated financial statements. |
Contingent Consideration
Contingent Consideration | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Contingent Consideration | Contingent Consideration In connection with certain of the Company’s acquisitions, contingent consideration is payable in cash or common stock upon the achievement of certain performance measures over future periods. The Company has recorded the acquisition date fair value of the contingent consideration liability as additional purchase price. The Company has recorded $24.3 million in contingent consideration at September 30, 2015 related to these arrangements. Any adjustments made to the fair value of the contingent consideration liability subsequent to the acquisition date will be recorded in the Company’s results of operations. During the three months ended September 30, 2015 and 2014 , the Company recorded expense (income) of $0.7 million and $(1.6) million , respectively. During the nine months ended September 30, 2015 and 2014 , the Company recorded expense (income) of $1.7 million and $(1.7) million , respectively. As of September 30, 2015 , the potential maximum contingent payments, excluding the amounts recorded in Due to seller which are currently payable, would be due as follows if all performance measures are achieved: Cash Common Stock Total 2015 $ — $ — $ — 2016 27,086,640 51,442,614 78,529,254 2017 — 46,290,130 46,290,130 $ 27,086,640 $ 97,732,744 $ 124,819,384 If the performance measures required by the purchase agreements are not achieved, the Company may pay less than the maximum amounts presented in the table above, depending on the terms of the agreement. While the maximum potential payments shown in the table are $124.8 million , the Company estimates that the fair value of the payments that will be made is $24.3 million . |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following is a summary of the goodwill balance for each operating segment as of September 30, 2015 : North America Latin America EMEA Total Net goodwill as of December 31, 2014 $ 170,859,421 $ 9,875,236 $ 66,213,243 $ 246,947,900 Foreign exchange impact (102,014 ) (159,253 ) (1,841,290 ) (2,102,557 ) Net goodwill as of September 30, 2015 $ 170,757,407 $ 9,715,983 $ 64,371,953 $ 244,845,343 Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with ASC 350, Intangibles – Goodwill and Other ("ASC 350"), goodwill is not amortized, but instead is tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. Absent any interim indicators of impairment, the Company tests for goodwill impairment as of the first day of the fourth fiscal quarter of each year. Under ASC 350, an entity is permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. If the quantitative test is used, in the first step, the fair value for each reporting unit is compared to its book value, including goodwill. In the case that the fair value is less than the book value, a second step is performed which compares the implied fair value of goodwill to the book value of goodwill. The fair value for the goodwill is determined based on the difference between the fair value of the reporting unit and the net fair values of the identifiable assets and liabilities. If the implied fair value of the goodwill is less than the book value of the goodwill, the difference is recognized as an impairment. The Company defines its three reporting units as North America, Latin America and EMEA. At October 1, 2014, the Company elected to perform the quantitative impairment test for each of its three reporting units. In performing this test, the Company determined the fair value of the reporting units based on the income approach. Under the income approach, the fair value of a reporting unit is calculated based on the present value of estimated future cash flows. No impairment was identified in the most recent annual impairment test performed as of October 1, 2014, and no events have occurred since that date which would more likely than not result in an impairment. The Company reviews for potential impairment indicators each reporting period and does not believe that goodwill is impaired as of September 30, 2015 . The fair value estimates used in the goodwill impairment analysis required significant judgment. The Company's fair value estimates for purposes of performing the analysis are considered Level 3 fair value measurements. The fair value estimates were based on assumptions that management believes to be reasonable, but that are inherently uncertain, including estimates of future revenues and operating margins and assumptions about the overall economic climate and the competitive environment for the business. |
Other Intangible Assets
Other Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Other Intangible Assets The following is a summary of the Company’s other intangible assets as of September 30, 2015 and December 31, 2014 : September 30, December 31, 2014 Weighted Average Life Customer lists $ 74,207,075 $ 75,113,728 13.6 Noncompete agreements 994,254 1,077,349 4.0 Trade names 3,245,162 3,467,655 12.5 Patents 56,896 56,896 9.0 78,503,387 79,715,628 Less accumulated amortization (38,815,930 ) (34,796,055 ) Intangible assets, net $ 39,687,457 $ 44,919,573 In accordance with ASC 350, the Company amortizes its intangible assets with finite lives over their respective estimated useful lives and reviews for impairment whenever impairment indicators exist. Impairment indicators could include significant under-performance relative to the historical or projected future operating results, significant changes in the manner of use of assets, significant negative industry or economic trends or significant changes in the Company’s market capitalization relative to net book value. Any changes in key assumptions used by the Company, including those set forth above, could result in an impairment charge and such a charge could have a material adverse effect on the Company’s consolidated results of operations. The Company’s intangible assets consist of customer lists, noncompete agreements, trade names and patents. The Company’s customer lists, which have an estimated weighted-average useful life of approximately fourteen years, are being amortized using the economic life method. The Company’s noncompete agreements, trade names and patents are being amortized on a straight-line basis over their estimated weighted-average useful lives of approximately four years, thirteen years and nine years, respectively. Amortization expense related to these intangible assets was $1.5 million and $1.9 million for the three months ended September 30, 2015 and 2014 , respectively, and $4.4 million and $5.5 million for the nine months ended September 30, 2015 and 2014 , respectively. The estimated amortization expense for the next five years and thereafter is as follows: Remainder of 2015 $ 1,488,663 2016 5,631,534 2017 5,184,220 2018 4,685,920 2019 4,381,527 Thereafter 18,315,593 $ 39,687,457 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s effective income tax rate was 44.6% and 26.0% for the three months ended September 30, 2015 and 2014 , respectively, and 44.0% and 27.6% for the nine months ended September 30, 2015 and 2014 , respectively. The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate. In addition, the effective tax rate can be impacted each period by discrete factors and events. The effective tax rates were affected by the fair value changes to contingent consideration in each period. Portions of the total amount recognized from fair value changes to contingent consideration relate to non-taxable acquisitions for which deferred taxes are not recognized, consistent with the treatment of goodwill and intangible assets for those acquisitions under GAAP. Excluding the impact of these transactions in each period, the effective tax rate was 41.4% and 32.7% for the three months ended September 30, 2015 and 2014 , respectively, and 39.2% and 30.7% for the nine months ended September 30, 2015 and 2014 , respectively. The increase in the effective tax rates in 2015 is primarily due to forecasted changes in pre-tax income mix by jurisdiction and the expiration of the federal research and development tax credit at the end of 2014. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted average shares outstanding plus share equivalents that would arise from the exercise of stock options, vesting of restricted common shares, and contingently issuable shares in connection with the Company’s acquisitions. During the three months ended September 30, 2015 and 2014 , an aggregate of 3,983,261 and 2,078,808 options and restricted common shares, respectively, and during the nine months ended September 30, 2015 and 2014 , an aggregate of 4,057,813 and 2,462,749 , respectively, were excluded from the calculation as these options and restricted common shares were anti-dilutive. The computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2015 and 2014 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator: Net income $ 4,983,236 $ 5,113,671 $ 7,553,117 $ 7,008,450 Denominator: Weighted-average shares outstanding – basic 52,972,500 52,655,284 52,759,404 51,974,408 Effect of dilutive securities: Employee and director stock options and restricted common shares 375,876 1,087,188 697,568 807,443 Weighted-average shares outstanding – diluted 53,348,376 53,742,472 53,456,972 52,781,851 Basic earnings per share $ 0.09 $ 0.10 $ 0.14 $ 0.13 Diluted earnings per share $ 0.09 $ 0.10 $ 0.14 $ 0.13 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive (Loss) | Accumulated Other Comprehensive Income (Loss) The table below presents changes in the components of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, 2015 2014 Foreign currency Foreign currency Balance, beginning of period $ (9,744,881 ) $ 3,600,618 Other comprehensive (loss) income before reclassifications (1,865,167 ) (4,588,285 ) Net current-period other comprehensive (loss) income (1,865,167 ) (4,588,285 ) Balance, end of period $ (11,610,048 ) $ (987,667 ) Nine Months Ended September 30, 2015 2014 Foreign currency Foreign currency Balance, beginning of period $ (5,401,135 ) $ 2,777,000 Other comprehensive loss before reclassifications (6,208,913 ) (3,764,667 ) Net current-period other comprehensive loss (6,208,913 ) (3,764,667 ) Balance, end of period $ (11,610,048 ) $ (987,667 ) |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company provides print procurement services to Arthur J. Gallagher & Co. J. Patrick Gallagher, Jr., a member of the Company’s Board of Directors, is the Chairman, President and Chief Executive Officer of Arthur J. Gallagher & Co. and has a direct ownership interest in Arthur J. Gallagher & Co. The total amount billed for such print procurement services during the three months ended September 30, 2015 and 2014 was $0.5 million and $0.3 million , respectively, and $1.4 million and $1.2 million during the nine months ended September 30, 2015 and 2014 , respectively. Additionally, Arthur J. Gallagher & Co. provides insurance brokerage and risk management services to the Company. As consideration of these services, Arthur J. Gallagher & Co. billed the Company $0.3 million and $0.3 million for the three months ended September 30, 2015 and 2014 , respectively, and $0.5 million and $0.5 million , respectively, during the nine months ended September 30, 2015 and 2014 . The net amount receivable from Arthur J. Gallagher & Co. at September 30, 2015 was $0.2 million . |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement ASC 820 includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels: • Level 1: Inputs are quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data. • Level 3: Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The Company's potential contingent consideration payments relating to acquisitions are its only Level 3 liabilities as of September 30, 2015 and December 31, 2014 . The fair value of the liabilities determined by this analysis is primarily driven by the probability of reaching the performance measures required by the purchase agreements and the associated discount rate. Probabilities are estimated by reviewing financial forecasts and assessing the likelihood of reaching the required performance measures based on factors specific to each acquisition as well as the Company’s historical experience with similar arrangements. If an acquisition reaches the required performance measure, the estimated probability would be increased to 100% , and if the measure is not reached, the probability would be reduced to reflect the amount earned, if any, depending on the terms of the agreement. Discount rates are estimated by using the local government bond yields plus the Company’s credit spread. A one percentage point increase in the discount rate across all contingent consideration liabilities would result in a decrease to the fair value of approximately $0.3 million . The following table sets forth the Company’s financial assets and financial liabilities measured at fair value on a recurring basis and the basis of measurement at September 30, 2015 and December 31, 2014 , respectively: At September 30, 2015 Total Fair Value Measurement Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 667,284 $ 667,284 $ — $ — Liabilities: Contingent consideration $ (24,262,861 ) $ — $ — $ (24,262,861 ) At December 31, 2014 Total Fair Value Measurement Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 667,127 $ 667,127 $ — $ — Liabilities: Contingent consideration $ (32,582,574 ) $ — $ — $ (32,582,574 ) (1) Included in cash and cash equivalents on the balance sheet. The following table provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3): Fair Value Measurements at Reporting Date Using Significant Unobservable Inputs (Level 3) Contingent Consideration Balance as of December 31, 2014 $ (32,582,574 ) Contingent consideration payments paid in cash 1,739,275 Contingent consideration payments paid in common stock 350,000 Change in fair value (1) (1,690,743 ) Reclassification to Due to seller 7,490,840 Foreign exchange impact (2) 430,341 Balance as of September 30, 2015 $ (24,262,861 ) (1) Adjustments to original contingent consideration obligations recorded were the result of using revised financial forecasts and updated fair value measurements. These changes are recognized within operating expenses on the consolidated statement of comprehensive income. (2) Changes in the contingent consideration liability which are caused by foreign exchange rate fluctuations are recognized in other comprehensive loss. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In December 2010, e-Lynxx Corporation filed a complaint against the Company and numerous other defendants for patent infringement in the United States District Court for the Middle District of Pennsylvania. As to the Company, the complaint alleges, among other things, that certain aspects of the Company’s PPM4 technology infringe on two patents owned by e-Lynxx purporting to cover a system and method for competitive pricing and procurement of customized goods and services, and seeks monetary damages, interest, costs, attorneys’ fees, punitive damages and a permanent injunction. In May 2013, e-Lynxx asserted that the monetary damages it seeks from the Company are in the range of $35 million to $88 million for the period from May 2009 through December 2012; e-Lynxx has not yet specified damages sought for 2013 and future periods. The Company disputes the allegations contained in e-Lynxx’s complaint and intends to vigorously defend this matter. Specifically, the Company contends that the patents at issue are invalid and not infringed, and, therefore, e-Lynxx is not entitled to any relief and the complaint should be dismissed. Further, even if e-Lynxx could establish liability, the Company contends that e-Lynxx is not entitled to the excessive monetary relief it seeks. On July 25, 2013, the court granted the Company’s motion for summary judgment, finding that the Company did not infringe the patents-in-suit. E-Lynxx filed a motion for reconsideration, which was denied. On March 5, 2014, e-Lynxx filed an appeal from the judgment entered in favor of the Company. On February 9, 2015, the Federal Circuit Court of Appeals affirmed the judgment entered in favor of the Company. All deadlines for further appellate review have since passed and the judgment in favor of the Company became a final judgment; therefore, the Company has no liability in the matter and effective July 2015, the matter is closed. In October 2013, the Company removed the former owner of Productions Graphics from his role as President of Productions Graphics, the Company’s French subsidiary. He had been in that role since the Company’s 2011 acquisition of Productions Graphics, a European business then principally owned by him. In December 2013, the former owner of Productions Graphics initiated a wrongful termination claim in the Commercial Court of Paris seeking approximately €0.7 million in fees and damages. In anticipation of this claim, in November 2013, he also obtained a judicial asset attachment order in the amount of €0.7 million as payment security; the attachment order was confirmed in January 2014 and the Company filed an appeal of the order. In March 2015, the appellate court ruled in the Company’s favor in the attachment proceedings, releasing all attachments. The Company disputes the allegations of the former owner of Productions Graphics and intends to vigorously defend these matters. In February 2014, based on a review the Company initiated into certain transactions associated with the former owner of Productions Graphics, the Company concluded that he had engaged in fraud by inflating the results of the Productions Graphics business in order to induce the Company to pay him €7.1 million in contingent consideration pursuant to the acquisition agreement. In light of those findings, in February 2014, the Company filed a criminal complaint in France seeking to redress the harm caused by his conduct and this proceeding is currently pending. In addition, in September 2015 the Company initiated a civil claim in the Paris Commercial Court against the former owner of Production Graphics, seeking civil damages to redress these same harms. In addition to these pending matters, there may be other potential disputes between the Company and the former owner of Productions Graphics relating to the acquisition agreement. As of September 30, 2015 , the Company had paid €5.8 million in fixed consideration and €7.1 million in contingent consideration to the former owner of Productions Graphics; the remaining maximum contingent consideration for the earn-out period ending in 2015 is €34.5 million and the Company estimates that none of this amount will be earned and payable. In January 2014, a former finance employee of Productions Graphics initiated wrongful termination and overtime claims in the Labor Court of Boulogne-Billancourt, and he currently seeks damages of approximately €0.6 million . The Company disputes these allegations and intends to vigorously defend these matters. In addition, the Company’s criminal complaint in France, described above, seeks to redress harm caused by this former employee in light of his participation in the fraudulent transactions described above. The labor claim has been stayed in deference to the Company’s related criminal complaint. In February 2014, shortly following the Company’s announcement of its intention to restate certain historical financial statements, an individual filed a putative securities class action complaint in the United States District Court for the Northern District of Illinois entitled Van Noppen v. InnerWorkings et al . The complaint, as amended in July 2014, alleges that the Company and certain executive officers violated federal securities laws by making materially false or misleading statements or omissions, and by engaging in a scheme to defraud purchasers of securities, relating to the Company’s financial results and prospects. The purported misstatements and scheme relate to the Company’s inside sales initiative and the Productions Graphics business based in France. The complaint seeks unspecified damages, interest, attorneys’ fees and other costs. The Company and individual defendants dispute the claims and intend to vigorously defend the matter. On September 29, 2014, the Company and individual defendants filed a motion to dismiss the complaint for failure to state a claim. On September 30, 2015, the Court granted in part and denied in part the motion to dismiss, resulting in the dismissal with prejudice of all claims relating to the inside sales initiative. On December 12, 2014, the Company received a derivative demand letter on behalf of Tom Turberg, a purported stockholder, demanding that the Company’s Board of Directors investigate and take action on behalf of the Company against the executive officers named in the Van Noppen action as well as certain past and current members of the Audit Committee of the Board of Directors. The demand letter’s allegations relate to (i) the Company’s restatement of financial statements for the fourth quarter of 2011 through the third quarter of 2013, (ii) the Company’s use of gross revenue accounting, (iii) incentive compensation paid to executive officers in 2011 and 2012, (iv) allegations in the Van Noppen action, and (v) typographical errors in the 2013 Form 10-K. The demand letter has been forwarded to the Company’s Board of Directors for its review and handling. Any loss that the Company and individual defendants may incur as a result of these matters cannot be estimated. |
Revolving Credit Facility
Revolving Credit Facility | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility The Company entered into a Credit Agreement, dated as of August 2, 2010, subsequently amended most recently as of September 25, 2014, among the Company, the lenders party thereto and Bank of America, N.A., as Administrative Agent (the “Credit Agreement”). The Credit Agreement includes a revolving commitment amount of $175 million in the aggregate with a maturity date of September 25, 2019 , and provides the Company the right to increase the aggregate commitment amount by an additional $50 million . Outstanding borrowings under the revolving credit facility are guaranteed by the Company’s material domestic subsidiaries, as defined in the Credit Agreement. The Company’s obligations under the Credit Agreement and such domestic subsidiaries’ guaranty obligations are secured by substantially all of their respective assets. The ranges of applicable rates charged for interest on outstanding loans and letters of credit are 125 - 250 basis point spread for letter of credit fees and loans based on the Eurodollar rate and 25 - 150 basis point spread for loans based on the base rate. The terms of the Credit Agreement include various covenants, including covenants that require the Company to maintain a maximum leverage ratio and a minimum interest coverage ratio. The Credit Agreement requires the Company to maintain a leverage ratio of no more than 3.25 to 1.0 for the quarter ended September 30, 2015 and 3.00 to 1.0 for each period thereafter. The Company is also required to maintain an interest coverage ratio of no less than 5.00 to 1.0. The Company is in compliance with all debt covenants as of September 30, 2015 . At September 30, 2015 , the Company had $21.6 million of unused availability under the Credit Agreement and $0.7 million of letters of credit which have not been drawn upon. The fair value of the debt under this Credit Agreement is not materially different from its book value as of September 30, 2015 . |
Share Repurchase Program
Share Repurchase Program | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Share Repurchase Program | Share Repurchase Program On February 12, 2015, the Company announced that its Board of Directors approved a share repurchase program authorizing the repurchase of up to an aggregate of $20 million of its common stock through open market and privately negotiated transactions over a two -year period. The timing and amount of any share repurchases will be determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time. Repurchases will be made in compliance with SEC rules and other legal requirements. During the three months ended September 30, 2015 , the Company did not repurchase any shares of its common stock. During the nine months ended September 30, 2015 , the Company repurchased 763,787 shares of its common stock for an aggregate amount of $4.9 million at an average cost of $6.41 per share. Shares repurchased under this program are recorded at acquisition cost, including related expenses. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segments | usiness Segments Segment information is prepared on the same basis that our Chief Executive Officer, who is our chief operating decision maker (“CODM”), manages the segments, evaluates financial results, and makes key operating decisions. The Company is organized and managed as three business segments: North America, Latin America, and EMEA. The North America segment includes operations in the United States and Canada; the Latin America segment includes operations in Mexico, South America, and Central America; and the EMEA segment includes operations in Europe, the Middle East, Africa, and Asia. “Other” consists of intersegment eliminations, shared service activities and unallocated corporate expenses. All transactions between segments are presented at their gross amounts and eliminated through Other. Management evaluates the performance of its operating segments based on net revenues and Adjusted EBITDA, which is a non-GAAP financial measure. The accounting policies of each of the operating segments are the same as those described in the summary of significant accounting policies in Note 1. Adjusted EBITDA represents income from operations excluding depreciation and amortization, stock-based compensation expense, income/expense related to changes in the fair value of contingent consideration liabilities and other items as described below. Management does not evaluate the performance of its operating segments using asset measures. The table below presents financial information for the Company’s reportable operating segments and Other for the three and nine month periods noted (in thousands): North America Latin America EMEA Other Total Three Months Ended September 30, 2015: Net revenue from third parties $ 179,990 $ 25,710 $ 59,020 $ — $ 264,720 Net revenue from other segments — 358 2,516 (2,874 ) — Total net revenues 179,990 26,069 61,536 (2,874 ) 264,720 Adjusted EBITDA (1) 18,053 2,288 3,591 (6,315 ) 17,617 Three Months Ended September 30, 2014: Net revenue from third parties $ 166,338 $ 24,622 $ 60,692 $ — $ 251,652 Net revenue from other segments — 103 2 (105 ) — Total net revenues 166,338 24,725 60,694 (105 ) 251,652 Adjusted EBITDA (1) 14,149 1,464 2,564 (5,891 ) 12,286 North America Latin America EMEA Other Total Nine Months Ended September 30, 2015: Net revenue from third parties $ 519,727 $ 74,076 $ 165,240 $ — $ 759,043 Net revenue from other segments — 1,302 7,026 (8,328 ) — Total net revenues 519,727 75,378 172,266 (8,328 ) 759,043 Adjusted EBITDA (1) 46,612 5,564 6,027 (20,997 ) 37,205 Nine Months Ended September 30, 2014: Net revenue from third parties $ 515,178 $ 77,522 $ 160,791 $ — $ 753,491 Net revenue from other segments 48 321 2,413 (2,782 ) — Total net revenues 515,226 77,843 163,204 (2,782 ) 753,491 Adjusted EBITDA (1) 40,866 4,194 5,331 (20,058 ) 30,333 (1) Adjusted EBITDA, which represents income from operations with the addition of depreciation and amortization, stock-based compensation expense, change in the fair value of contingent consideration liabilities and certain legal settlements, is considered a non-GAAP financial measure under SEC regulations. Income from operations is the most directly comparable financial measure calculated in accordance with GAAP. The Company presents this measure as supplemental information to help investors better understand trends in its business results over time. The Company’s management team uses Adjusted EBITDA to evaluate the performance of the business. Adjusted EBITDA is not equivalent to any measure of performance required to be reported under GAAP, nor should this data be considered an indicator of the Company’s overall financial performance and liquidity. Moreover, the Adjusted EBITDA definition the Company uses may not be comparable to similarly titled measures reported by other companies. The table below reconciles the total of the reportable segments' Adjusted EBITDA and the Adjusted EBITDA included in Other to income before income taxes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Adjusted EBITDA $ 17,617 $ 12,286 $ 37,205 $ 30,333 Depreciation and amortization (4,485 ) (4,387 ) (12,842 ) (12,932 ) Stock-based compensation expense (1,227 ) (1,375 ) (4,854 ) (4,023 ) Change in fair value of contingent consideration (701 ) 1,570 (1,691 ) 1,744 Restatement-related professional fees — — — (2,093 ) Income from operations 11,204 8,094 17,818 13,028 Total other expense (2,214 ) (1,181 ) (4,319 ) (3,355 ) Income before income taxes $ 8,990 $ 6,913 $ 13,499 $ 9,674 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation of Interim Financial Statements | Basis of Presentation of Interim Financial Statements The accompanying unaudited consolidated financial statements of InnerWorkings, Inc. and subsidiaries (the “Company”) included herein have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying unaudited financial statements have been included, and all adjustments are of a normal and recurring nature. The operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015 . These condensed interim consolidated financial statements and notes should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto as of and for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2015. |
Description of the Business | Description of the Business The Company was incorporated in the state of Delaware on January 3, 2006. The Company is a leading global marketing execution firm for Fortune 1000 companies 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 creation, production, and distribution of marketing and promotional materials, signage and displays, retail experiences, events and promotions, and packaging across every major market worldwide. The items the Company sources are generally procured through the marketing supply chain, and are referred to collectively as marketing materials. The Company’s technology and database of information is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional marketing and manufacturing supply chain to obtain favorable pricing and to deliver high-quality products and services. The Company is organized and managed as three business segments, North America, Latin America and EMEA, and is viewed as three operating segments by the chief operating decision maker for purposes of resource allocation and assessing performance. See Note 13 for further information about the Company’s reportable segments. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications have not been material and have not affected net income. |
Preparation of Financial Statements and Use of Estimates | Preparation of Financial Statements and Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates, including those related to product returns, allowance for doubtful accounts, inventories and inventory valuation, valuation and impairments of goodwill and long-lived assets, income taxes, contingencies, stock-based compensation and litigation. The Company bases its estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of assets and liabilities when those values are not readily apparent from other sources. Actual results can differ from those estimates. |
Foreign Currency Translation | Foreign Currency Translation The Company determines the functional currency for its parent company and each of its subsidiaries by reviewing the currencies in which their respective operating activities occur. Assets and liabilities of these operations are translated into U.S. currency at the rates of exchange at the balance sheet date. Income and expense items are translated at average monthly rates of exchange. The resulting translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders’ equity. Transaction gains and losses arising from activities in other than the applicable functional currency are calculated using average exchange rates for the applicable period and reported in net income as a non-operating item in each period. Non-monetary balance sheet items denominated in a currency other than the applicable functional currency are translated using the historical rate. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue upon meeting all of the following revenue recognition criteria, which are typically met upon shipment or delivery of its products to customers: (i) persuasive evidence of an arrangement exists through customer contracts and orders, (ii) the customer takes title and assumes the risks and rewards of ownership, (iii) the sales price charged is fixed or determinable as evidenced by customer contracts and orders, and (iv) collectability is reasonably assured. Unbilled revenue relates to shipments that have been made to customers for which the related account receivable has not yet been billed. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-45, Revenue Recognition – Principal Agent Considerations , the Company generally reports revenue on a gross basis because the Company is the primary obligor in its arrangements to procure marketing materials and other products for its customers. Under these arrangements, the Company is responsible for the fulfillment, including the acceptability, of the marketing materials and other products. In addition, the Company (i) determines which suppliers are included in its network, (ii) has discretion to select from among the suppliers within its network, (iii) is obligated to pay its suppliers regardless of whether it is paid by its customers, and (iv) has reasonable latitude to establish exchange price. In some transactions, the Company also has general inventory risk and is involved in the determination of the nature or characteristics of the marketing materials and products. When the Company is not the primary obligor, revenues are reported net. The Company recognizes revenue for creative and other services provided to its customers which may be delivered in conjunction with the procurement of marketing materials at the time when delivery and customer acceptance occur and all other revenue recognition criteria are met. The Company recognizes revenue for creative and other services provided on a stand-alone basis upon completion of the service. Service revenue has not been material to the Company’s overall revenue to date. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation awards to employees and directors in accordance with ASC 718, Compensation – Stock Compensation . Compensation expense is measured by determining the fair value using the Black-Scholes option valuation model and is then recognized over the requisite service period of the awards, which is generally the vesting period, on a straight-line basis for the entire award. Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest. Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company recorded $1.2 million and $1.4 million in stock-based compensation expense for the three months ended September 30, 2015 and 2014 , respectively, and $4.9 million and $4.0 million for the nine months ended September 30, 2015 and 2014 , respectively. During the first quarter of 2015, $0.4 million of stock-based compensation expense was recognized related to the modification of a former executive’s award agreements in connection with his transition agreement. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In September 2015, the FASB issued Accounting Standards Update 2015-15, Business Combinations (Topic 805) (“ASU 2015-16”). The amendments in ASU 2015-16 require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments are to be applied prospectively to adjustments to provisional amounts that occur after the effective date of ASU 2015-16 with earlier application permitted for financial statements that have not been issued. The Company is currently evaluating the impact of adopting ASU 2015-16 on its consolidated financial statements . In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-9”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ( “ ASU 2015-14 ” ) which defers the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of adopting these standards on its consolidated financial statements . In July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ( “A SU 2015-11 ” ). ASU 2015-11 applies to inventory that is measured using first-in, first-out (FIFO) or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out (LIFO). The standard is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting ASU 2015-11 on its consolidated financial statements . In April 2015, the FASB issued Accounting Standards Update 2015-5, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-5”). This update provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. This guidance is effective for public companies for fiscal years and interim periods beginning after December 15, 2015. The new guidance is to be applied either prospectively to new cloud computing arrangements or retrospectively. The Company does not expect ASU 2015-5 to have a material impact on its consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update 2015-3, Interest – Imputation of Interest (Subtopic 835-30) (“ASU 2015-3”), which simplifies the presentation of debt issuance costs. This guidance requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with debt discounts. The standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The new guidance should be applied on a retrospective basis. The Company does not expect ASU 2015-3 to have a material impact on its consolidated financial statements. In January 2015, the FASB issued Accounting Standards Update 2015-1, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20) (“ASU 2015-1”). ASU 2015-1 eliminates from GAAP the concept of extraordinary items. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted provided that guidance is applied from the beginning of the fiscal period of adoption. The Company may also apply the amendments retrospectively to all prior periods presented in the financial statements. The Company does not expect ASU 2015-1 to have a material impact on its consolidated financial statements. In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements – Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern and to provide disclosures in certain circumstances. The standard is effective for annual and interim periods beginning after December 15, 2016. The Company does not expect ASU 2014-15 to have a material impact on its consolidated financial statements. In April 2014, the FASB issued Accounting Standards Update 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-8”). ASU 2014-8 provides a narrower definition of discontinued operations than currently exists under GAAP. The standard requires that only disposals of components of an entity (or groups of components) that represent a strategic shift that has or will have a major effect on the reporting entity’s operations are reported in the financial statements as discontinued operations. The standard also provides guidance on the financial statement presentations and disclosures of discontinued operations. The standard is effective prospectively for disposals (or classifications of businesses as held-for-sale) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. The Company adopted ASU 2014-8 on January 1, 2015, and it did not have an effect on its consolidated financial statements |
Contingent Consideration (Table
Contingent Consideration (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | As of September 30, 2015 , the potential maximum contingent payments, excluding the amounts recorded in Due to seller which are currently payable, would be due as follows if all performance measures are achieved: Cash Common Stock Total 2015 $ — $ — $ — 2016 27,086,640 51,442,614 78,529,254 2017 — 46,290,130 46,290,130 $ 27,086,640 $ 97,732,744 $ 124,819,384 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Business Combination, Segment Allocation | The following is a summary of the goodwill balance for each operating segment as of September 30, 2015 : North America Latin America EMEA Total Net goodwill as of December 31, 2014 $ 170,859,421 $ 9,875,236 $ 66,213,243 $ 246,947,900 Foreign exchange impact (102,014 ) (159,253 ) (1,841,290 ) (2,102,557 ) Net goodwill as of September 30, 2015 $ 170,757,407 $ 9,715,983 $ 64,371,953 $ 244,845,343 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule Of Finite Lived And Indefinite Lived Intangible Assets | The following is a summary of the Company’s other intangible assets as of September 30, 2015 and December 31, 2014 : September 30, December 31, 2014 Weighted Average Life Customer lists $ 74,207,075 $ 75,113,728 13.6 Noncompete agreements 994,254 1,077,349 4.0 Trade names 3,245,162 3,467,655 12.5 Patents 56,896 56,896 9.0 78,503,387 79,715,628 Less accumulated amortization (38,815,930 ) (34,796,055 ) Intangible assets, net $ 39,687,457 $ 44,919,573 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated amortization expense for the next five years and thereafter is as follows: Remainder of 2015 $ 1,488,663 2016 5,631,534 2017 5,184,220 2018 4,685,920 2019 4,381,527 Thereafter 18,315,593 $ 39,687,457 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2015 and 2014 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator: Net income $ 4,983,236 $ 5,113,671 $ 7,553,117 $ 7,008,450 Denominator: Weighted-average shares outstanding – basic 52,972,500 52,655,284 52,759,404 51,974,408 Effect of dilutive securities: Employee and director stock options and restricted common shares 375,876 1,087,188 697,568 807,443 Weighted-average shares outstanding – diluted 53,348,376 53,742,472 53,456,972 52,781,851 Basic earnings per share $ 0.09 $ 0.10 $ 0.14 $ 0.13 Diluted earnings per share $ 0.09 $ 0.10 $ 0.14 $ 0.13 |
Accumulated Other Comprehensi24
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The table below presents changes in the components of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, 2015 2014 Foreign currency Foreign currency Balance, beginning of period $ (9,744,881 ) $ 3,600,618 Other comprehensive (loss) income before reclassifications (1,865,167 ) (4,588,285 ) Net current-period other comprehensive (loss) income (1,865,167 ) (4,588,285 ) Balance, end of period $ (11,610,048 ) $ (987,667 ) Nine Months Ended September 30, 2015 2014 Foreign currency Foreign currency Balance, beginning of period $ (5,401,135 ) $ 2,777,000 Other comprehensive loss before reclassifications (6,208,913 ) (3,764,667 ) Net current-period other comprehensive loss (6,208,913 ) (3,764,667 ) Balance, end of period $ (11,610,048 ) $ (987,667 ) |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table sets forth the Company’s financial assets and financial liabilities measured at fair value on a recurring basis and the basis of measurement at September 30, 2015 and December 31, 2014 , respectively: At September 30, 2015 Total Fair Value Measurement Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 667,284 $ 667,284 $ — $ — Liabilities: Contingent consideration $ (24,262,861 ) $ — $ — $ (24,262,861 ) At December 31, 2014 Total Fair Value Measurement Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds (1) $ 667,127 $ 667,127 $ — $ — Liabilities: Contingent consideration $ (32,582,574 ) $ — $ — $ (32,582,574 ) (1) Included in cash and cash equivalents on the balance sheet. |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3): Fair Value Measurements at Reporting Date Using Significant Unobservable Inputs (Level 3) Contingent Consideration Balance as of December 31, 2014 $ (32,582,574 ) Contingent consideration payments paid in cash 1,739,275 Contingent consideration payments paid in common stock 350,000 Change in fair value (1) (1,690,743 ) Reclassification to Due to seller 7,490,840 Foreign exchange impact (2) 430,341 Balance as of September 30, 2015 $ (24,262,861 ) (1) Adjustments to original contingent consideration obligations recorded were the result of using revised financial forecasts and updated fair value measurements. These changes are recognized within operating expenses on the consolidated statement of comprehensive income. (2) Changes in the contingent consideration liability which are caused by foreign exchange rate fluctuations are recognized in other comprehensive loss. |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The table below presents financial information for the Company’s reportable operating segments and Other for the three and nine month periods noted (in thousands): North America Latin America EMEA Other Total Three Months Ended September 30, 2015: Net revenue from third parties $ 179,990 $ 25,710 $ 59,020 $ — $ 264,720 Net revenue from other segments — 358 2,516 (2,874 ) — Total net revenues 179,990 26,069 61,536 (2,874 ) 264,720 Adjusted EBITDA (1) 18,053 2,288 3,591 (6,315 ) 17,617 Three Months Ended September 30, 2014: Net revenue from third parties $ 166,338 $ 24,622 $ 60,692 $ — $ 251,652 Net revenue from other segments — 103 2 (105 ) — Total net revenues 166,338 24,725 60,694 (105 ) 251,652 Adjusted EBITDA (1) 14,149 1,464 2,564 (5,891 ) 12,286 North America Latin America EMEA Other Total Nine Months Ended September 30, 2015: Net revenue from third parties $ 519,727 $ 74,076 $ 165,240 $ — $ 759,043 Net revenue from other segments — 1,302 7,026 (8,328 ) — Total net revenues 519,727 75,378 172,266 (8,328 ) 759,043 Adjusted EBITDA (1) 46,612 5,564 6,027 (20,997 ) 37,205 Nine Months Ended September 30, 2014: Net revenue from third parties $ 515,178 $ 77,522 $ 160,791 $ — $ 753,491 Net revenue from other segments 48 321 2,413 (2,782 ) — Total net revenues 515,226 77,843 163,204 (2,782 ) 753,491 Adjusted EBITDA (1) 40,866 4,194 5,331 (20,058 ) 30,333 (1) Adjusted EBITDA, which represents income from operations with the addition of depreciation and amortization, stock-based compensation expense, change in the fair value of contingent consideration liabilities and certain legal settlements, is considered a non-GAAP financial measure under SEC regulations. Income from operations is the most directly comparable financial measure calculated in accordance with GAAP. The Company presents this measure as supplemental information to help investors better understand trends in its business results over time. The Company’s management team uses Adjusted EBITDA to evaluate the performance of the business. Adjusted EBITDA is not equivalent to any measure of performance required to be reported under GAAP, nor should this data be considered an indicator of the Company’s overall financial performance and liquidity. Moreover, the Adjusted EBITDA definition the Company uses may not be comparable to similarly titled measures reported by other companies. |
Schedule Of Earnings Before Interest Tax Depreciation And Amortization Reconciliation | The table below reconciles the total of the reportable segments' Adjusted EBITDA and the Adjusted EBITDA included in Other to income before income taxes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Adjusted EBITDA $ 17,617 $ 12,286 $ 37,205 $ 30,333 Depreciation and amortization (4,485 ) (4,387 ) (12,842 ) (12,932 ) Stock-based compensation expense (1,227 ) (1,375 ) (4,854 ) (4,023 ) Change in fair value of contingent consideration (701 ) 1,570 (1,691 ) 1,744 Restatement-related professional fees — — — (2,093 ) Income from operations 11,204 8,094 17,818 13,028 Total other expense (2,214 ) (1,181 ) (4,319 ) (3,355 ) Income before income taxes $ 8,990 $ 6,913 $ 13,499 $ 9,674 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Unit | Sep. 30, 2014USD ($) | |
Accounting Policies [Abstract] | |||||
Number of Reportable Segments | Unit | 3 | ||||
Share-based compensation | $ (1,226,490) | $ (1,374,496) | $ (4,854,194) | $ (4,023,227) | |
Share-based compensation arrangement by share-based payment award, plan modification, incremental compensation cost | $ 400,000 |
Contingent Consideration - Sche
Contingent Consideration - Schedule of Contingent Consideration (Details) | Sep. 30, 2015USD ($) |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | $ 124,819,384 |
Common Stock [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 97,732,744 |
Cash [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 27,086,640 |
2015 [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 0 |
2015 [Member] | Common Stock [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 0 |
2015 [Member] | Cash [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 0 |
2016 [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 78,529,254 |
2016 [Member] | Common Stock [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 51,442,614 |
2016 [Member] | Cash [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 27,086,640 |
2017 [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 46,290,130 |
2017 [Member] | Common Stock [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | 46,290,130 |
2017 [Member] | Cash [Member] | |
Business Acquisition, Contingent Consideration [Line Items] | |
Potential Maximum Contingent Payments | $ 0 |
Contingent Consideration - Cont
Contingent Consideration - Contingent Consideration (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Combinations [Abstract] | ||||
Business combination, contingent consideration, liability | $ 24,300,000 | $ 24,300,000 | ||
Fair value of contingent consideration adjustment expense (income) | 701,086 | $ (1,570,129) | 1,690,743 | $ (1,743,637) |
Business combination, contingent consideration, maximum potential cash payment | $ 124,819,384 | $ 124,819,384 |
Goodwill (Details)
Goodwill (Details) | Oct. 01, 2014USD ($) | Sep. 30, 2015USD ($)Unit |
Goodwill [Roll Forward] | ||
Net goodwill as of December 31, 2014 | $ 246,947,900 | |
Foreign exchange impact | (2,102,557) | |
Net goodwill as of June 30, 2015 | $ 244,845,343 | |
Goodwill impairment | $ 0 | |
Number of Reportable Segments | Unit | 3 | |
North America [Member] | ||
Goodwill [Roll Forward] | ||
Net goodwill as of December 31, 2014 | $ 170,859,421 | |
Foreign exchange impact | (102,014) | |
Net goodwill as of June 30, 2015 | 170,757,407 | |
Latin America [Member] | ||
Goodwill [Roll Forward] | ||
Net goodwill as of December 31, 2014 | 9,875,236 | |
Foreign exchange impact | (159,253) | |
Net goodwill as of June 30, 2015 | 9,715,983 | |
EMEA [Member] | ||
Goodwill [Roll Forward] | ||
Net goodwill as of December 31, 2014 | 66,213,243 | |
Foreign exchange impact | (1,841,290) | |
Net goodwill as of June 30, 2015 | $ 64,371,953 |
Other Intangible Assets - Sched
Other Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 78,503,387 | $ 79,715,628 |
Less accumulated amortization | (38,815,930) | (34,796,055) |
Intangible assets, net | 39,687,457 | 44,919,573 |
Trade names [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 3,245,162 | 3,467,655 |
Acquired finite-lived intangible assets, weighted average useful life | 12 years 6 months | |
Customer lists [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 74,207,075 | 75,113,728 |
Acquired finite-lived intangible assets, weighted average useful life | 13 years 7 months 6 days | |
Noncompete agreements [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 994,254 | 1,077,349 |
Acquired finite-lived intangible assets, weighted average useful life | 4 years | |
Patents [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 56,896 | $ 56,896 |
Acquired finite-lived intangible assets, weighted average useful life | 9 years |
Other Intangible Assets - Addit
Other Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization Of Intangible Assets | $ 1.5 | $ 1.9 | $ 4.4 | $ 5.5 |
Other Intangible Assets - Sch33
Other Intangible Assets - Schedule of Other Intangible Amortization (Details) | Sep. 30, 2015USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2015 | $ 1,488,663 |
2,016 | 5,631,534 |
2,017 | 5,184,220 |
2,018 | 4,685,920 |
2,019 | 4,381,527 |
Thereafter | 18,315,593 |
Finite-Lived Intangible Assets, Net | $ 39,687,457 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 44.60% | 26.00% | 44.00% | 27.60% |
Effective Income Tax Rate Reconciliation, Percent, Total | 41.40% | 32.70% | 39.20% | 30.70% |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,983,261 | 2,078,808 | 4,057,813 | 2,462,749 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Basic and Diluted Earnings per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Numerator: | ||||
Net income | $ 4,983,236 | $ 5,113,671 | $ 7,553,117 | $ 7,008,450 |
Denominator: | ||||
Weighted-average shares outstanding – basic | 52,972,500 | 52,655,284 | 52,759,404 | 51,974,408 |
Effect of dilutive securities: | ||||
Employee and director stock options and restricted common shares | 375,876 | 1,087,188 | 697,568 | 807,443 |
Weighted-average shares outstanding – diluted | 53,348,376 | 53,742,472 | 53,456,972 | 52,781,851 |
Basic earnings per share (in dollars per share) | $ 0.09 | $ 0.10 | $ 0.14 | $ 0.13 |
Diluted earnings per share (in dollars per share) | $ 0.09 | $ 0.10 | $ 0.14 | $ 0.13 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Balance, beginning of period | $ (9,744,881) | $ 3,600,618 | $ (5,401,135) | $ 2,777,000 |
Other comprehensive loss before reclassifications | (1,865,167) | (4,588,285) | (6,208,913) | (3,764,667) |
Net current-period other comprehensive loss | (1,865,167) | (4,588,285) | (6,208,913) | (3,764,667) |
Balance, end of period | $ (11,610,048) | $ (987,667) | $ (11,610,048) | $ (987,667) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Related Party Transaction [Line Items] | ||||
Print Procurement Services | $ 0.5 | $ 0.3 | $ 1.4 | $ 1.2 |
Insurance and Risk Management Services | 0.3 | $ 0.3 | 0.5 | $ 0.5 |
Arthur J.Gallagher Co [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from Related Parties, Current | $ 0.2 | $ 0.2 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements Valuation Process Probability Percentage | 100.00% |
Effect Of Discount Rate Increase In Fair Value | $ 0.3 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Fair Value Measurement (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Assets: | ||
Money market funds(1) | $ 667,284 | $ 667,127 |
Liabilities: | ||
Contingent consideration | (24,262,861) | (32,582,574) |
Fair Value, Inputs, Level 1 [Member] | ||
Assets: | ||
Money market funds(1) | 667,284 | 667,127 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Assets: | ||
Money market funds(1) | 0 | 0 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Assets: | ||
Money market funds(1) | 0 | 0 |
Liabilities: | ||
Contingent consideration | $ (24,262,861) | $ (32,582,574) |
Fair Value Measurement - Sche41
Fair Value Measurement - Schedule of Unobservable Fair Value Inputs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance as of December 31, 2014 | $ (32,582,574) | |||
Change in fair value of contingent consideration | $ 701,086 | $ (1,570,129) | 1,690,743 | $ (1,743,637) |
Foreign exchange impact(2) | (2,102,557) | |||
Balance as of September 30, 2015 | (24,262,861) | (24,262,861) | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance as of December 31, 2014 | (32,582,574) | |||
Contingent consideration payments paid in cash | 1,739,275 | |||
Contingent consideration payments paid in common stock | 350,000 | |||
Change in fair value of contingent consideration | (1,690,743) | |||
Reclassification to Due to seller | 7,490,840 | |||
Foreign exchange impact(2) | 430,341 | |||
Balance as of September 30, 2015 | $ (24,262,861) | $ (24,262,861) |
Commitments and Contingencies (
Commitments and Contingencies (Details) € in Millions, $ in Millions | 1 Months Ended | 44 Months Ended | ||||
Jan. 31, 2014EUR (€) | Dec. 31, 2013EUR (€) | Nov. 30, 2013EUR (€) | Dec. 31, 2012USD ($)Patents | Sep. 30, 2015EUR (€) | Feb. 28, 2014EUR (€) | |
Other Commitments [Line Items] | ||||||
Loss Contingency, Patents Allegedly Infringed, Number | Patents | 2 | |||||
Loss Contingency, Damages Sought, Value | € 0.6 | € 0.7 | € 0.7 | |||
Loss Contingency Damages Value Contingent Consideration | € 7.1 | € 7.1 | ||||
Loss Contingency Damages Value Fixed Consideration | 5.8 | |||||
Loss Contingency Damages Maximum Contingent Consideration | € 34.5 | |||||
Minimum [Member] | ||||||
Other Commitments [Line Items] | ||||||
Loss Contingency, Damages Sought, Value | $ | $ 35 | |||||
Maximum [Member] | ||||||
Other Commitments [Line Items] | ||||||
Loss Contingency, Damages Sought, Value | $ | $ 88 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 175,000,000 |
Line of Credit Facility Maturity Date | Sep. 25, 2019 |
Line of Credit Facility Increased Current Borrowing Capacity | $ 50,000,000 |
Line of Credit Facility Required Leverage Ratio | 3.25 |
Line of Credit Facility Unused Capacity | $ 21,600,000 |
Line of Credit Facility Borrowings to be Drawn | $ 700,000 |
Eurodollar [Member] | Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility Basis Spread on Variable Rate | 1.25% |
Eurodollar [Member] | Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility Basis Spread on Variable Rate | 2.50% |
Base Rate [Member] | Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility Basis Spread on Variable Rate | 0.25% |
Base Rate [Member] | Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility Basis Spread on Variable Rate | 1.50% |
Leverage Ratio Required After the Quarter Ended June 30, 2015 [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility Required Leverage Ratio | 3 |
Line of Credit Facility Required Interest Coverage Ratio | 5 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) - USD ($) | Feb. 12, 2015 | Sep. 30, 2015 | Sep. 30, 2015 |
Equity [Abstract] | |||
Stock Repurchase Program, Authorized Amount | $ 20,000,000 | ||
Stock Repurchase Program, Period in Force | 2 years | ||
Treasury Stock, Shares, Acquired | 0 | 763,787 | |
Treasury Stock, Value, Acquired, Cost Method | $ 4,900,000 | ||
Treasury Stock Acquired, Average Cost Per Share (in USD per Share) | $ 6.41 |
Business Segments - Schedule of
Business Segments - Schedule of Business Segment Financial Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Net revenue from third parties | $ 264,720,003 | $ 251,651,521 | $ 759,042,648 | $ 753,490,776 |
Net revenue from other segments | (1) | 0 | 0 | 0 |
Total net revenues | 264,720,003 | 251,651,521 | 759,042,648 | 753,490,776 |
Adjusted EBITDA | 17,617,069 | 12,285,708 | 37,205,402 | 30,332,816 |
North America [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue from third parties | 179,990,032 | 166,337,914 | 519,727,088 | 515,178,003 |
Net revenue from other segments | 0 | 0 | 0 | 47,931 |
Total net revenues | 179,990,032 | 166,337,914 | 519,727,088 | 515,225,934 |
Adjusted EBITDA | 18,052,751 | 14,149,000 | 46,611,583 | 40,866,000 |
Latin America [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue from third parties | 25,710,381 | 24,621,937 | 74,075,949 | 77,522,235 |
Net revenue from other segments | 358,303 | 102,639 | 1,302,000 | 320,625 |
Total net revenues | 26,068,684 | 24,724,576 | 75,377,949 | 77,842,860 |
Adjusted EBITDA | 2,288,215 | 1,464,000 | 5,563,869 | 4,194,000 |
EMEA [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue from third parties | 59,019,591 | 60,691,670 | 165,239,612 | 160,790,528 |
Net revenue from other segments | 2,515,963 | 1,881 | 7,026,000 | 2,413,289 |
Total net revenues | 61,535,554 | 60,693,551 | 172,265,612 | 163,203,817 |
Adjusted EBITDA | 3,590,942 | 2,564,000 | 6,026,813 | 5,331,000 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue from third parties | 0 | 0 | 0 | 0 |
Net revenue from other segments | (2,874,267) | (104,520) | (8,328,000) | (2,781,845) |
Total net revenues | (2,874,267) | (104,520) | (8,328,000) | (2,781,845) |
Adjusted EBITDA | $ (6,314,839) | $ (5,891,292) | $ (20,996,863) | $ (20,057,184) |
Business Segments - Schedule 46
Business Segments - Schedule of Business Segments Adjusted EBITDA (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting [Abstract] | ||||
Adjusted EBITDA | $ 17,617,069 | $ 12,285,708 | $ 37,205,402 | $ 30,332,816 |
Depreciation and amortization | (4,485,119) | (4,387,438) | (12,842,347) | (12,931,952) |
Stock-based compensation expense | (1,226,490) | (1,374,496) | (4,854,194) | (4,023,227) |
Change in fair value of contingent consideration | (701,086) | 1,570,129 | (1,690,743) | 1,743,637 |
Restatement-related professional fees | 0 | 0 | 0 | (2,093,104) |
Income from operations | 11,204,373 | 8,093,903 | 17,818,117 | 13,028,170 |
Total other expense | (2,214,349) | (1,180,813) | (4,319,468) | (3,354,653) |
Income before income taxes | $ 8,990,024 | $ 6,913,090 | $ 13,498,649 | $ 9,673,517 |