InnerWorkings Announces Q4 and Full Year 2012 Results and 2013 Guidance

CHICAGO—February 13, 2013—InnerWorkings Inc., a leading global marketing supply chain company, today reported results for the fourth quarter and fiscal year ended December 31, 2012.

Quarterly Highlights:

• Record revenue of $208.0 million, an increase of 19 percent compared to revenue of $175.2 million in the fourth quarter of 2011. Growth was driven by 16 percent organic growth in this quarter versus the fourth quarter of 2011.
• Record adjusted cash flow generated from operations of $21.9 million, an increase of 94 percent compared to $11.3 million in the fourth quarter of 2011.
• Adjusted diluted earnings per share increased by 25 percent to $0.15 per diluted share in the fourth quarter, compared to $0.12 per adjusted diluted share in the year-earlier period.
• Record adjusted EBITDA of $12.5 million, compared to $11.2 million in the year-earlier period.

Fiscal Year Highlights:

• Record revenue for fiscal year 2012 of $797.7 million, an increase of 26 percent compared to revenue of $633.8 million in fiscal year 2011. Growth was driven by 19 percent organic growth year-over-year.
• Adjusted cash flow generated from operations of $20.7 million in 2012, compared to $29.0 million in fiscal year 2011.
• Full year adjusted diluted earnings per share increased by 17 percent to $0.41 in 2012 compared to $0.35 in 2011.
• Adjusted EBITDA was $45.3 million, an increase of 20 percent compared to $37.6 million in fiscal year 2011.
• Full year 2012 enterprise account growth was 30 percent driven by the successful ramp-up of several new large enterprise client contracts and full year middle market account growth was 15 percent driven primarily by strong inside sales results.

“2012 was a record year for InnerWorkings, driven by over $100 million of organic revenue from new enterprise clients,” said Eric D. Belcher, CEO of InnerWorkings. “We invested wisely in our global platform last year, built up our inside sales business, and added the necessary leadership across our international organization to drive our future growth. We enter this year with a strong sense of confidence in our ability to win new large contracts that will again drive strong organic growth in 2013 and beyond.”

Additional fourth quarter 2012 financial and operational highlights include the following:

• 80 percent of the company’s revenue was generated from domestic sales, while 20 percent was derived from international sales activity. Enterprise clients accounted for 75 percent of sales with middle market clients accounting for 25 percent of sales.
• The company had a net benefit on the change in fair value of contingent consideration of $3.5 million related to acquisitions in Europe, which was recorded in the fourth quarter of 2012. All InnerWorkings acquisitions are structured under a contingent consideration arrangement, pursuant to which earn-out payments will not be made unless certain performance measures are met. Due to the softness in Europe, some of the applicable performance measures were not met in the fourth quarter of 2012, and as a result, the company recorded a net benefit to release a portion of its contingent consideration obligations.
• The company also recorded an incremental non-cash stock-based compensation expense of $2.0 million due to a better than forecasted employee retention rate than was assumed at the date of equity grant.
• Net debt declined by 26 percent sequentially and stood at $47.8 million at the end of the fourth quarter. The debt-to-leverage ratio was at a four year low of 1.4 times trailing twelve month adjusted EBITDA at the end of the fourth quarter.

“We were not only able to maintain our growth and execute against our strategy by investing in the business over the past year, but we also made significant contributions to strengthen our balance sheet,” said Joseph M. Busky, CFO. “We look forward to seeing our strategic 2012 investments in inside sales, Brazil and China turn profitable in 2013.”

Outlook
The company anticipates 2013 annual revenue of $930 million to $960 million, which reflects 16 to 20 percent organic growth. GAAP diluted earnings per share are expected to range between $0.57 to $0.61 in 2013, which reflects growth of 39 to 49 percent versus 2012 adjusted diluted earnings per share excluding legal settlement expense of $0.41.

About InnerWorkings Inc.
InnerWorkings Inc. (NASDAQ: INWK) is a leading global marketing supply chain company servicing corporate clients across a wide range of industries. With proprietary technology, an extensive supplier network and deep domain expertise, the company procures, manages and delivers printed materials and promotional products as part of a comprehensive outsourced enterprise solution. InnerWorkings is based in Chicago, employs approximately 1,300 individuals, and maintains 46 global offices. Among the many industries InnerWorkings services are: retail, financial services, hospitality, non-profits, healthcare, food and beverage, broadcasting and cable, education, transportation and utilities.

Source: InnerWorkings.