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InnerWorkings Inc. Reports Operating Results (10-Q)

November 09, 2009 | About:
10qk

10qk

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InnerWorkings Inc. (INWK) filed Quarterly Report for the period ended 2009-09-30.

INNERWORKINGS are a leading global provider of managed print and promotional procurement solutions to corporate clients. With proprietary technology, an extensive supplier network and domain expertise, they procure, manage and deliver printed products as part of a comprehensive outsourced enterprise solution. Their technology is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional print supply chain to obtain favorable pricing and to deliver high quality products and services for our clients. Innerworkings Inc. has a market cap of $242.4 million; its shares were traded at around $5.32 with a P/E ratio of 44.3 and P/S ratio of 0.6.

Highlight of Business Operations:

of the decrease in revenue is due to a one time correction of an error related to a revenue accrual for one customer. See Note 1 to our consolidated financial statements, Adjustment of Prior Year Errors, for more information on the prior period portion of this correction. The remaining $18.1 million, or 14.8%, decrease in revenue is due to the decrease in revenue from enterprise clients of $15.8 million, or 19.9%, from $79.2 million during the three months ended September 30, 2008 to $63.4 million during the three months ended September 30, 2009. As of September 30, 2009, we had 166 enterprise clients compared to 137 enterprise clients as of September 30, 2008. Additionally, revenue from transactional clients decreased by $8.0 million, or 18.7%, from $42.8 million during the three months ended September 30, 2008 to $34.8 million during the three months ended September 30, 2009.

Our revenue decreased by $22.0 million, or 7.0%, from $314.6 million during the nine months ended September 30, 2008 to $292.6 million during the nine months ended September 30, 2009. $5.7 million, or 1.8%, of the decrease in revenue is due to a one time correction of an error related to a revenue accrual for one customer. See Note 1 to our consolidated financial statements, Adjustment of Prior Year Errors, for more information on the prior period portion of this correction. The remaining $16.2 million, or 5.2%, decrease in revenue is due to the decrease in revenue from enterprise clients of $13.5 million, or 6.7%, from $202.9 million during the nine months ended September 30, 2008 to $189.3 million during the nine months ended September 30, 2009. As of September 30, 2009, we had 166 enterprise clients compared to 137 enterprise clients as of September 30, 2008. Revenue from transactional clients decreased by $8.5, or 7.6%, from $111.7 million during the nine months ended September 30, 2008 to $103.2 million during the nine months ended September 30, 2009.

At September 30, 2009, we had $1.3 million of cash and cash equivalents and $24.5 million in short-term investments, which includes approximately $8.8 million in available-for-sale securities and $15.6 million in auction-rate securities. In October 2008, we entered into an agreement with UBS regarding our outstanding auction-rate securities. Under the agreement, we have the right to sell all of our outstanding auction-rate securities back to UBS at their par value. The agreement allows us to exercise this right starting June 30, 2010, and the right will expire on July 2, 2012. As a result of this agreement, our auction-rate securities are classified as short-term investments at September 30, 2009.

Operating Activities. Cash provided by operating activities primarily consists of net income adjusted for certain non-cash items, including depreciation and amortization, and the effect of changes in working capital and other activities. Cash provided by operating activities for the nine months ended September 30, 2009 was $10.1 million and primarily consisted of net income of $4.1 million, $11.1 million of non-cash items, offset by $5.2 million used by working capital and other activities. The most significant impact on working capital and other activities consisted of an increase in accounts receivable and unbilled revenue of $6.4 million and increase in accounts payable of $9.2 million, offset by a decrease in customer deposits of $3.4 million, decrease in inventories of $5.5 million and decrease in income tax payable of $9.0 million.

Investing Activities. Cash used in investing activities in the nine months ended September 30, 2009 of $12.6 million was attributable to capital expenditures of $5.8 million, $7.2 million in payments made in connection with acquisitions and a $684,000 payment to seller, offset by an $850,000 gain on sale of Echo shares.

Cash used in investing activities in the nine months ended September 30, 2008 of $33.7 million was attributable to the proceeds from the sale of marketable securities of $2.6 million and proceeds from the sales of a portion of our Echo investment of $6.1 million, offset by $38.2 million of payments made in connection with our 2007 and 2008 acquisitions and capital expenditures of $4.3 million

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10qk
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