News August 22, 2018
InnerWorkings Reports Q2 Loss
The Top 40 distributor also posted a net loss for the first six months of the year.
In a Nutshell:
- Q2 sales were up a pinch to $282 million, but gross profit was down about $5 million and the company posted a net loss of $300,000.
- Half-year sales improved 2.2%, but InnerWorkings still had a net loss for the period.
Despite an uptick in sales, Top 40 distributor InnerWorkings (asi/168860) reported net losses for the second quarter and the first six months of the year.
Rich Stoddart, President/CEO, InnerWorkings.
Q2 gross revenue tallied $282 million, or 0.7% more than the same quarter in 2017. Sales for the first six months of the year reached $556.5 million, up 2.2% year-over-year, according to financial data.
Meanwhile, gross profit for the second quarter of 2018 was off more than $5 million from last year, falling to about $64.9 million. Similarly, profit for the half-year retreated from $134.75 million in 2017 to $130.9 million this year.
At the bottom line, InnerWorkings netted out with a Q2 loss of about $300,000, or $0.01 in loss per diluted share. That compared to net income of nearly $4.4 million, or $0.08 per diluted share, during the same period in 2017. Net loss for the half-year stands at $1.98 million, or $0.04 in loss per diluted share, down from last year’s net income of $10 million, or $0.18 per diluted share.
Despite the downbeat report, executives at InnerWorkings believe better days are ahead. They noted that the company is implementing a cost reduction plan that is expected to reduce selling, general and administrative expenses in 2019 to be in line with 2017 expenses. The company expects to reduce annualized G&A expenses by $20 million over the next few quarters, with reductions made across the business to optimize staffing levels, realign underperforming operations, and better leverage talent.
Chip Hodgkins, Interim CFO, InnerWorkings.
“We have already initiated cost reduction measures, with approximately 50% of the plan to be actioned by October 1st,” said Chip Hodgkins, interim chief financial officer at InnerWorkings. “If in 2019 we achieve a similar gross revenue growth rate and gross margin as compared to this year, these cost reductions are expected to enable 2019 non-GAAP adjusted EBITDA of $65 to $70 million, or approximately 30% above our expectation for 2018.”
Looking ahead, InnerWorkings forecasts 2018 revenue to reach the range of $1.155 billion to $1.190 billion. Hitting those targets would mean annual growth of 1% to 4%. For the year, InnerWorkings anticipates non-GAAP EBITDA to fall between $50 million and $53 million.
With estimated 2017 North American promotional products sales of $147 million, InnerWorkings ranked 15th on Counselor’s most recent list of the largest distributors in the industry.