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InnerWorkings Announces Second Quarter 2009 Results

Friday, August 07, 2009

Press release from the issuing company

Major Gains in Market Share Driven by Nine Organic Enterprise Wins Combined With Outstanding Client Retention

CHICAGO, IL. -- InnerWorkings, Inc., a leading global provider of managed print and promotional solutions to corporate clients, today reported results for the three months ended June 30, 2009.

* The Company generated second quarter revenue of $100.1 million and diluted earnings per share of $0.05, including $0.01 per share from the sale of Echo Global Logistics, Inc. common stock.
* Nine new enterprise contracts were signed during the quarter, including two major contracts each expected to yield in excess of $10.0 million in annual revenue.
* Revenue from new accounts of $11.0 million in the quarter and $21.0 million year-to-date.
* Apart from customer bankruptcy and credit issues, the Company has retained 24 of its top 25 clients in the past 12 months.
* Cash flow from operations in the quarter was $0.4 million, bringing year-to-date operating cash flow to $8.0 million.

"The continued momentum in our enterprise segment is driving our market share gains at an increasing rate," said Eric D. Belcher, Chief Executive Officer of InnerWorkings. "While this is being overshadowed by the current pressure on printing budgets, we believe we are poised for significant growth as new customers come online and marketing budgets rebound."

Revenue for the second quarter was $100.1 million compared to revenue of $105.3 million in the year-earlier period. Despite a decline in same-customer revenue of 23%, revenue for the quarter only decreased five percent driven by the Company's gains in market share. Second quarter net income was $2.1 million or $0.05 per diluted share. Adjusted EBITDA was $5.7 million for the quarter, a $1.2 million decrease versus $6.9 million in the year-earlier period.

Additional second quarter 2009 financial and operational highlights include:
* Sales to enterprise clients accounted for 65 percent of second quarter revenue, with the remaining 35 percent derived from transactional clients.
* Customer concentration for the top ten accounts decreased to 31 percent of total revenue, compared to 39 percent in the second quarter of 2008.
* The Company sold 94,444 shares of common stock in Echo Global Logistics, Inc. for $850,000 in cash. The sale was in line with its plan to monetize the remaining 1.3 million share investment over time.
* The Company has drawn $42.2 million on its $75.0 million bank credit facility and has an additional $19 million of cash and short-term investments (not including the 1.3 million shares of Echo mentioned above).

Although InnerWorkings still expects a seasonally stronger second half, it has yet to see any significant movement up in same-customer volume. To prepare for potential continued organic revenue declines, the Company will reduce costs by an additional $1.2 million during the second half of the year through salary reductions and mandatory unpaid furloughs.

"In response to a slower than expected rebound in organic growth, we will take costs out of the business in the third and fourth quarters," said Joseph M. Busky, Chief Financial Officer of InnerWorkings. "We believe adjusting our flexible cost structure is prudent in this environment and encourage investors to look to our customer retention and steady order flow as an indication of our strength in 2010 and beyond."




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