inwk investor presentation - printstockwatch · procurement outsourcing is expected to continue...

inwk investor presentation

inwk | we make marketing happen

Safe Harbor + GAAP Reconciliation

This presentation contains statements relating to future results. These statements are forward-looking statements under the

federal securities laws. We can give no assurance that any future results discussed in these statements will be achieved.

Any forward-looking statements represent our views only as of today and should not be relied upon as representing our

views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our

actual results to differ materially from the statements contained in this presentation. For a discussion of important factors

that could affect our actual results, please refer to our SEC filings, including the "Risk Factors" section of our most recently

filed Form 10-K.

This presentation includes the following financial measures defined as "non-GAAP financial measures" by the Securities

and Exchange Commission: Non-GAAP Adjusted EBITDA, Non-GAAP diluted earnings per share and constant currency.

We believe these measures provide useful information to investors because they provide information about the estimated

financial performance of the Company's ongoing business. These measures are used by management in its financial and

operational decision-making and evaluation of overall operating performance. With respect to constant currency, we

believe such presentation allows investors to measure our financial performance exclusive of foreign currency exchange

fluctuations more clearly. Constant currency for revenue, gross profit and Non-GAAP Adjusted EBITDA is calculated by

retranslating current period results at a consistent rate with the prior period results. This approach is based on the pricing

currency for each country, which is typically the functional currency. All of these non-GAAP financial measures may be

different from similar measures used by other companies. The presentation of this financial information, which is not

prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as

a substitute for the financial information prepared and presented in accordance with generally accepted accounting

principles. For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, please

see the "GAAP to Non-GAAP Reconciliation” included in the appendix and in our SEC filings.

investor presentation | 2016

2


Who We Are

3

An asset-light, fully outsourced

global solution, InnerWorkings

designs, procures and executes

branded marketing materials

and retail experiences for the

world’s leading brands.

we make marketing happen.

NASDAQ: INWK

~$400Mmarket cap

EPS growing

+20%97% enterprise

client retention rate

13Bmarketing pieces

produced annually through our technology



InnerWorkings delivers a

comprehensive suite of

services to meet our clients’

execution needs.

Our Offerings

4

events &

promotions

retail

environments

& displays

creative

services

print

management

product

packaging

ecommerce &

fulfillment

branded

merchandise



What We Manage

5

prepress

• Design a

supply chain

that optimizes

total cost of

ownership

• Shrink lead

times

• Ensure on-

time delivery

• Factor in

business

continuity

plans

• Maintain

product

integrity

• Identify most

efficient

formats

• Minimize costs

and reduce

waste

creativeprint, pos,

packaging

inbound

logisticskitting /

fulfillmentdistribution

• Maintain and

enhance

quality

• Utilize

international

network of

specialists for

site visits and

quality control

• Consolidate

spend to

realize

economies of

scale

• Unlock value

through

ideation and

value

engineering

business process reengineering to

improve efficiency & cost savings

change management

• Creative

design from

merchandising

through to

manufacturing

• Optimized for

production



Where Do We Fit in the Marketplace

6

outsourced

marketing

execution firm

Outside

Creative Agency

Trend toward decoupling of

marketing strategy and

marketing execution

Corporate

Marketing

Trend toward freeing up

marketing professionals

from execution tasks

Corporate

Procurement

Trend toward outsourcing non-core

internal procurement functions to

third party specialists

Everything from design

execution and procurement

to production management

and installation of

marketing materials

supporting the brand



Why Outsource Marketing Execution Services?

7

marketing procurement organizational

• Innovation

• Brand stewardship

• Speed to market

• Enhanced decision making

• Centralized knowledge &

continuity

• Execution within budget

• Increased line of sight

• Increased cost savings

• Increased spend visibility

• Streamlined processes

• Consistent data capture

• Enabling technology systems

• Leveraged buying

• Improved service levels

alongside heightened

efficiencies

• A new level of accountability

• Flexibility to support rapidly

changing business needs

growth of marketing channels and ecommerce has made it more difficult and costly for

companies to maintain a unified brand in-house



Our Investment Value Proposition


8

unique ability

to drive value for

clients

recurring

revenue from

diverse, blue-chip

client base

scalable

business model

aligned with client

interests

leader in

favorable market

inwk


Leader in Favorable Market


9

~$600B

Marketing procurement

increasingly becoming a non-

core function fit to be outsourced

Marketing Materials, POS, Direct

Mail + Packaging (1)

$250B+

Procurement outsourcing is

expected to continue growing

~12% per year

Business Process

Outsourcing (2)

(1) Source: Smithers Pira.

(2) Source: Everest Group (data is for managed procurement spend).

large, fragmented addressable market and growing BPO trend


Unique Ability to Drive Value for Clients

10

commerce

Short lead time and direct

access to global purchasing

execution

collaborate

Provides pivotal visibility

and encourages sharing

successful marketing ideas

procure

Utilize millions of objective

data records to source with

intelligence

approve

Easy on-demand ordering

with transparent reporting

and automated approvals


43 countries. 28 currencies. 13 languages.

9,000+ suppliers. 45,000+ daily external users.

cutting-edge technology with extensive real-time data

unmatched breadth of offering and supplier network on a global platform

achieve brand consistency and

high marketing impact across

comprehensive suite of services

buying power and domain

expertise enable significantly

lower costs for clients

creative

services

ecommerce

+ fulfillment

print

management

branded

merchandise

retail

environments

+ displays

events +

promotions

product

packaging


Recurring Revenue from Diverse, Blue-Chip Client Base

Managing non-newsprint purchasing supply chain for custom

publishing, direct mail, and field marketing collateral.

Global marketing across the entire marketing execution

spectrum – from print and retail displays to branded

merchandise, eCommerce, and events and promotions.

Global print sourcing partner including catalogs, retail

signage systems, event marketing, promotional

products, and direct mail.

Original enterprise client from 2005, focus is on

merchandising, commercial print, and eCommerce.

Manage marketing process & execution for POS,

merchandising, displays, barware and premiums across

portfolio.

Bringing Nike’s retail vision to a massive global audience via

retail experience design, manufacturing, inventory, and

distribution.

Working across three continents to manage print, events and

promotions, temporary and permanent retail display signage,

and fixtures.

Providing end-to-end solution including onsite creative

agency, commercial print, direct mail, and retail experiences.

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long term contracts;

high switching costs

~97%

retention rate

minimal client

concentration

largest account

<6% of sales

creates business

partnership; not

transactional relationship

~85% of sales from

enterprise clients

established relationships with large multinational firms


Case Study: Energizer

challenge

Energizer noticed delays in getting its merchandising materials to market as costs began to escalate. Energizer executives also needed tighter control of their global brand standards.

solution

InnerWorkings transformed Energizer’s global marketing execution across international retail locations - concept development, design, prototyping, engineering, sourcing, production, warehousing and global logistics of materials

InnerWorkings’ unique combination of expertise in brand delivery, global scale and underpinning proprietary technology enabled a total solution to complex challenges by consolidating its global procurement of merchandising materials through:

o Building one core display catalog that fits all retail environments worldwide

o Centralizing creative control of design and sourcing

o Launching an eCommerce platform to enable global purchasing from a single site

o Overhauling its end-to-end global in-store marketing supply chain

results

> 10+ percent savings on initial unit costs

> Reduced global merchandising program suppliers from 75+ to one

> Shortened time to market

12



Case Study: Nike

challenge

Nike needed a reliable, cost-effective ally to produce and deliver its Partner concept stores across Europe, the Middle East, and emerging markets.

solution

InnerWorkings kicked off this global retail program by creating, producing, and installing Nike’s largest store in Spain and the largest Partner store in Europe. As the program’s scope grew, inwk:

o Engineered and procured materials in China

o Managed global logistics

o Launched an online ordering portal

results

> Installed and delivered 48 Partner stores throughout Europe, the Middle East, and emerging markets in only one year

> Additional stores slated for rollout

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Case Study: InterContinental Hotels Group

14

2009

InterContinental Hotels Group sought a centralized solution to its fragmented spend across brands such as Holiday Inn, Crown Plaza, and Hotel Indigo

Multi-year enterprise agreement in North and South America included global management of the first and fastest growing loyalty program in the hotel industry

2013

Built on the success in the Americas to include Europe, the Middle East,

Greater China, and Asia Pacific

Sourcing and procuring all categories of print and promotional materials

throughout all of IHG’s global regions

today

InnerWorkings developed and manages an integrated solution to serve IHG’s

marketing inventory management needs beginning with creative design to

strategic sourcing to e-commerce technology and global fulfillment services

InnerWorkings’ eStore interface facilitates the processing of more than 12,000

orders from 71 percent of the IHG hotels annually, representing improvements

in savings to the group’s franchise community, better speed-to-market, and

improved compliance with brand standards



Scalable Business Model Aligned with Client Interests


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….adds new opportunities to create value for clients at low incremental cost to INWK

$10MMin new business

with…

23%gross profit

margin requires…

~$1.2MMin overhead

10% - 12%contribution

margin1

result

global platform with increasing category and industry vertical expertise….

7service

offerings

40+countries

served

2011 Today

2service

offerings

16countries

served

1. Contribution margin represents impact after fully ramped


Economic Model Illustration

16

ENTERPRISE CLIENT ECONOMICS BEFORE/AFTER ENGAGING INWK

Before After Savings %

Product Costs $10,000,000 $8,800,000 $1,200,000 12%

Overhead Costs (staffing) $500,000 $0 $500,000 100%

Total Procurement Costs $10,500,000 $8,800,000 $1,700,000 16%

INWK ECONOMICS

Revenue $8,800,000

Cost of Goods Sold ($6,776,000)

Gross Profit $2,024,000

Gross Margin% 23%

Overhead Costs (people, technology,

commissions, etc.) ($1,144,000)

Contribution Profit $ 880,000

Contribution Margin% 10%


1. Contribution profit represents impact after fully ramped

gain-share structure aligns interests; incentivizes surpassing client savings goals

Gross margin achieved through

our technology, scale, category

and vertical expertise, and

supplier network


technology

& data

breadth of

offering

client vertical

experience

global

platform

aligned

w/client

interests

internal marketing +

procurement

advertising agencies

large manufacturers

marketing procurement

outsourcing firms

Premier Provider in a Fragmented Marketplace


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inwk | we make marketing happen investor presentation | 2016

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Successful Organic Growth Strategy

growth within existing clients

wins in 2015

Creative Services Product Packaging

Geography Creative Services

Retail Environment +

Displays & Branded

Merchandise

Print Management

new contracts

Direct Mail +

Marketing CollateralRetail Environment +

Displays

Print Management

Creative Services

+ strong pipeline of prospects


$400

$482

$632

$790

$891

$1,000

2009 2010 2011 2012 2013 2014 2015 2016 EST.

Track Record of Consistent Revenue Growth


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$mm

over $135MM in new organic contractual awards in 2015

$1,060 - $1,080$1,029

Note: 2015 revenue grew 9.3% in constant currency; 2016 revenue expected to increase 6% - 8% in constant currency and excluding two small exited markets.


Financial Outlook


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$mm except EPS

2013 2014 2015 2016 Outlook

Revenue $891 $1,000 $1,029 $1,060 - $1,080

Gross Margin% 22.7% 22.9% 23.3% 23.0% - 23.5%

Non-GAAP Adjusted

EBITDA$26.9 $42.8 $51.9 $58.0 - $62.0

Non-GAAP Adjusted

EBITDA Margin%3.0% 4.3% 5.1% 5.5% – 5.7%

Non-GAAP Diluted EPS $0.09 $0.20 $0.25 $0.30 - $0.33

please see appendix for GAAP to Non-GAAP reconciliation

double-digit adj. EBITDA and EPS growth; significant margin expansion

2016 revenue expected to grow 6% - 8% excluding currency impacts and exited operations


Current Strategy and Long Term Objectives


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target 10% organic revenue growth

margin improvement

achieve 8% adjusted EBITDA margin

(5.1% in 2015)

current strategy

long term objectives

organic growth

focused on enterprise

contracts

cross sell new services

and geographies

inside of existing

accounts

cost and operational

discipline


Significant Opportunity to Grow Earnings and Cash Flow


22

• increase share of wallet through breadth of product categories – leverage scale and

suite of offerings to increase customer penetration

• new business win momentum – $135MM in new contracts in 2015

• global scale and investments in technology support higher-margin growth

operating leverage

• add to high-performing team

• strengthen go-to-market and pricing strategies

• improve sales tools and revamp sales compensation

maximize pipeline through

improved sales productivity

• align supplier terms with clients to create a more unified supply chain

• incorporate working capital terms in new client contracts

• enhance billing practices to lower DSOs

improve working capital

management

• executing organic growth strategy; no acquisitions made in last 2 years

• no contingent consideration payments expected beyond 2017

declining earnout

obligations

• align infrastructure with clients

• fully integrate prior acquisitions

• accelerate best practice improvement

recently-announced

global realignment

expected to improve

annual profitability by

$5.0-$6.0 million


Capital Allocation Priorities


23

capital investment invest in sales platform and technology – highest expected return on capital

excess cashrepurchase shares to opportunistically return cash

to shareholders

balance sheet optimize financial flexibility, access to debt, and cost of capital

cash total debttotal debt /

LTM adj. EBITDA

as of December 30, 2015 $30.8 million $99.3 million 1.9x


We Make Marketing Happen


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Through comprehensive technology

platform, an extensive supplier network,

substantial procurement data, buying

power, and deep domain expertise

how we do it

To be the preeminent marketing

execution partner for the world’s

most famous brands through our

comprehensive capabilities,

industry-leading technology,

strategic geographic footprint,

and focus on innovation

We empower clients to maximize the

return on marketing investment by

delivering substantial savings,

shorter lead times, greater brand

consistency, and a new level of

control and transparency across the

marketing supply chain

our vision

the value we bring

inwk

Global Fortune 1000 corporations,

primarily in the CPG, retail,

financial services, pharma, media

and not-for-profit verticals

who we serve

appendix


GAAP to Non-GAAP Reconciliation 2013 - 2015


26

($ in thousands) Year Ended December 31,

2015 2014 2013

Net income (loss) ($32,338) $44,462 ($8,660)

Income tax expense (benefit) 12,665 2,313 (556)

Total other expense 7,678 5,118 3,236

Depreciation and amortization 17,472 17,723 13,664

Stock-based compensation expense 5,873 5,352 4,733

Change in fair value of contingent consideration (270) (37,874) (31,331)

Goodwill impairment charge 37,539 — 37,908

Intangible asset impairment charges 202 2,710 —

Restructuring and other charges 1,053 — 4,322

Restatement-related professional fees — 2,093 —

Payments to former owner of PG — — 2,624

e-Lynxx fees — — 961

Secured asset reserve 2,023 940 —

Non-GAAP Adjusted EBITDA $51,896 $42,838 $26,901

($ in thousands) Year Ended December 31,

2015 2014 2013

Net income (loss) ($32,338) $44,462 ($8,660)

Change in fair value of contingent consideration, net

of tax (282) (37,571) (29,658)

Goodwill impairment charge 37,539 — 37,908

Intangible asset impairment charges, net of tax 153 1,657 —

Restructuring and other charges, net of tax 873 — 2,615

Venezuela remeasurement charges 1,521 — —

Secured asset reserve, net of tax 1,239 568 —

Restatement-related professional fees, net of tax — 1,266 —

Payments to former owner of PG — — —

e-Lynxx fees — — 625

Realignment-related income tax charges 4,685 — 1,617

Adjusted net income 13,389 10,382 4,447

Weighted average shares outstanding, diluted 53,515 53,104 50,875

Non-GAAP Diluted Earnings Per Share $0.25 $0.20 $0.09


Our Global Leadership


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Eric D. Belcher, President and CEOEric is a well-established expert on the subject of improving the efficiency, effectiveness and transparency of the global marketing supply chain. A frequent guest speaker at major industry conferences, he is

regularly sought out by industry media and has also testified before the U.S. Congress to help define marketing execution best practices. Prior to joining InnerWorkings, Eric served as Chief Operating Officer

and Chief Financial Officer of manroland North America, and before that, he led project teams at Marakon Associates, an international management consulting firm. He currently serves on the Advisory Board for

the Polsky Center for Entrepreneurship at Chicago Booth

Jeffrey P. Pritchett, Executive Vice President and CFOJeff previously served as Head of the Finance Practice and a Senior Operating Executive at Cerberus Operations and Advisory Company, LLC (COAC), an affiliate of Cerberus Capital Management, L.P. At

COAC, Jeff supported the firm’s portfolio companies in driving strategic initiatives and improving their financial and operating performance, while also leading operational diligence for new Cerberus investments.

He served as Interim Executive Chairman of the Board of TransCentra, Inc. and as a Board Member of Remington Outdoors Company, Inc. in conjunction with his role at COAC. Prior to joining COAC, Jeff

served in numerous finance and strategy roles at Vertis Communications, a marketing communications company, where he ended his tenure as Interim CFO

Ron Provenzano, General CounselRon previously spent 8 years as Deputy General Counsel of RR Donnelley, a printing and print services company, where his responsibilities included leading the international legal function and advising

management and the board in governance, risk and compliance matters. Ron has also served as General Counsel of Huron Consulting Group, a business consulting company and Vice President, Associate

General Counsel of Interpublic Group, one of the largest global advertising and marketing services agencies in the world

Alex Castroneves, President and Managing Director, LATAM, EMEA, and APACAlex oversees all of our international business and focuses on growth, innovation, and exceptional client service. Alex joined the company in 2012, launching our Brazil office and then expanding our reach

throughout the entire Latin America region. Before joining InnerWorkings, Alex developed his professional career in large consumer goods corporations and business start-ups, working in key executive positions

in Latin America. He worked at A.T. Kearney Management Consulting as a Senior Principal and also served as a core member of the Consumer Goods & Retail Practice in the region

Pat McCusker, President, North AmericaPat manages our business in North America, driving growth and best-in-class service for our clients. Since joining InnerWorkings in 2011, Pat has held numerous sales and operations roles, including

developing new relationships across retail, financial services, and consumer goods clients. Prior to InnerWorkings, Pat was an Associate Partner with McKinsey & Company in the firm’s Chicago and London

offices where he primarily served B2C clients across retail, consumer goods, and technology sectors

Leigh Segall, Chief Marketing OfficerLeigh is responsible for all aspects of the company’s global marketing strategy. Prior to joining InnerWorkings, she was the Vice President of Marketing for Leapfrog Online, one of the nation’s largest digital

marketing companies. Leigh also spent seven years with SAVO, the leading sales enablement technology company in the U.S., where she built and oversaw its consulting practice and then moved on to lead

SAVO’s marketing function as Chief Marketing Officer. In addition, Leigh served as Executive Director and chief spokesperson for Youth Venture, a national not-for-profit organization based in Washington, DC

Rob Burkart, Chief Information Officer

Rob has led the Business Technology group since 2013. He ensures that we create, maintain and publish the technology that gives us valuable insights into the global marketing supply chain – and helps us

make smart data-driven decisions for our clients. Rob previously led sales, operations and forecasting groups for InnerWorkings, and prior to joining InnerWorkings in 2009, honed his experience in such diverse

industries as aerospace, building materials and electronics

Oliver Kimberley, Senior Vice President, Head of Global Client SolutionsOliver has more than 10 years of experience working in marketing execution, managed services, and outsourcing across the globe. Oliver’s focus is to work closely with new and existing clients to design custom

solutions to fit their needs using our people, best-in-class processes, and proprietary technology. Oliver oversees the Sourcing, Implementation, Training, and Supplier Relations groups globally that focus on

successful transitions and on client growth

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