InnerWorkings' CEO Discusses Q1 2013 Results - Earnings Call Transcript

May.10.13 | About: InnerWorkings, Inc. (INWK)

InnerWorkings Inc. (NASDAQ:INWK)

Q1 2013 Results Earnings Call

May 10, 2013 11:00 AM ET

Executives

Joe Busky - Chief Financial Officer

Eric Belcher - Chief Executive Officer

Analysts

George Sutton - Craig Hallum

Matthew Kempler - Sidoti & Company

Nate Brochmann - William Blair

Kevin Steinke - Barrington Research

Operator

Good day, ladies and gentlemen. And welcome to the InnerWorkings, Inc. Quarterly -- First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions)

I would now like to introduce your host for today's program, Mr. Joe Busky, Chief Financial Officer. Please go ahead

Joe Busky

Thanks, John, and good evening, everyone. And thank you for joining us on our first quarter 2013 earnings call. This is Joe Busky. I am Chief Financial Officer at InnerWorkings, and joining me on the call today is our Chief Executive Officer, Eric Belcher.

Before we begin though, I’d like to note that this call will include forward-looking statements related to future results that are made pursuant to the Safe Harbor provisions of the Federal Securities laws.

These statements are subject to a variety of risks, uncertainties and assumptions that may cause actual results to differ materially from those stated or implied by the forward-looking statements.

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. Listeners to the call are advised to review our SEC filings, including the risk factors contained in our most recent Form 10-K.

This call will discuss, among other financial performance measures, non-GAAP adjusted EBITDA and non-GAAP adjusted operating cash flow, which are non-GAAP financial performance measures.

Please refer to the company’s earnings release issued yesterday for a reconciliation of these non-GAAP measures to the nearest comparable GAAP measures. And this call is intended for investors and analysts only and may not be reproduced in the media, in whole or in part without our prior consent.

Eric will lead off today by discussing first quarter activities and then I’ll spend a few minutes on our financial results.

So, with that, I’m going to turn the call over to Eric now.

Eric Belcher

Great. Hi. Thank you, Joe, and good morning, everyone. Before we turn our attention to our overall business, let me start off this morning with some background on our announcement few weeks ago regarding the loss in spending from one our largest customers.

The spending loss was triggered by our customer’s assets sales of large portion of its business to a private equity firm. A new senior management team was properly brought in and the company went through a major restructuring.

Our work was transferred to a firm within the new management team had a previous business relationship with. This was by no means the results of our performance, in fact we were exceeding our service and savings level targets.

Going forward, we expect to continue serving the client's business that was not part of the assets sale and of course, we’ll be there to assist our client with any other support they may require.

While the revenue loss is obviously disappointing in our view it’s an isolated event and has no impact on our value proposition and growth prospects. We are proud of our 98% retention rate of enterprise clients. We have blue chip clients who serve as great reference in nearly every industry vertical and we are often recognized by our clients through our excellent.

As an example, last week, Advance Auto Parts named us a vendor of the year for 2012. InnerWorkings was selected for this honor from among the thousands of great providers to their business and our services for this retailer were recently extended, as well as expanded.

John Deere just named InnerWorkings to their supplier Hall of Fame, a real honor awarded only to companies who meet demanding performance metrics for five consecutive years. And a few weeks ago, we received a prestigious display of the year award in conjunction with our client Pernod Ricard by the leading global association of retail marketing.

Our company culture is one where we take particular pride in success of our clients business, with hundreds of our professionals now working on site in a full-time dedicated manner side by side with our key marketing stakeholders every single day. We offer not only industry expertise but a deep commitment for the success of their company.

Let’s move to our new business activity, today is strong as ever, just this week, we reached a new agreement with InterContinental Hotels Group significantly expand our scope of work. We had previously managed IHG's loyalty program materials, as well as several e-commerce sites for general marketing collateral ordered by their hotels in United States.

Our new contract is a global encompassing all categories of print, point-of-sale, and promotional items, and our business is already rapidly expanding into new areas around world like China.

We just signed a broad new long-term agreement with one of the largest non-profit healthcare organization in U.S., network of 13 hospitals located across the Midwest. We signed on with the major advertising agency in Mexico where we will be managing their client point-of-sale and promotional product needs throughout the country.

We just signed a long-term contract with Fortune 500 financial services firm headquartered in Texas to manage a component of their spend and last month, we contracted with one of the world’s largest mobile communications providers to manage all of their in-store displays, signage and retail activation materials in Italy.

It’s a great new roaster of clients and we are really excited started about our pipeline of new business activity. For these reasons, we feel confident that we will achieve our organic enterprise revenue goals again this year.

I will now touch on three areas of the business where we’ve made significant investments in 2012, Brazil, China and inside sales. Starting with Brazil. If you recall just a year ago, we had no people and no clients in Brazil. Today, as a result of our new organic business development efforts, we are supporting a fantastic lineup of Fortune 500 clients including Unilever, Reckitt Benckiser and Procter & Gamble.

Our Brazilian operation is already break-even and our new business pipeline is healthy and growing. I couldn’t be more proud of our colleagues in São Paulo, their dedication and their passion, as well as our colleagues across Latin American markets where organic revenues grew 30% in the first quarter.

Next to China, our team is recently been able to expand few of our existing accounts from other countries into the Chinese market. And again, we are already operating at a break-even level in the country with high expectations for future growth. Additionally, we expect our growing sourcing operation in China to begin driving improvements in our global gross margins in the back half of the year.

And finally turning to our inside sales operations, targeting the small and medium-sized business market in the U.S. Well, this group continues to be the primary growth driver of our middle market segment. Our revenues fell short of our internal forecast for the first quarter. This sales channel is first of its kind in our industry and we continue to develop and improve upon our key performance metrics. We are optimistic about this growth area and we are forecasting a slightly longer investment period, reaching break-even on a quarterly basis in early 2014, as opposed to the third quarter of 2013.

And moving on to our M&A strategy, M&A continues to be approving vehicle for us for new talents, new capabilities and new geographies. We recently announced our acquisition of DB Studios, a California-based distributor of permanent point-of-purchase displays and retail fixtures. The acquisition provides us with additional creative design, engineering, and prototyping capabilities.

DB Studios has a great pipeline of companies such as AMC, Kroger and Burger King. We see tremendous potential to cross sell our complementary services across our collective client basis and those conversations are already underway.

I will turn it back over to Joe, now and then, be back in minute with some concluding remarks. Joe?

Joe Busky

All right. Thanks, Eric. In total, we generated revenue of $204.3 million in the first quarter of 2013, an increase of 8% compared with the first quarter of 12. Walking through the growth table, in the press release you can see that growth in the first quarter was primarily attributable to $18 million or 10% organic new enterprise account growth.

New customer organic enterprise growth would have been $25 million, absent the previously discussed spending loss from a large client. We had $2 million of organic inside sales middle market growth and $3 million of run rate revenue growth from acquisitions. The DB Studios acquisition announced on April 16 has little impact on Q1 since the deal was closed in March.

Total company and customer organic spend in the first quarter was down 3% versus Q1 2012. The EMEA and LatAm same customer impacts were as expected in the quarter. The U.S. same customer spend declined 3% versus our original expectation of a 1% increase. This swing of roughly $5 million of revenue, we believe is mostly a timing impact. That said, we expect U.S. same customer spending to be closer to flat for the full year now rather than up 1% and it’s already considered in our revised guidance.

Looking at our sales channel mix, enterprise revenue grew 8% in the first quarter of 2013 versus the year earlier period driven primarily by the successful ramp up of new account revenue. Middle market revenue grew by 9% compared to Q1 2012. And overall, our enterprise channel accounted for 79% of revenue during the quarter and middle-market 21% consistent with our mix in the first quarter of last year.

We had a 50 basis points increase in the first quarter growth margins compared to Q1 2012. Gross profit for the quarter was $26 million and gross margin percentage was 22.5% compared to $41.4 million and 22% in Q1 of last year. Q1 year-over-year of 50 basis points improvement in gross profit margin was driven by an increase in gain share resulting from our growing purchasing power with our suppliers. And as expected and consistent with 2012, we saw a seasonal sequential drop in gross profit margin percentage in Q4 to Q1, primarily due to enterprise middle market revenue mix.

Now, turning to expenses, SG&A expense was $41.7 million or 24.4% of revenue in the first quarter versus $33.1 million or 17.5% of revenue in the year-earlier period. In addition to the revenue shortfall in the quarter, there were two items impacting the SG&A margin increase this year.

The first was approximately $500,000 professional fees and second was $600,000 write-off, a prepaid commissions triggered by higher than forecasted turnover in our inside sales position. This impact was primarily driven by constant decisions to replace some lower performing sales reps and while this decision impacted our short-term results, it will prove to be right decision for us in the long-term as we continue to refine and improve our sales trend.

EBITDA adjusted to exclude stock-based compensation and contingent liability consideration expense was $5.8 million compared to $9.6 million in the year-earlier period. The worse-than-prior-year adjusted EBITDA figure is due to the same items impacting our SG&A margins, offset slightly by higher gross profit margins.

And GAAP diluted earnings per share for the quarter was $0.02 versus $0.07 in the year-earlier period. The decline is due to a $0.02 impact from the reduction in spending from a large client, a $0.01 impact from softer same customer spending in the U.S., a $0.02 impact from insight sales and $0.01 impact of foreign exchange loss primarily from a strengthening dollar versus the euro and other LatAm currencies related to short-term inter-company loans.

And moving on to our liquidity and balance sheet, we had a $6.4 million of adjusted operating cash inflow for the quarter as compared to an adjusted cash outflow of $3.3 million in Q1 of 2012. In the quarter, we kept VPOs flat while at the same time improving our DSOs. We have identified a number of operational DSO improvements to put in place with our customers and our production staff to allow us to continue to drive down DSOs in 2013.

At March 31, 2013, we increased our gross debt by $5 million from Q4 to $70 million due to the DB Studios’ acquisition down payment and $9 million of previous acquisition earn-out payments made in the quarter. These $9 million of previous acquisition earn-out payments represent approximately 70% of the expected full-year 2013 earn-out payment. Our debt-to-leverage ratio is at 1.6 times trailing 12 months adjusted EBITDA and we retained $90 million of available liquidity.

Now, looking at our guidance for 2013, we do reiterate our revised guidance provided on April 16 of $900 million to $930 million of revenue and $0.45 to $0.50 in earnings per share. This revised guidance includes the expectation to achieve our organic revenue growth targets, break-even are better than Brazil and China and some additional investment in inside sales.

Second quarter SG&A and EBITDA margins will still be down as costs associated with reduction and spending from a large client will be coming out slower than the loss revenue. Additionally, nearly all of the DB Studios revenue will occur in Q3 and Q4 due to the seasonal nature of that business.

Lastly, I want to briefly address the questions I have recently received from some investors regarding our financial reporting. As many of you already know, the SEC staff is required to undertake some level of review of each SEC periodic filings at least once every three years. These reviews typical result in staff issuing comment letters with questions or suggestions for enhanced disclosure or request for additional information so that the staff can better understand the company’s disclosure.

Last fall, we went through this process and submitted thorough responses to SEC staff comments. The SEC staff November 2012 letter informed us that their review is complete and there are no open issues related to that review. Comment, letters and responses are made available on the SEC’s website, now that the review process has been completed and both management and our audited financial statements have consistently concluded that we probably apply U.S. GAAP in our filings.

Now, let’s turn the call back now to Eric.

Eric Belcher

Okay. Thanks Joe. So to sum up, while this isn’t the start to the year, we anticipated for the reasons I mentioned at the beginning of my remarks. We’re focused on the bigger picture. Even with a significant loss of spending from a large client, we are still forecasting to grow by approximately 15% this year both on the top and bottom line.

With the majority of this growth being organic, our business fundamentals and our new enterprise pipeline are stronger than ever. We’re excited about the size and potential of our addressable global market and feel we are the best positioned company to capitalize on the opportunity.

Jonathan, let’s open up the call now for questions please.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of George Sutton, Craig Hallum. Your question please.

George Sutton - Craig Hallum

Thank you. Eric, as you’ve now had some time to deal with the loss of the customer. I'm just curious from a management perspective what sorts of things are you possibly doing differently or trying to do in reaction to this? And if you could look forward to six months, how will we have viewed this or maybe even a year from now how will we have viewed this loss? Is it truly, truly isolated situation?

Eric Belcher

Yeah. This isn’t the first time it’s happened to us, it’s the second. In 2007, I believe, 2007 or 2008, Joe?

Joe Busky

Right.

Eric Belcher

We had a situation where a business unit that we were supporting for Fortune 500 Company had an abrupt change in management and that new management brought in an agency that they had worked with in the past. And all in a matter of minutes we were out of that work.

So with the hundreds of accounts that we have to only have this happened a couple of times to us over a decade. I don't think that this is something we're going to see happen all that often. And George, we don't have any learnings, if you will, that would cause us to do anything different going forward.

We had an excellent contract in place, excellent performance and this is an isolated event. I will just point out quickly that we are still supporting this client. And I expect to be supporting this client for a very, very long period of time just not the portion that went a different way under the different ownership.

George Sutton - Craig Hallum

Okay. Thanks for that and Joe, when you talk about DSOs and they are starting to improve, what sorts of programs can you talk through with us that give you a sense that those could come down further?

Joe Busky

Yeah. Hey, George, the improvements actions that we are referring to are, there is really three areas that there's basic just nuts and bolts, basic tackling collection efforts that we can improve. We can improve, timed the invoice with our production staff and we can actually take some actions with our customers and the ones with their customers those are obviously the harder ones to effectuate. But we've got action plans in all three of those areas and it is nice to see what we are seeing some traction in those initiatives. We do think there's enough of those opportunities or actions left in DSOs as we move through 2013.

Eric Belcher

And George, I will add one other item to the three Joe mentioned and that is our contracts going forward with new clients. They have significantly better payment terms negotiated in them than some of our legacy contracts do. And so the combination of all four of those factors working together, we think we still got a lot of room to bring DSOs down in the future.

George Sutton - Craig Hallum

Great. That's helpful. Thanks, guys.

Eric Belcher

Thanks, George.

Operator

(Operator Instructions) Our next question comes from the line of Matthew Kempler from Sidoti & Company. Your question, please?

Matthew Kempler - Sidoti & Company

So you reviewed the number of wins in 2013. It sounds like the activity level was still strong. But when you put that in perspective, how does new bookings activity compared so far in ’13 versus in 2012?

Eric Belcher

We are on track with our goals for the year, which is slightly higher delivery of new organic enterprise price revenue growth in 2013. So, we are ahead of schedule. We are ahead of 2012 and we are on schedule. This wins that I mentioned on the call, they are call I would say fairly typical enterprise wins in terms of the duration of the contract, three, four years for original contract in terms of the economic, in terms of the number of personnel that we are going to be devoting to these clients, two, three, four people full-time on-site. And so we really like we were at and equally, importantly is not a little bit more importantly. We do think that there will be some more good news coming with respect to the pipeline in the later stage discussions where there maybe some large new enterprise clients.

Matthew Kempler - Sidoti & Company

Okay. Great. And on the middle-market side, it sounded like you are attributing the soft revenue to the inside salesforce versus speed on the street, is that correct?

Eric Belcher

Correct.

Matthew Kempler - Sidoti & Company

Okay. So can you review these investments that you have mentioned in the prepared remarks that you are making on the inside salesforce? And then what are the assumptions around growth for this segment for the rest of the year versus what we saw in the first quarter?

Eric Belcher

Well, the business grew about 50% in the first quarter over last year. We had expected a higher growth rate and so we've now readjusted slightly our expectation for the growth rate for the full year but not by a meaningful amount. In terms of what improvements and changes we are making, look, no ones ever developed a salesforce like this to use regeneration and to penetrate the smaller middle market. And there are lots of learnings going on. No ones done it before and we are relatively new at it.

So we continue to learn, improve and refine and make a lot of adjustments. And I will say that this is going to be a very difficult business for a competitor to replicate when they do attempt to because I’m sure, they will because this is going to be a large and successful business for us we believe going forward.

Matthew Kempler - Sidoti & Company

Okay. And then lastly on the commentary around the gross margin and the China sourcing that you are implementing there. Can you just touch on that strategy, and how meaningful it can possibly be to the gross margin down the road?

Eric Belcher

Sure. Well, the strategy for us, Matt is historically, we have relied on third parties for things like quality assurance and sourcing and production management oversight of the transit of goods and things of that nature. And we’ve decided as of last year that we were going to develop our own internal capabilities with a large group in Guangzhou.

And we've been building out that business fairly rapidly and we believe as a result, not only we are going to cut out intermediary fees but we will be able to more efficiently source and do many of the things that we do, primarily for point-of-sale materials and promotional product items that are sourced out of China. We are already starting to see some of the benefits of that in terms of quantifying exactly, how much of an improvement to our overall company gross profit margin. We’re not projecting a number publicly. We do have internal benchmarks that we are tracking them.

Matthew Kempler - Sidoti & Company

Okay. Thank you.

Eric Belcher

Thanks, Matt.

Operator

Thank you. (Operator Instructions) Our next question comes from the line of Nate Brochmann from William Blair. Your question, please?

Nate Brochmann - William Blair

Good morning, gentlemen.

Eric Belcher

Good morning, Nate.

Nate Brochmann - William Blair

Hey, wanted to talk a little bit, obviously not much you can do to control the loss of big customer like that and like you say, it is kind of an isolated incident Eric. But in terms of kind of going forward, the guidance obviously implies probably pretty darn big second half ramped and I assume some of that is a mix of revenue that you feel is going to be coming online in the pipeline and some of that from the acquisition. But I also assume a good chunk of that is kind of readjusting the cost structure a little bit.

Could you give us maybe some examples, or some things in terms of getting the vote of confidence on that second half ramp up in the earnings power? Again, whether it is from the sales side or the cost side, particularly given the fact that the U.S. kind of got a little unexpectedly weaker here or in terms of same customer spend in the first quarter?

Eric Belcher

Sure, Nate. So, most of the confidence that we have comes from growth in the business, not the cost side. That's said, there are specific areas of the business, which we are looking at in terms of cost reductions and making cost reductions. With the business model that has a highly variable component to it, although it is quite easy to see what areas of the business require some adjustments on the cost side. But for the most part, Nate, it is growth coming from new enterprise accounts landed at the end of last year which are ramping throughout this year.

You recall, we had quite a number of wins last year and those accounts did not fully contribute in 2012. We expect them to in 2013. It is the wins I just mentioned right now as well. It is the revenue from DB Studios as well. All of those equations and the growth coming from inside sales factor into situation where we have the business growing at about 15% this year over last year.

Joe Busky

Hey, Nate, and just to add on to that, recall that the investments that we've talked about, China, Brazil and Eric just mentioned inside sales, we did mentioned earlier that we expect those to become more profitable as the year goes. And in addition, you've got that seasonality in the European business, the former Production Graphic business that we saw last year. Q1 is the weakest quarter. Q4 is a particularly strong quarter for them. So all that combined with what Eric said will get you to that strong second-half seasonality.

Nate Brochmann - William Blair

Okay. Great. Thanks for that. And then just in terms of again the same customer spend in the U.S. kind of falling off a little bit and Joe, you mentioned you thought it was kind of timing. Could you explain that a little bit and give us a little bit of color in terms of why it is timing as opposed to maybe just something getting a little bit weaker or people pulling back on some spend?

Joe Busky

Yeah. Nate, recall that when we put the guidance out originally, the assumptions that I laid out that was the full company or total company same customer spend would be flat full year, but underneath of that you would see approximately 10% decline in Europe, 4% to 5% increase in LatAm and a 1% increase in the U.S. And as I said in the prepared remarks, in Europe and LatAm, the performance in Q1 was largely in line with those expectations.

In the U.S., however, we did see a fairly small decline around 3% in the U.S., which came mostly from the enterprise side of the business. And based on the visibility that we have into those clients’ budgets and the discussions we have with those clients on a very regular basis, we do believe that a good portion of that same customer spend decline is the timing related however not all of it. So that's why I pulled back slightly the assumption on the U.S. same customer spend to a full year flat as opposed to full year up 1%.

Joe Busky

Okay. These number, anyway, these number are fairly small, but in perspective, you were talking about $4 or $5 million in total same customer issue in the U.S.

Nate Brochmann - William Blair

Okay. That’s fair. I appreciate that thanks.

Eric Belcher

Thanks.

Operator

Thank you. Our next question comes from the line of Kevin Steinke from Barrington Research. Your questions please.

Kevin Steinke - Barrington Research

Good morning. You referenced in our prepared comments the expansion of the IHG contract. I was wondering how material that increases in term of revenue or maybe relative to the size of your other clients, does it vaulted into top 10, top 5 if it wasn’t already?

Eric Belcher

Kevin, the client will likely end up being a top 20 client. I don’t know that it would up being a top 10 client.

Kevin Steinke - Barrington Research

Okay.

Eric Belcher

One significant -- just one more comment on that contract. We made a decision, as you know, couple of years ago to develop a global platform and a contract win like this is something that would not have been possible 24 months ago and is one of the number of reasons but it’s one reason why we’re quite confident that we’re on the right track, with building out a global program.

We believe in the future we will see corporations rely on one provider, no matter where their brand appears to ensure that product is sourced intelligently and the brand adheres to the guidelines of the corporation. And so we’re really excited about the growth, of course, from the account that we just mentioned but equally important what that growth represents in terms of the global platform.

Kevin Steinke - Barrington Research

Okay. Great. And I wasn’t intrigued by the latest contract that you announced at least publicly, Young & Rubicam working with an advertising and marketing agency. And it sounds like you were going to be doing work for both of them as well as your clients. Do you see that as a source of gaining new enterprise clients. And do you feel like advertising and marketing firms is an area where you can do more work with those guys?

Eric Belcher

There is no doubt about it. We’ve always felt that way but until Y&R came our way in Mexico recently, we haven’t seen an agency take the bold move to acknowledge that there is a new best-in-class method of sourcing materials and get out of head of that, take advantage of it for the benefit of their clients and plug us in the engine that handles other procurement production management for their clients.

So, it’s the first of what we hope. We’ll end up being a large number of creative agency that will come our way. As of right now, the agencies are still doing a tremendous amount of buying albeit with no data or technology or real focus on that particular component of their business and view as perhaps more as competitive to there as solution. But this will be a great case study for how we can work, so that everybody benefits. The agency after retaining this work and their clients by receiving best-in-class in the way of efficient production of their marketing materials.

Kevin Steinke - Barrington Research

Okay. Great. Now, on the European pipeline, I know you’ve talked about the weaker economic environment there perhaps leading to a pick up in the new business pipeline --are you seeing that and is that part of your confidence going forward as well?

Eric Belcher

Yeah. We’ve got a solid pipeline in Europe. I spent a week in Europe with our team over there and couldn’t be more excited about what we have coming up in, not just Europe but EMEA and Latin America as well. Asia as well but in Europe the softness in their economic clearly creates additional lead on the behalf of corporations to find inefficiencies and save money, particularly in categories of indirect spend. And so it is helping us but we’ve got a great team there that’s performing well. We expect some good coming from Europe before long.

Kevin Steinke - Barrington Research

Okay. And is the rollout of the new technology system that you’re implanting globally, is that now complete?

Eric Belcher

It’s not complete. We’ve rolled out in some areas of the world. We did just put up with our new client win in Italy, our first automated eCommerce program which provides for really a number of features and benefits in the world of online -- automated ordering of printed materials, feature and benefits which just haven’t existed before.

And so we’ve just rolled that program out in last month with our first of all what we expected to be many, many eCommerce enrollment. The broader MIS system and procurement tool in using the data and the technology to source in all corners of the globe. That’s still under development and will be for the balance of this year.

Kevin Steinke - Barrington Research

Okay. I think Eric, you’ve referenced in the past once that technology is fully implemented, it could perhaps enable you to combine current manufacturing runs across clients. I was wondering again going back to margins if you’re able to be successful in doing some combined manufacturing runs. If that get you more leverage with your suppliers and if over the long term that something that could benefit margins on profitability?

Eric Belcher

No doubt about it and the amount of money that our clients saves. So we’ve seen it a Vista print perfect game running when it comes to small ticket items. For larger ticket items where the set-up costs are still a meaningful component the overall cost of manufacturing, no one has ever been able to in an automated fashion combined runs. You need to have two things in place to do, so right.

You need to have the volume first fall and that is something that we’ve been developing over the last decade. Now, we believe we are largest buyer of printed materials in the world.

Secondly, you need to have the technology that allows you to that and that is the technology that under development. Now, that’s just one component of the technology that we are developing. There is also technologies that relates to collaborative tools at allow clients to share within their company, displays in other materials that are going up in one region so that if in another region, there is a desire to piggyback on that purchase, driving down cost as well as gaining the idea of intellectual property of the creative work that's being developed in that other market that otherwise within our own companies they probably wouldn't have visibility into it. That’s our collaboration tool and there is a lot of other things, Kevin, involves in this new program, this new technology development that we've got. We think it’s a game changer.

Kevin Steinke - Barrington Research

Okay. Great. Thanks of all the color.

Eric Belcher

All right. Thanks Kevin.

Operator

Our next question is a follow-up question from the line of Matthew Kempler from Sidoti & Company. Your questions please.

Matthew Kempler - Sidoti & Company

Actually that’s been answered. Thank you.

Operator

Thank you. We’re out time for more questions. Thank you for joining us for the InnerWorkings first quarter earnings call. This does conclude the program. You may now disconnect. Good day.

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