Chicago-based Top 40 distributor InnerWorkings (asi/168860) posted a net loss of nearly $76.2 million in 2018 on the back of revenue that was down 1.4% year-over-year to $1.12 billion. The news, announced this week, follows a string of difficult quarterly earnings reports for the firm, which experienced a net loss of $29.26 million in 2018’s fourth quarter amid sales that declined nearly 4% from Q4 2017 to $294.2 million.

According to company financial data released Tuesday, InnerWorkings’ registered a loss of $1.46 per share in 2018 – down from earnings per share of about $0.30 in 2017. For the fourth quarter, loss-per-share amounted to $0.57 – a fall from Q4 2017’s loss of $0.01.

Don Pearson, CFO, InnerWorkings

“Fourth quarter net loss includes $20.9 million of goodwill and other asset impairment charges, $5.5 million of inventory and other operational adjustments impacting gross profit, and $2.7 million of bad debt expense,” InnerWorkings said in a statement. “The impacts to gross profit and bad debt mainly result from unprofitable client relationships that have been terminated.”

The firm noted that adjusted EBITDA was down too, dropping from $10.8 million in the fourth quarter of 2017 to $1.3 million in last year’s Q4.

Despite the downbeat results, InnerWorkings’ believes brighter days are ahead. The distributorship anticipates that 2019 revenue will grow 3% to 5%, reaching the range of $1.15 billion to $1.18 billion. Adjusted EBITDA for the year could come in between $42 million and $46 million – which would represent annual performance growth of 45% to 58%, the company said. Non-GAAP diluted earnings per share guidance for 2019 is expected to be $0.20 to $0.24.

Advancing an aggressive cost reduction plan in 2019 and beyond will help make InnerWorkings more profitable, said Don Pearson, InnerWorkings’ recently appointed chief financial officer.

Rich Stoddart, CEO, InnerWorkings

“At year-end 2018, we had actioned nearly $15 million of the $20 million in previously announced cost reduction measures, with another $3 million being actioned in the first quarter of 2019,” Pearson said. “But this original scope is not enough as our cost to serve our clients is still too high…We have launched a second phase of further profit enhancement opportunities...We expect to realize $3 million of cost savings from this phase in the second half of 2019 and another $12 million in 2020 and beyond. These initiatives are designed to put in place a cost structure and operating platform that will deliver sustainable profitable growth.”

Meanwhile, InnerWorkings’ said there’s cause for optimism because of business wins, too. Additional work from new and existing clients earned during 2018 amounts to $136 million of annual revenue at full run-rate, the company said. More than $40 million was awarded year-to-date in 2019. Multi-year agreements in 2019 span across five clients, including an expansion with global premium spirits producer Beam Suntory and a new relationship with one of the world's top commercial and retail banks.

“It has become clear that translating this growth into returns for our shareholders requires a multi-year transformation to drive sustainable operating leverage in our business,” said InnerWorkings CEO Rich Stoddart. “Through the progress we've made on our cost reduction plan, we've also developed a better understanding of what is required to realize the full potential of this business.”

With estimated 2017 North American promotional products revenue of $147 million, InnerWorkings ranked 15th on Counselor’s latest list of the largest distributors in the industry.