Attached files
file | filename |
---|---|
8-K - FORM 8-K - CEB Inc. | c23923e8vk.htm |
Exhibit 99.1
Contact:
|
Richard S. Lindahl | |||
Chief Financial Officer | 1919 North Lynn Street | |||
(571) 303-6956 | Arlington, Virginia 22209 | |||
jconnor@executiveboard.com | www.exbd.com |
The
Corporate Executive Board Reports Third Quarter Results
Company Reports Revenue Growth of 9.6%, Contract Value Growth of
12.0%,
And Updates 2011 Guidance
Arlington, Virginia (October 31, 2011) - The Corporate Executive Board Company (CEB or the
Company) (NYSE: EXBD) today announces financial results for the third quarter and nine months
ended September 30, 2011. Revenues increased 9.6% to $122.9 million for the third quarter of 2011
from $112.1 million for the third quarter of 2010. Net income for the third quarter of 2011 was
$14.0 million, or $0.41 per diluted share, compared to $7.0 million, or $0.20 per diluted share,
for the same period of 2010. For the third quarter of 2010, adjusted net income was $14.8 million and non-GAAP diluted earnings
per share was $0.43, excluding the after tax effect of the non-cash
impairment loss relating primarily to a write-down of goodwill associated with our 2007 acquisition
of Toolbox.com.
For the first nine months of 2011, revenues were $356.9 million, a 10.9% increase from $321.9
million for the first nine months of 2010. Net income for the first nine months of 2011 was $35.7
million compared to $29.6 million for the same period in 2010. Diluted earnings per share for the
first nine months of 2011 was $1.03, an increase from $0.86 for the same period in 2010. Adjusted
net income was $37.4 million and non-GAAP diluted earnings per share was $1.09 for the first nine
months of 2010, excluding the after tax effect of the non-cash impairment loss described above.
Contract Value at September 30, 2011 increased 12.0% to $472.2 million, compared to $421.6 million
at September 30, 2010, as a result of increased sales to new and existing members. Wallet
retention rate at September 30, 2011 increased to 102% from 96% at September 30, 2010 as a result
of improved pricing, renewals, and sales of additional products and services. Contract Value per
member institution increased 4.4% at September 30, 2011 to $85,804 from $82,171 at September 30,
2010.
The Companys third quarter financial results reflect solid growth and keep us on course to reach
our annual objectives, said Thomas Monahan, Chairman and Chief Executive Officer. Our teams
sustained global momentum by successfully connecting our uniquely valuable services to critical
member needs even in the face of increased market volatility. Our updated outlook incorporates
year-to-date outcomes, acquisition costs, and timing of deferred revenue recognition. Looking
ahead, we currently expect to enter 2012 in a position of strength based on 2011 bookings and
anticipated returns on our operating investments.
OUTLOOK FOR 2011
The Companys updated 2011 annual guidance is as follows: Revenues of $485 to $495 million;
Non-GAAP diluted earnings per share of $1.50 to $1.60; Depreciation and amortization expense of
approximately $17 to $18 million; capital expenditures of approximately $11 million; and an
Adjusted EBITDA margin of between 21.5% and 22.5%.
SHARE REPURCHASE
During the third quarter of 2011, the Company repurchased approximately 1,268,000 shares of its
common stock at a total cost of $40.3 million. The total remaining authorization pursuant to the
Companys stock repurchase program was $28.1 million at September 30, 2011. Repurchases may be
made through open market purchases or
privately negotiated transactions. The timing of repurchases and the exact number of shares of
common stock to be repurchased will be determined by CEBs management, in its discretion, and will
depend upon market conditions and other factors. The program will be funded using the Companys
cash on hand and cash generated from operations.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying tables, as well as earnings discussions, may include a
discussion of EBITDA, Adjusted EBITDA, Adjusted net income, and Non-GAAP diluted earnings per
share, which are non-GAAP financial measures provided as a complement to the results provided in
accordance with accounting principles generally accepted in the United States of America (GAAP).
The term EBITDA refers to a financial measure that we define as earnings before interest income,
net, depreciation and amortization, and provision for income taxes. The term Adjusted EBITDA
refers to a financial measure that we define as earnings before interest income, net, depreciation
and amortization, provision for income taxes, impairment loss, costs associated with exit
activities, restructuring costs, and gain on acquisition. The term Adjusted net income refers to
net income excluding the after tax effects of impairment loss, costs associated with exit
activities, restructuring costs, and gain on acquisition. Non-GAAP diluted earnings per share
refers to diluted earnings per share excluding the after tax per share effects of impairment loss,
costs associated with exit activities, restructuring costs, and gain on acquisition.
These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP,
but they should not be considered a substitute for, or superior to, GAAP results. We intend to
continue to provide these non-GAAP financial measures as part of our future earnings discussions
and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our
financial reporting.
A reconciliation of these non-GAAP measures to GAAP results is provided below.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income |
$ | 14,006 | $ | 6,989 | $ | 35,704 | $ | 29,602 | ||||||||
Interest income, net |
(146 | ) | (317 | ) | (644 | ) | (1,116 | ) | ||||||||
Depreciation and amortization |
3,974 | 4,517 | 12,820 | 15,291 | ||||||||||||
Provision for income taxes |
8,121 | 4,460 | 23,833 | 20,568 | ||||||||||||
EBITDA |
$ | 25,955 | $ | 15,649 | $ | 71,713 | $ | 64,345 | ||||||||
Impairment loss |
| 12,645 | | 12,645 | ||||||||||||
Adjusted EBITDA |
$ | 25,955 | $ | 28,294 | $ | 71,713 | $ | 76,990 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income |
$ | 14,006 | $ | 6,989 | $ | 35,704 | $ | 29,602 | ||||||||
Adjustments, net of tax: |
||||||||||||||||
Impairment loss |
| 7,789 | | 7,789 | ||||||||||||
Adjusted net income |
$ | 14,006 | $ | 14,778 | $ | 35,704 | $ | 37,391 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP diluted earnings per share |
$ | 0.41 | $ | 0.20 | $ | 1.03 | $ | 0.86 | ||||||||
Adjustments, net of tax: |
||||||||||||||||
Impairment loss |
| 0.23 | | 0.23 | ||||||||||||
Non-GAAP diluted earnings per share |
$ | 0.41 | $ | 0.43 | $ | 1.03 | $ | 1.09 | ||||||||
With respect to the Companys 2011 annual guidance, reconciliations of Non-GAAP diluted earnings
per share to GAAP diluted earnings per share, Adjusted net income to net income, and Adjusted
EBITDA to Net income as projected for 2011 are not provided because the Company cannot, without
unreasonable effort, determine the components of GAAP diluted earnings per share and net income to
provide reconciliations to Non-GAAP diluted earnings per share and Adjusted EBITDA for its 2011
fiscal year with certainty at this time.
We believe that EBITDA, Adjusted EBITDA, Adjusted net income, and Non-GAAP diluted earnings per
share are relevant and useful supplemental information for our investors. We use these non-GAAP
financial measures for internal budgeting and other managerial purposes, when publicly providing
the Companys business outlook and as a measurement for potential acquisitions. A limitation
associated with EBITDA and Adjusted EBITDA is that they do not reflect the periodic costs of
certain capitalized tangible and intangible assets used in generating revenues in our business.
Management evaluates the costs of such tangible and intangible assets through other financial
measures such as capital expenditures. Management compensates for these limitations by also relying
on the comparable GAAP financial measure of Income from operations, which includes depreciation and
amortization.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements using words such as estimates, expects, anticipates,
projects, plans, intends, believes, forecasts and variations of such words or similar expressions
are intended to identify forward-looking statements. In addition, statements about anticipated
future financial results, such as our 2011 annual guidance, are forward-looking statements. You
are hereby cautioned that these statements are based upon our expectations at the time we make them
and may be affected by important factors including, among others, the factors set forth below and
in our filings with the U.S. Securities and Exchange Commission, and consequently, actual
operations and results may differ materially from the results discussed in the forward-looking
statements. Our expectations, beliefs and projections are expressed in good faith and we believe
there is a reasonable basis for them. Factors that could cause actual results to differ materially
from those indicated by forward-looking statements include, among others, our dependence on
renewals of our membership-based services, the sale of additional programs to existing members and
our ability to attract new members, our potential failure to adapt to changing member needs and
demands, our potential inability to attract and retain a significant number of highly skilled
employees, risks associated with the results of restructuring plans, fluctuations in operating
results, our potential inability to protect our intellectual property rights, our potential
exposure to loss of revenue resulting from our unconditional service guarantee, exposure to
litigation related to our content, various factors that could affect our estimated income tax rate
or our ability to use our existing deferred tax assets, changes in estimates or assumptions used to
prepare our financial statements, our potential inability to make, integrate and maintain
acquisitions and investments, the amount and timing of the benefits expected from acquisitions and
investments, and our potential inability to effectively anticipate, plan for and respond to
changing economic and financial markets conditions, especially in light of ongoing uncertainty in
the worldwide economy and possible volatility of our stock price. These and other factors are
discussed more fully in the Managements Discussion and Analysis of Financial Condition and
Results of Operations and Risk Factors sections of our filings with the U.S. Securities and
Exchange Commission, including, but not limited to, our 2010 Annual Report on Form 10-K. The
forward-looking statements in this press release are made as of October 31, 2011, and we undertake
no obligation to update any forward-looking statements, whether as a result of new information,
future events, or otherwise.
ABOUT THE CORPORATE EXECUTIVE BOARD COMPANY
By identifying and building on the proven best practices of the worlds best companies, CEB helps
senior executives and their teams drive corporate performance. CEB offers comprehensive data
analysis, research and advisory services that align to executive leadership roles and key recurring
decisions. CEB tools, insights, and
analysis empower member companies to focus efforts, move quickly, and address emerging and enduring
business challenges with confidence. CEBs client and member network includes 85 percent of the
Fortune 500, 50 percent of the Dow Jones Asian Titans, and 70 percent of the FTSE 100. It spans
more than 50 countries, 5,500 individual organizations, and 225,000 business professionals. For
more information, visit www.exbd.com.
THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights and Other Operating Statistics
(Unaudited)
Financial Highlights and Other Operating Statistics
(Unaudited)
Selected | Three Months Ended | Selected | Nine Months Ended | |||||||||||||||||||||
Percentage | September 30, | Percentage | September 30, | |||||||||||||||||||||
Changes | 2011 | 2010 | Changes | 2011 | 2010 | |||||||||||||||||||
Financial Highlights (GAAP, as reported, in thousands, except per share data): |
||||||||||||||||||||||||
Revenues |
9.6 | % | $ | 122,852 | $ | 112,113 | 10.9 | % | $ | 356,925 | $ | 321,865 | ||||||||||||
Net income |
$ | 14,006 | $ | 6,989 | $ | 35,704 | $ | 29,602 | ||||||||||||||||
Basic earnings per share |
$ | 0.41 | $ | 0.20 | $ | 1.04 | $ | 0.87 | ||||||||||||||||
Diluted earnings per share |
$ | 0.41 | $ | 0.20 | $ | 1.03 | $ | 0.86 | ||||||||||||||||
Weighted average shares outstanding: |
||||||||||||||||||||||||
Basic |
34,134 | 34,292 | 34,299 | 34,211 | ||||||||||||||||||||
Diluted |
34,381 | 34,532 | 34,648 | 34,488 | ||||||||||||||||||||
Other Operating Statistics: |
||||||||||||||||||||||||
Contract Value (in thousands)* |
12.0 | % | $ | 472,245 | $ | 421,646 | ||||||||||||||||||
Member institutions |
7.3 | % | 5,504 | 5,131 | ||||||||||||||||||||
Contract Value per member institution |
4.4 | % | $ | 85,804 | $ | 82,171 | ||||||||||||||||||
Wallet retention rate** |
102 | % | 96 | % |
* | We define Contract Value, at the end of the quarter, as the aggregate annualized
revenue attributed to all agreements in effect on such date, without regard to the remaining
duration of any such agreement. |
|
** | We define Wallet retention rate, at the end of the quarter, as the total current
year Contract Value from prior year members as a percentage of the total prior year Contract
Value. |
THE CORPORATE EXECUTIVE BOARD COMPANY
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 122,852 | $ | 112,113 | $ | 356,925 | $ | 321,865 | ||||||||
Cost and expenses: |
||||||||||||||||
Cost of services |
41,892 | 40,071 | 126,199 | 112,866 | ||||||||||||
Member relations and marketing |
36,608 | 32,222 | 108,196 | 88,157 | ||||||||||||
General and administrative |
15,706 | 14,334 | 49,456 | 44,614 | ||||||||||||
Depreciation and amortization |
3,974 | 4,517 | 12,820 | 15,291 | ||||||||||||
Impairment loss |
| 12,645 | | 12,645 | ||||||||||||
Total costs and expenses |
98,180 | 103,789 | 296,671 | 273,573 | ||||||||||||
Income from operations |
24,672 | 8,324 | 60,254 | 48,292 | ||||||||||||
Other (expense) income, net (1) |
(2,545 | ) | 3,125 | (717 | ) | 1,878 | ||||||||||
Income before provision for
income taxes |
22,127 | 11,449 | 59,537 | 50,170 | ||||||||||||
Provision for income taxes |
8,121 | 4,460 | 23,833 | 20,568 | ||||||||||||
Net income |
$ | 14,006 | $ | 6,989 | $ | 35,704 | $ | 29,602 | ||||||||
Basic earnings per share |
$ | 0.41 | $ | 0.20 | $ | 1.04 | $ | 0.87 | ||||||||
Diluted earnings per share |
$ | 0.41 | $ | 0.20 | $ | 1.03 | $ | 0.86 | ||||||||
Weighted average shares outstanding |
||||||||||||||||
Basic |
34,134 | 34,292 | 34,299 | 34,211 | ||||||||||||
Diluted |
34,381 | 34,532 | 34,648 | 34,488 | ||||||||||||
Percentages of Revenues |
||||||||||||||||
Cost of services |
34.1 | % | 35.7 | % | 35.4 | % | 35.1 | % | ||||||||
Member relations and marketing |
29.8 | % | 28.7 | % | 30.3 | % | 27.4 | % | ||||||||
General and administrative |
12.8 | % | 12.8 | % | 13.9 | % | 13.9 | % | ||||||||
Depreciation and amortization |
3.2 | % | 4.0 | % | 3.6 | % | 4.8 | % | ||||||||
Income from operations |
20.1 | % | 7.4 | % | 16.9 | % | 15.0 | % | ||||||||
EBITDA (2) |
21.1 | % | 14.0 | % | 20.1 | % | 20.0 | % | ||||||||
Adjusted EBITDA (2) |
21.1 | % | 25.2 | % | 20.1 | % | 23.9 | % |
(1) | Other (expense) income, net for the three months ended September 30, 2011
includes $0.1 million of interest income, net, a $0.7 million foreign currency loss, and a
$1.9 million decrease in the fair value of deferred compensation plan assets. Other (expense)
income, net for the three months ended September 30, 2010 includes $0.3 million of interest
income, net, $0.8 million of foreign currency gain, a $1.1 million increase in the fair value
of deferred compensation plan assets and $0.9 million of other income. Other
(expense) income, net for the nine months ended September 30, 2011 includes a $1.3 million
decrease in the fair value of deferred compensation plan assets and $0.6 million of interest
income, net. Other (expense) income, net for the nine months ended September 30, 2010
includes $1.1 million of interest income, net, and a $0.8 million increase in the fair value
of deferred compensation plan assets. |
|
(2) | See NON-GAAP FINANCIAL MEASURES for further explanation. |
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, 2011 | Dec. 31, 2010 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 96,922 | $ | 102,498 | ||||
Marketable securities |
3,314 | 10,114 | ||||||
Membership fees receivable, net |
92,039 | 141,322 | ||||||
Deferred income taxes, net |
17,594 | 18,727 | ||||||
Deferred incentive compensation |
15,086 | 15,710 | ||||||
Prepaid expenses and other current assets |
16,135 | 10,388 | ||||||
Total current assets |
241,090 | 298,759 | ||||||
Deferred income taxes, net |
39,222 | 43,524 | ||||||
Marketable securities |
7,314 | 10,850 | ||||||
Property and equipment, net |
81,922 | 83,140 | ||||||
Goodwill |
32,275 | 29,266 | ||||||
Intangible assets, net |
15,853 | 13,828 | ||||||
Other non-current assets |
32,693 | 30,782 | ||||||
Total assets |
$ | 450,369 | $ | 510,149 | ||||
Liabilities and stockholders equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 35,661 | $ | 52,439 | ||||
Accrued incentive compensation |
28,693 | 40,719 | ||||||
Deferred revenues |
235,097 | 251,200 | ||||||
Total current liabilities |
299,451 | 344,358 | ||||||
Deferred income taxes |
1,833 | 679 | ||||||
Other liabilities |
83,213 | 82,296 | ||||||
Total liabilities |
384,497 | 427,333 | ||||||
Total stockholders equity |
65,872 | 82,816 | ||||||
Total liabilities and
stockholders equity |
$ | 450,369 | $ | 510,149 | ||||
THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 35,704 | $ | 29,602 | ||||
Adjustments to reconcile net income to net cash flows provided by
operating activities: |
||||||||
Impairment loss |
| 12,645 | ||||||
Depreciation and amortization |
12,820 | 15,291 | ||||||
Deferred income taxes |
4,027 | (6,039 | ) | |||||
Share-based compensation |
6,144 | 5,301 | ||||||
Excess tax benefits from share-based compensation arrangements |
(1,821 | ) | | |||||
Foreign currency translation gain |
(70 | ) | | |||||
Amortization of marketable securities premiums, net |
166 | 288 | ||||||
Changes in operating assets and liabilities: |
||||||||
Membership fees receivable, net |
50,169 | 39,337 | ||||||
Deferred incentive compensation |
520 | (1,655 | ) | |||||
Prepaid expenses and other current assets |
(5,812 | ) | (652 | ) | ||||
Other non-current assets |
(1,172 | ) | (4,001 | ) | ||||
Accounts payable and accrued liabilities |
(15,251 | ) | (21,287 | ) | ||||
Accrued incentive compensation |
(12,227 | ) | 1,352 | |||||
Deferred revenues |
(16,036 | ) | (29,464 | ) | ||||
Other liabilities |
920 | 6,421 | ||||||
Net cash flows provided by operating activities |
58,081 | 47,139 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property and equipment |
(7,641 | ) | (4,225 | ) | ||||
Acquisition of businesses, net of cash acquired |
(5,791 | ) | (12,957 | ) | ||||
Cost method investment |
(150 | ) | | |||||
Maturities of marketable securities |
9,845 | 22,382 | ||||||
Net cash flows (used in) provided by investing activities |
(3,737 | ) | 5,200 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from the exercise of common stock options |
1,587 | | ||||||
Proceeds from the issuance of common stock under the
employee stock purchase plan |
369 | 333 | ||||||
Acquisition of businesses, contingent consideration |
(3,655 | ) | | |||||
Credit facility issuance costs |
(542 | ) | | |||||
Excess tax benefits from share-based compensation arrangements |
1,821 | | ||||||
Purchases of treasury shares |
(43,295 | ) | (1,225 | ) | ||||
Payment of dividends |
(15,430 | ) | (11,283 | ) | ||||
Net cash flows used in financing activities |
(59,145 | ) | (12,175 | ) | ||||
Effect of exchange rates on cash |
(775 | ) | | |||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(5,576 | ) | 40,164 | |||||
Cash and cash equivalents, beginning of period |
102,498 | 31,760 | ||||||
Cash and cash equivalents, end of period |
$ | 96,922 | $ | 71,924 | ||||