Attached files
| file | filename |
|---|---|
| 8-K - GARTNER INC | c68378_8k.htm |
| EX-3.1 - GARTNER INC | c68378_ex3-1.htm |
Exhibit 99.1
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CONTACT:
Brian Shipman
Group Vice President, Investor Relations
+1 203 316 3659
brian.shipman@gartner.com
Gartner Reports Financial Results for Fourth Quarter and Full Year 2011
Contract Value $1,116 Million, Highest in Gartner’s History, Up 14% YoY
Full Year 2011 Diluted Earnings per Share $1.39, Up 45% YoY
Full Year 2011 Free Cash Flow $213.6 Million, Up 11% YoY
STAMFORD, Conn., February 7, 2012 — Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for fourth quarter and full year 2011, and provided its preliminary financial outlook for full year 2012.
For fourth quarter 2011, total revenue was $427.7 million, up 12% year-over-year. Foreign exchange had only a negligible impact. Net income increased 23% while Normalized EBITDA increased 17% to $84.8 million (see “Non-GAAP Financial Measures” for a discussion of Normalized EBITDA). Diluted earnings per share was $0.46 in fourth quarter 2011 compared to $0.37 for fourth quarter 2010. Diluted earnings for fourth quarter 2010 included acquisition related charges, net of tax, of $(0.02) per share compared to zero in the fourth quarter of 2011.
For full year 2011, total revenue was $1,468.6 million, an increase of 14%, and net income was $136.9 million. Total revenue increased 11% year-over-year excluding the foreign exchange impact. Normalized EBITDA was $279.4 million, an increase of 21% over 2010. Diluted earnings per share was $1.39 compared to $0.96 in 2010. Diluted earnings per share for 2011 included acquisition-related charges, net of tax, of $(0.04) per share compared to $(0.14) in 2010. Free Cash Flow was $213.6 million in 2011, an increase of 11% over 2010 (see “Non-GAAP Financial Measures” for a discussion of Free Cash Flow).
Gene Hall, Gartner’s chief executive officer, commented, “We achieved record levels of new business and contract value, maintained strong client and wallet retention, and many of our other key business metrics continued their strong performance during the fourth quarter. We delivered double-digit revenue, Normalized EBITDA, EPS, and operating cash flow growth for the full year 2011. As we look ahead to 2012, we are excited about the opportunity we see in the market, and we expect to deliver another year of double-digit growth as measured by our key business metrics.”
Business Segment Highlights
Research
Revenue for fourth quarter 2011 was $262.6 million, up 14% over the fourth quarter of 2010 excluding the impact of foreign exchange. Gross contribution margin improved 2 percentage points to 67%. For full year 2011, revenue was $1,012.1 million, up 14% year-over-year excluding the impact of foreign exchange. Gross contribution margin increased 2 points year-over-year, to 67%.
-more-
Contract value was $1,116 million at December 31, 2011, up 14% compared to December 31, 2010 and the highest reported contract value in Gartner’s history. Foreign exchange had a negligible impact on contract value. Client and wallet retention rates for fourth quarter 2011 were 82% and 99%, respectively, compared to 83% and 98% in fourth quarter 2010.
Consulting
Revenue for fourth quarter 2011 was $88.6 million, a decline of 1% over fourth quarter 2010 excluding the impact of foreign exchange. Gross contribution margin was 41%. For full year 2011, revenue was $308.0 million, a decline of 1% year-over-year excluding the impact of foreign exchange. Gross contribution margin for full year 2011 was 37%.
Fourth quarter 2011 utilization was 68% and billable headcount was 481. Backlog was $100.6 million at December 31, 2011.
Events
Revenue for fourth quarter 2011 was $76.4 million, up 23% compared to fourth quarter 2010 excluding the impact of foreign exchange. Gross contribution margin was 49%. For full year 2011, revenue was $148.5 million, up 21% compared to 2010 excluding the impact of foreign exchange. Gross contribution margin for full year 2011 was 45%.
During fourth quarter 2011, the Company held 12 events with 20,500 attendees. During full year 2011, the Company held 60 events with 42,748 attendees.
Cash Flow and Balance Sheet Highlights
Gartner generated operating cash of $79.1 million during fourth quarter 2011 and $255.6 million for full year 2011. Additions to property, equipment and leasehold improvements (“Capital Expenditures”) were $18.2 million in fourth quarter 2011 and $42.0 million for full year 2011. Free Cash Flow for full year 2011 was $213.6 million, an increase of 11% over 2010. (See “Non-GAAP Financial Measures” for a discussion of Free Cash Flow).
The Company had $142.7 million of cash at December 31, 2011 and almost $377.0 million of borrowing capacity on its revolving credit arrangement. During 2011, the Company deployed its free cash flow principally to repurchase 5.9 million of its common shares. The Company’s remaining share repurchase authorization is $293.0 million as of December 31, 2011. As of December 31, 2011, the Company had total debt of $200.0 million compared to $220.2 million at year-end 2010.
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Gartner, Inc. |
page 2 |
Preliminary Financial Outlook for 2012
Gartner also provided its preliminary financial outlook for 2012:
Projected Revenue
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($ in millions) |
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2012 Projected |
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% Change |
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Research |
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$1,130 |
– |
1,150 |
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12% |
– |
14% |
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Consulting |
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310 |
– |
330 |
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1% |
– |
7% |
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Events |
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160 |
– |
170 |
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8% |
– |
14% |
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Total Revenue |
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$1,600 |
– |
1,650 |
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9% |
– |
12% |
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Projected Earnings and Cash Flow |
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($ in millions, except per share data) |
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2012 Projected |
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% Change |
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Diluted Earnings Per Share |
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$ 1.63 |
– |
$1.79 |
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17% – 29% |
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Normalized EBITDA (1) |
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$ 315 |
– |
$ 335 |
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13% – 20% |
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Operating Cash Flow (2) |
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$ 285 |
– |
305 |
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12% – 19% |
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Capital Expenditures (2) |
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(46 |
) – |
(48 |
) |
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Free Cash Flow (1) |
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$ 239 |
– |
257 |
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12% – 20% |
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(1) |
See “Non-GAAP Financial Measures” below for a discussion of Normalized EBITDA and Free Cash Flow. |
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(2) |
Capital expenditures includes approximately $16.0 million of estimated payments we will make for the renovation of our Stamford headquarters facility, which are contractually reimbursable from the landlord. The accounting impact of these renovation payments increases both cash flow from operations and capital expenditures (investing activities) by the same amount and as a result has no net impact on Free Cash Flow. |
Conference Call and Investor Day Information
Gartner has scheduled a conference call at 8:30 a.m. eastern time on Tuesday, February 7, 2012 to discuss the Company’s financial results. The conference call will be available via the Internet by accessing the Company’s website at http://investor.gartner.com or by dial-in. The U.S. dial-in number is 888-680-0878 and the international dial-in number is 617-213-4855 and the participant passcode is 67418089. The question and answer session of the conference call will be open to investors and analysts only. A replay of the webcast will be available for approximately 90 days following the call.
The Company will also host an Investor Day for institutional investors and sell-side analysts beginning at 8:00 a.m. eastern time on Thursday, February 16, 2012 in New York City. The Investor Day is by invitation and registration is required. Analysts and investors interested in attending should contact our Investors Relations department prior to February 16. It will also be webcast live via the Internet on the Company’s web site at http://investor.gartner.com and a replay will be available following the event.
Annual Meeting of Stockholders
Gartner will hold its 2012 Annual Meeting of Stockholders at 10:00 a.m. eastern time on Thursday, June 7, 2012, at the Company’s offices in Stamford, Connecticut.
About Gartner
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in
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Gartner, Inc. |
page 3 |
high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner to clients in over 12,400 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,975 associates, including 1,295 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.
Non-GAAP Financial Measures
Normalized EBITDA: Represents operating income excluding depreciation, accretion on obligations related to excess facilities, amortization, stock-based compensation expense, and acquisition-related charges. We believe Normalized EBITDA is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results. Investors are cautioned that Normalized EBITDA is not a financial measure defined under generally accepted accounting principles and as a result is considered a non-GAAP financial measure. We provide this measure to enhance the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future. It should not be construed as an alternative to any other measure of performance determined in accordance with generally accepted accounting principles.
Free Cash Flow: Represents cash provided by operating activities plus cash acquisition and integration payments less additions to property, equipment and leasehold improvements (“Capital Expenditures”). We believe that Free Cash Flow is an important measure of the recurring cash generated by the Company’s core operations that is available to be used to repurchase stock, repay debt obligations and invest in future growth through new business development activities or acquisitions.
Safe Harbor Statement
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Gartner, Inc. |
page 4 |
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GARTNER, INC. |
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Condensed Consolidated Statements of Operations |
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(Unaudited; in thousands, except per share amounts) |
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Three
Months Ended |
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Twelve
Months Ended |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenues: |
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Research |
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$ |
262,633 |
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$ |
230,552 |
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14 |
% |
$ |
1,012,062 |
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$ |
865,000 |
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17 |
% |
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Consulting |
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88,640 |
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89,321 |
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-1 |
% |
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308,047 |
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302,117 |
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2 |
% |
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Events |
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76,421 |
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62,431 |
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22 |
% |
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148,479 |
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121,337 |
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22 |
% |
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Total revenues |
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427,694 |
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382,304 |
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12 |
% |
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1,468,588 |
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1,288,454 |
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14 |
% |
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Costs and expenses: |
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Cost of services and product development |
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180,282 |
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164,959 |
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9 |
% |
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608,755 |
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552,238 |
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10 |
% |
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Selling, general and administrative |
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170,816 |
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154,796 |
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10 |
% |
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613,707 |
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543,174 |
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13 |
% |
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Depreciation |
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6,396 |
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6,131 |
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4 |
% |
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25,539 |
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25,349 |
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1 |
% |
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Amortization of intangibles |
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737 |
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2,531 |
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-71 |
% |
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6,525 |
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10,525 |
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-38 |
% |
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Acquisition and integration charges |
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— |
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813 |
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-100 |
% |
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— |
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7,903 |
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-100 |
% |
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Total costs and expenses |
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358,231 |
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329,230 |
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9 |
% |
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1,254,526 |
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1,139,189 |
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10 |
% |
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Operating income |
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69,463 |
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53,074 |
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31 |
% |
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214,062 |
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149,265 |
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43 |
% |
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Interest expense, net |
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(2,104 |
) |
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(6,047 |
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>-100 |
% |
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(9,967 |
) |
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(15,616 |
) |
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-36 |
% |
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Other (expense) income, net |
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(417 |
) |
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(300 |
) |
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39 |
% |
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(1,911 |
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436 |
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>100 |
% |
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Income before income taxes |
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66,942 |
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46,727 |
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43 |
% |
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202,184 |
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134,085 |
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51 |
% |
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Provision for income taxes |
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21,918 |
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10,033 |
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>100 |
% |
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65,282 |
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37,800 |
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73 |
% |
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Net income |
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$ |
45,024 |
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$ |
36,694 |
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23 |
% |
$ |
136,902 |
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$ |
96,285 |
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42 |
% |
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Income per common share: |
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Basic: |
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$ |
0.48 |
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$ |
0.38 |
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26 |
% |
$ |
1.43 |
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$ |
1.01 |
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42 |
% |
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Diluted: |
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$ |
0.46 |
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$ |
0.37 |
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24 |
% |
$ |
1.39 |
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$ |
0.96 |
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45 |
% |
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Weighted average shares outstanding: |
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Basic |
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94,691 |
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95,895 |
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-1 |
% |
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96,019 |
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95,747 |
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0 |
% |
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Diluted |
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97,037 |
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99,567 |
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-3 |
% |
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98,846 |
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99,834 |
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-1 |
% |
BUSINESS
SEGMENT DATA
(Dollars
in thousands)
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Revenue |
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Direct |
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Gross |
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Contribution |
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Three Months Ended 12/31/11 |
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Research |
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$ |
262,633 |
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$ |
86,917 |
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$ |
175,716 |
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67 |
% |
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Consulting |
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88,640 |
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52,623 |
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36,017 |
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41 |
% |
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Events |
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76,421 |
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38,689 |
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37,732 |
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49 |
% |
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TOTAL |
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$ |
427,694 |
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$ |
178,229 |
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$ |
249,465 |
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58 |
% |
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Three Months Ended 12/31/10 |
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Research |
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$ |
230,552 |
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$ |
81,333 |
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$ |
149,219 |
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65 |
% |
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Consulting |
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89,321 |
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51,658 |
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37,663 |
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42 |
% |
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Events |
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62,431 |
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29,234 |
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33,197 |
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53 |
% |
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TOTAL |
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$ |
382,304 |
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$ |
162,225 |
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$ |
220,079 |
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58 |
% |
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Twelve Months Ended 12/31/11 |
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Research |
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$ |
1,012,062 |
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$ |
329,926 |
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$ |
682,136 |
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67 |
% |
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Consulting |
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308,047 |
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193,209 |
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114,838 |
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37 |
% |
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Events |
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148,479 |
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82,214 |
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66,265 |
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45 |
% |
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TOTAL |
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$ |
1,468,588 |
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$ |
605,349 |
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$ |
863,239 |
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59 |
% |
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Twelve Months Ended 12/31/10 |
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Research |
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$ |
865,000 |
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$ |
300,473 |
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$ |
564,527 |
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65 |
% |
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Consulting |
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302,117 |
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|
180,232 |
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|
121,885 |
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40 |
% |
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Events |
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121,337 |
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65,453 |
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55,884 |
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46 |
% |
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TOTAL |
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$ |
1,288,454 |
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$ |
546,158 |
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$ |
742,296 |
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58 |
% |
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SELECTED STATISTICAL DATA
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December
31, |
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December
31, |
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Research contract value |
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$ |
1,115,801 |
(a) |
$ |
977,710 |
(a) |
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Research client retention |
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82 |
% |
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83 |
% |
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Research wallet retention |
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99 |
% |
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98 |
% |
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Research client organizations |
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12,427 |
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11,601 |
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Consulting backlog |
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$ |
100,564 |
(a) |
$ |
100,839 |
(a) |
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Consulting—quarterly utilization |
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68 |
% |
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66 |
% |
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Consulting billable headcount |
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481 |
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473 |
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Consulting—average annualized revenue per billable headcount |
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$ |
454 |
(a) |
$ |
419 |
(a) |
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Events—number of events for the quarter |
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12 |
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12 |
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Events—attendees for the quarter |
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20,500 |
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18,194 |
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(a) Dollars in thousands. |
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SUPPLEMENTAL INFORMATION (in thousands, except per share amounts)
Reconciliation - Operating income to Normalized EBITDA (a):
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Three Months Ended
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Twelve Months
Ended |
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2011 |
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2010 |
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2011 |
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2010 |
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Net income |
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$ |
45,024 |
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$ |
36,694 |
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$ |
136,902 |
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$ |
96,285 |
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Interest expense, net |
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2,104 |
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6,047 |
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9,967 |
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15,616 |
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Other expense (income), net |
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417 |
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300 |
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1,911 |
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(436 |
) |
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Tax provision |
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21,918 |
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10,033 |
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65,282 |
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37,800 |
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Operating income |
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$ |
69,463 |
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$ |
53,074 |
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$ |
214,062 |
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$ |
149,265 |
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Normalizing adjustments: |
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Stock-based compensation expense (b) |
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8,114 |
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9,336 |
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32,864 |
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32,634 |
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Depreciation, accretion, and amortization (c) |
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7,193 |
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8,777 |
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32,329 |
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36,475 |
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Pre-acquisition deferred revenue (d) |
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42 |
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522 |
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193 |
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4,095 |
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Acquisition and integration charges (e) |
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— |
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813 |
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— |
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7,903 |
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Normalized EBITDA |
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$ |
84,812 |
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$ |
72,522 |
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$ |
279,448 |
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$ |
230,372 |
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(a) |
Normalized EBITDA is based on GAAP operating income adjusted for certain normalizing adjustments. |
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(b) |
Consists of charges for stock-based compensation awards. |
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(c) |
Includes charges for amortization of intangibles related to AMR Research and Burton Group of $0.7 million and $2.5 million for the three months ended December 31, 2011 and 2010, respectively, and $6.5 million and $10.1 million for the twelve months ended December 31, 2011 and 2010, respectively. |
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(d) |
Consists of non-cash fair value adjustments on pre-acquisition AMR Research and Burton Group deferred revenue. These amounts were amortized ratably over the life of the underlying contract. |
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(e) |
Includes non-recurring cash charges incurred to acquire and integrate the acquisitions of AMR Research and Burton Group, such as legal, consulting, severance, and other costs. |
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SUPPLEMENTAL INFORMATION continued (in thousands)
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Selected Balance Sheet Data |
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(unaudited and preliminary) |
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December 31, |
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2011 |
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2010 |
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Cash and cash equivalents |
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$ |
142,739 |
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$ |
120,181 |
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Fees receivable, net |
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421,033 |
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364,818 |
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Total assets |
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1,379,872 |
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1,285,658 |
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Deferred revenues |
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611,647 |
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523,263 |
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Total current and long-term debt |
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200,000 |
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220,156 |
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Total liabilities |
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1,198,088 |
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1,098,602 |
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Total stockholders’ equity |
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181,784 |
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187,056 |
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Selected Cash Flow Data |
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(unaudited and preliminary) |
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Twelve Months Ended |
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December 31, |
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2011 |
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2010 |
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Cash provided by operating activities |
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$ |
255,566 |
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$ |
205,499 |
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Cash paid for capital expenditures |
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41,954 |
(a) |
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21,694 |
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Cash paid for treasury stock |
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211,986 |
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99,820 |
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Cash payments on debt, net |
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20,156 |
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113,627 |
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(a) 2011 includes $9.5 million of expenditures related to the rennovation of our Stamford headquarters facility. These amounts are reimbursable by our landlord. |
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Reconciliation - Cash Provided by Operating Activities to Free Cash Flow (a): |
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(unaudited and preliminary) |
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Twelve Months Ended |
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December 31, |
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2011 |
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2010 |
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Cash provided by operating activities |
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$ |
255,566 |
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$ |
205,499 |
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Adjustments: |
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Cash acquisition and integration payments |
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— |
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8,003 |
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Cash paid for capital expenditures |
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(41,954 |
) |
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(21,694 |
) |
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Free Cash Flow |
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$ |
213,612 |
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$ |
191,808 |
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(a) Free cash flow is based on cash provided by operating activities determined in accordance with GAAP plus cash acquisition and integration payments less additions to capital expenditures. |
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