Exhibit 99.1
| Contact: | Richard S. Lindahl | |||
| Chief Financial Officer | 1919 North Lynn Street | |||
| (571) 303-6956 | Arlington, Virginia 22209 | |||
| jconnor@executiveboard.com | www.executiveboard.com |
CEB REPORTS FOURTH QUARTER RESULTS AND PROVIDES 2013 GUIDANCE
CEB Reports Total Revenue Growth of 46.8%, Operating Cash Flow Growth of 21.8%,
CEB Segment Contract Value Growth of 12.5%, and Increases Quarterly Cash Dividend by 30%
ARLINGTON, Va. – Feb. 6, 2013 – The Corporate Executive Board Company (“CEB” or the “Company”) (NYSE: CEB) today announces financial results for the fourth quarter and year ended December 31, 2012. The financial results include the results of operations of SHL Group Holdings 1 Limited and its subsidiaries (“SHL”) for the entire fourth quarter of 2012 and from August 2, 2012 (the date of acquisition) for the full year of 2012. Revenue increased 46.8% to $193.7 million in the fourth quarter of 2012 from $132.0 million in the fourth quarter of 2011. Income from continuing operations in the fourth quarter of 2012 was $7.2 million, or $0.21 per diluted share, compared to $19.9 million, or $0.59 per diluted share, in the same period of 2011. Adjusted net income was $23.6 million and Non-GAAP diluted earnings per share were $0.69 in the fourth quarter of 2012 compared to $21.7 million and $0.65 in the same period of 2011, respectively.
In 2012, revenue was $622.7 million, a 28.5% increase from $484.7 million for 2011. Income from continuing operations in 2012 was $37.1 million, or $1.10 per diluted share, compared to $57.4 million, or $1.67 per diluted share, in 2011. Income from continuing operations in 2012 includes $24.5 million of costs primarily associated with the acquisition and integration of SHL. Adjusted net income was $86.2 million and Non-GAAP diluted earnings per share were $2.55 in 2012 compared to $64.3 million and $1.87 in 2011, respectively.
“CEB’s 2012 results reflect our success at helping our customers navigate a complex environment,” said Tom Monahan, Chairman and CEO. “Continued momentum across most of our businesses provides us with the resources to invest in growth and to return capital to shareholders. We are planning for a year of continued solid top-line growth, attractive margins, and increased investment to realize both short and long term growth opportunities.”
OUTLOOK FOR 2013
The Company’s 2013 annual guidance is as follows: Adjusted revenue of $825 to $845 million, revenue of $812 to $832 million, capital expenditures of $29 to $31 million, Non-GAAP diluted earnings per share of $2.85 to $3.15, an Adjusted EBITDA margin between 25.0% and 26.5%, and depreciation and amortization expense of $62 to $64 million. Adjusted revenue refers to revenue before the impact of the reduction of SHL revenue recognized in the post-acquisition period to reflect the adjustment of deferred revenue at the SHL acquisition date to fair value.
FOURTH QUARTER SEGMENT HIGHLIGHTS
Since the August 2012 acquisition of SHL, the Company has had two operating segments, CEB and SHL. The CEB segment includes the legacy CEB products and services provided to senior executives and their teams to drive corporate performance. SHL provides cloud-based solutions for talent assessment and talent mobility as well as professional services that support those solutions. Beginning with the fourth quarter of 2012, Personnel Decisions Research Institutes, Inc. (“PDRI”), a subsidiary acquired as part of the SHL acquisition, is included in the CEB segment. PDRI provides customized personnel assessment tools and services to various agencies of the U.S. Government. The Company’s segment disclosures for the year ended December 31, 2012 have been recast for comparative purposes to include PDRI in the CEB segment. The SHL segment represents the acquired SHL business except for PDRI.
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Feb. 6, 2013
CEB Segment
CEB segment revenue increased 18.0% in the fourth quarter of 2012 to $155.7 million from $132.0 million in the same period of 2011. There was $7.5 million of PDRI revenue included in CEB segment revenue in the fourth quarter of 2012. CEB segment Adjusted EBITDA in the fourth quarter of 2012 was $43.0 million compared to $40.6 million in the same period of 2011. CEB segment Adjusted EBITDA margin in the fourth quarter of 2012 was 27.6% of segment revenue compared to 30.8% in the fourth quarter of 2011.
CEB segment revenue increased 16.4% during 2012 to $564.1 million from $484.7 million in 2011. There was $12.6 million of PDRI revenue included in CEB segment revenue in 2012. CEB segment Adjusted EBITDA in 2012 was $154.6 million compared to $120.8 million in 2011. CEB segment Adjusted EBITDA margin in 2012 was 27.4% of segment revenue compared to 24.9% in 2011.
CEB segment Contract Value at December 31, 2012 increased 12.5% to $561.8 million compared to $499.4 million at December 31, 2011. CEB segment Wallet retention rate at December 31, 2012 was 102% compared to 100% at December 31, 2011. CEB segment Contract Value per member institution increased 6.0% at December 31, 2012 to $92,252 from $87,040 at December 31, 2011.
SHL Segment
SHL segment revenue was $38.1 million in the fourth quarter of 2012. SHL segment Adjusted EBITDA in the fourth quarter of 2012 was $11.6 million. SHL segment Adjusted EBITDA margin in the quarter was 24.8% of segment Adjusted revenue.
SHL segment revenue was $58.6 million in 2012. SHL segment Adjusted EBITDA in 2012 was $19.6 million. SHL segment Adjusted EBITDA margin in 2012 was 25.9% of segment Adjusted revenue.
SHL segment Wallet retention rate at December 31, 2012 was 97%. Unlike CEB members, a majority of SHL customers do not typically enter into contracts for fixed periods, so Contract Value is not a relevant operating statistic for the SHL segment.
QUARTERLY DIVIDEND
The Company announces that its Board of Directors has approved a cash dividend on its common stock for the first quarter of 2013 of $0.225 per share, an increase of 30% compared to the dividend paid in the fourth quarter of 2012. The Company will fund its dividend payments with cash on hand and cash generated from operations. The dividend is payable on March 29, 2013 to stockholders of record on March 15, 2013.
SHARE REPURCHASE
In the fourth quarter of 2012, the Company repurchased approximately 240,000 shares of its common stock at a total cost of $10.0 million. These purchases were made pursuant to the Company’s prior stock repurchase authorization, which expired on December 31, 2012.
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Feb. 6, 2013
On February 5, 2013, the Company’s Board of Directors approved a new $50 million stock repurchase program, which is authorized through December 31, 2014. 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 CEB’s management, in its discretion, and will depend upon market conditions and other factors. The program will be funded using the Company’s cash on hand and cash generated from operations.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying tables, as well as earnings discussions, include a discussion of Adjusted revenue, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, and Non-GAAP diluted earnings per share, all of 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”). Beginning in the third quarter of 2012, we changed our definition of these non-GAAP measures to provide enhanced insight into the financial performance of our business. Specifically, we are now adjusting for the impact of the deferred revenue fair value adjustment, share-based compensation, and amortization of acquisition related intangibles when calculating these metrics.
The term “Adjusted revenue” refers to revenue before impact of the reduction of SHL revenue recognized in the post-acquisition period to reflect the adjustment of deferred revenue at the SHL acquisition date to fair value (the “deferred revenue fair value adjustment”).
The term “Adjusted EBITDA” refers to a financial measure that we define as net income before loss from discontinued operations, net of provision for income taxes; interest expense, net; depreciation and amortization; provision for income taxes; the impact of the deferred revenue fair value adjustment; acquisition related costs; share-based compensation; costs associated with exit activities; restructuring costs; and gain on acquisition.
The term “Adjusted EBITDA margin” refers to Adjusted EBITDA as a percentage of Adjusted revenue.
The term “Adjusted Net Income” refers to net income before loss from discontinued operations, net of provision for income taxes and excludes the after tax effects of the impact of the deferred revenue fair value adjustment, acquisition related costs, share-based compensation, amortization of acquisition related intangibles, costs associated with exit activities, restructuring costs, and gain on acquisition.
“Non-GAAP Diluted Earnings per Share” refers to diluted earnings per share before the per share effect of loss from discontinued operations, net of provision for income taxes and excludes the after tax per share effects of the impact of the deferred revenue fair value adjustment, acquisition related costs, share-based compensation, amortization of acquisition related intangibles, costs associated with exit activities, restructuring costs, and gain on acquisition.
We believe that these non-GAAP financial measures are relevant and useful supplemental information for evaluating our results of operations as compared from period to period and as compared to our competitors. We use these non-GAAP financial measures for internal budgeting and other managerial purposes, when publicly providing the Company’s business outlook, and as a measurement for potential acquisitions. These non-GAAP financial measures are not defined in the same manner by all companies and therefore may not be comparable to other similar titled measures used by other companies.
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.
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A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in the accompanying tables.
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, all statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to our 2013 annual guidance. 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 (“SEC”), 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 failure to develop and sell, or expand sales markets for our SHL tools and services, our potential inability to attract and retain a significant number of highly skilled employees or successfully manage succession planning issues, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential inability to adequately maintain and protect our information technology infrastructure and our member and client data, potential confusion about our rebranding, including our integration of the SHL brand, 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, assumptions or revenue recognition policies used to prepare our consolidated 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 including our acquisition of SHL, our potential inability to effectively manage the risks associated with the indebtedness we incurred and the senior secured credit facilities we entered into in connection with our acquisition of SHL or any additional indebtedness we may incur in the future, our potential inability to effectively manage the risks associated with our international operations, including the risk of foreign currency exchange fluctuations, 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. Various important factors that could cause our actual results to differ from our expected or historical results are discussed more fully in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our filings with the SEC, including, but not limited to, our Quarterly Report on Form 10-Q filed in November 2012 and our 2011 Annual Report on Form 10-K. The forward-looking statements in this press release are made as of February 6, 2013, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
ABOUT CEB
CEB is the leading member-based advisory company. By combining the best practices of thousands of member companies with our advanced research methodologies and human capital analytics, we equip senior leaders and their teams with insight and actionable solutions to transform operations. This distinctive approach, pioneered by CEB, enables executives to harness peer perspectives and tap into breakthrough innovation without costly consulting or reinvention. The CEB member network includes more than 16,000 executives and the majority of top companies globally. CEB is also the global leader in cloud-based talent measurement and management solutions. For more information visit www.executiveboard.com.
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Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights and Other Operating Statistics
| Selected Percentage Changes |
Three Months Ended December 31, |
Selected Percentage Changes |
Year Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||
| Financial Highlights: |
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| (In thousands, except per share data) |
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| Revenue |
46.8 | % | $ | 193,720 | $ | 131,951 | 28.5 | % | $ | 622,654 | $ | 484,663 | ||||||||||||
| Income from continuing operations |
(63.9 | )% | $ | 7,181 | $ | 19,873 | (35.5 | )% | $ | 37,051 | $ | 57,447 | ||||||||||||
| Net income |
(57.6 | )% | $ | 7,181 | $ | 16,950 | (29.6 | )% | $ | 37,051 | $ | 52,655 | ||||||||||||
| Adjusted net income |
8.5 | % | $ | 23,561 | $ | 21,706 | 34.0 | % | $ | 86,153 | $ | 64,317 | ||||||||||||
| Earnings per diluted share from continuing operations |
(64.4 | )% | $ | 0.21 | $ | 0.59 | (34.1 | )% | $ | 1.10 | $ | 1.67 | ||||||||||||
| Non-GAAP diluted earnings per share |
6.2 | % | $ | 0.69 | $ | 0.65 | 36.4 | % | $ | 2.55 | $ | 1.87 | ||||||||||||
| Other Operating Statistics: |
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| CEB segment Contract Value (in thousands)* |
|
12.5 | % | $ | 561,823 | $ | 499,424 | |||||||||||||||||
| CEB segment Member institutions |
|
6.1 | % | 6,090 | 5,738 | |||||||||||||||||||
| CEB segment Contract Value per member institution |
|
6.0 | % | $ | 92,252 | $ | 87,040 | |||||||||||||||||
| CEB segment Wallet retention rate** |
|
102 | % | 100 | % | |||||||||||||||||||
| SHL segment Wallet retention rate*** |
|
97 | % | — | ||||||||||||||||||||
| * | We define “CEB segment 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. CEB segment Contract Value does not include the impact of PDRI. |
| ** | We define “CEB segment Wallet retention rate,” at the end of the quarter, as the total current year CEB segment Contract Value from prior year members as a percentage of the total prior year CEB segment Contract Value. The CEB segment Wallet retention rate does not include the impact of PDRI. |
| *** | We define “SHL segment Wallet retention rate,” at the end of the quarter on a constant currency basis, as the last current 12 months of total SHL segment Adjusted Revenue from prior year customers as a percentage of the prior 12 months of total SHL segment Adjusted Revenue. |
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Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenue (1) |
$ | 193,720 | $ | 131,951 | $ | 622,654 | $ | 484,663 | ||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of services |
72,606 | 43,302 | 223,766 | 167,258 | ||||||||||||
| Member relations and marketing |
54,497 | 35,923 | 178,204 | 142,324 | ||||||||||||
| General and administrative |
22,403 | 14,635 | 73,629 | 61,668 | ||||||||||||
| Acquisition related costs (2) |
3,243 | — | 24,529 | — | ||||||||||||
| Depreciation and amortization |
15,597 | 4,702 | 37,858 | 16,928 | ||||||||||||
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| Total costs and expenses |
168,346 | 98,562 | 537,986 | 388,178 | ||||||||||||
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| Operating profit |
25,374 | 33,389 | 84,668 | 96,485 | ||||||||||||
| Other (expense) income, net |
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| Interest income and other (3) |
(715 | ) | 731 | 1,834 | 372 | |||||||||||
| Interest expense |
(6,655 | ) | (192 | ) | (11,882 | ) | (550 | ) | ||||||||
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| Other (expense) income, net |
(7,370 | ) | 539 | (10,048 | ) | (178 | ) | |||||||||
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| Income from continuing operations before provision for income taxes |
18,004 | 33,928 | 74,620 | 96,307 | ||||||||||||
| Provision for income taxes |
10,823 | 14,055 | 37,569 | 38,860 | ||||||||||||
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| Income from continuing operations |
7,181 | 19,873 | 37,051 | 57,447 | ||||||||||||
| Loss from discontinued operations, net of provision for income taxes |
— | (2,923 | ) | — | (4,792 | ) | ||||||||||
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| Net income |
$ | 7,181 | $ | 16,950 | $ | 37,051 | $ | 52,655 | ||||||||
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| Basic earnings (loss) per share |
$ | 0.21 | $ | 0.51 | $ | 1.11 | $ | 1.55 | ||||||||
| Continuing operations |
0.21 | 0.60 | 1.11 | 1.69 | ||||||||||||
| Discontinued operations |
$ | — | $ | (0.09 | ) | $ | — | $ | (0.14 | ) | ||||||
| Diluted earnings (loss) per share |
$ | 0.21 | $ | 0.50 | $ | 1.10 | $ | 1.53 | ||||||||
| Continuing operations |
0.21 | 0.59 | 1.10 | 1.67 | ||||||||||||
| Discontinued operations |
$ | — | $ | (0.09 | ) | $ | — | $ | (0.14 | ) | ||||||
| Weighted average shares outstanding |
||||||||||||||||
| Basic |
33,463 | 33,298 | 33,462 | 34,071 | ||||||||||||
| Diluted |
33,802 | 33,583 | 33,821 | 34,419 | ||||||||||||
| Percentages of Adjusted Revenue |
||||||||||||||||
| Cost of services |
35.9 | % | 32.8 | % | 35.0 | % | 34.5 | % | ||||||||
| Member relations and marketing |
26.9 | % | 27.2 | % | 27.9 | % | 29.4 | % | ||||||||
| General and administrative |
11.1 | % | 11.1 | % | 11.5 | % | 12.7 | % | ||||||||
| Depreciation and amortization |
7.7 | % | 3.6 | % | 5.9 | % | 3.5 | % | ||||||||
| Operating profit |
12.5 | % | 25.3 | % | 13.2 | % | 19.9 | % | ||||||||
| Adjusted EBITDA (4) |
27.0 | % | 30.8 | % | 27.2 | % | 24.9 | % | ||||||||
| (1) | Net of an $8.7 million and $17.1 million reduction to reflect the impact of the SHL deferred revenue fair value adjustment in the three months and year ended December 31, 2012, respectively. |
| (2) | Acquisition related costs incurred in the year ended December 31, 2012 primarily relate to the acquisition and integration of SHL and include $14.7 million of transaction costs, a $5.1 million settlement of the forward currency contract that the Company put in place on July 2, 2012 to hedge its obligation to pay a portion of the gross SHL purchase price in British pound sterling, and $4.7 million of integration costs. |
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Feb. 6, 2013
| (3) | Interest income and other in the three months ended December 31, 2012 includes a $0.3 million increase in the fair value of deferred compensation plan assets, $0.1 million of interest income offset by $1.1 million of foreign currency losses. Interest income and other in the three months ended December 31, 2011 includes a $0.9 million increase in the fair value of deferred compensation plan assets and $0.2 million of interest income offset by a $0.4 million foreign currency loss. Interest income and other for the year ended December 31, 2012 includes a $1.7 million increase in the fair value of deferred compensation plan assets, $1.1 million of interest income and $0.3 million of other income offset by $1.3 million of foreign currency losses. Interest income and other for the year ended December 31, 2011 includes $1.2 million of interest income offset by $0.5 million decrease in the fair value of deferred compensation plan assets and a $0.3 million foreign currency loss. |
| (4) | See “NON-GAAP Financial Measures” for further explanation. |
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Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
Segment Operating Results
(In thousands)
| Three Months Ended December 31, |
Year
Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Adjusted Revenue (1) |
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| CEB segment |
$ | 155,660 | $ | 131,951 | $ | 564,062 | $ | 484,663 | ||||||||
| SHL segment (2) |
46,808 | — | 75,726 | — | ||||||||||||
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| $ | 202,468 | $ | 131,951 | $ | 639,788 | $ | 484,663 | |||||||||
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| Adjusted EBITDA (1) |
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| CEB segment |
$ | 43,037 | $ | 40,619 | $ | 154,600 | $ | 120,757 | ||||||||
| SHL segment |
11,598 | — | 19,589 | — | ||||||||||||
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| $ | 54,635 | $ | 40,619 | $ | 174,189 | $ | 120,757 | |||||||||
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| Adjusted EBITDA Margin (1) |
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| CEB segment |
27.6 | % | 30.8 | % | 27.4 | % | 24.9 | % | ||||||||
| SHL segment |
24.8 | — | 25.9 | — | ||||||||||||
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| 27.0 | % | 30.8 | % | 27.2 | % | 24.9 | % | |||||||||
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| (1) | See “Non-GAAP Financial Measures” for further explanation. |
| (2) | Includes an $8.7 million and $17.1 million increase to revenue to reflect the impact of the SHL deferred revenue fair value adjustment in the three months and year ended December 31, 2012, respectively. |
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CEB Reports Fourth Quarter Results and Provides 2013 Guidance
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Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 72,699 | $ | 133,429 | ||||
| Marketable securities |
— | 3,794 | ||||||
| Accounts receivable, net (1) |
239,599 | 154,255 | ||||||
| Deferred income taxes, net |
15,669 | 17,844 | ||||||
| Deferred incentive compensation |
19,984 | 17,330 | ||||||
| Prepaid expenses and other current assets |
19,068 | 21,624 | ||||||
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| Total current assets |
367,019 | 348,276 | ||||||
| Deferred income taxes, net |
283 | 20,490 | ||||||
| Marketable securities |
— | 6,722 | ||||||
| Property and equipment, net |
96,962 | 80,981 | ||||||
| Goodwill |
471,299 | 29,492 | ||||||
| Intangible assets, net |
335,191 | 13,581 | ||||||
| Other non-current assets |
51,495 | 34,150 | ||||||
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| Total assets |
$ | 1,322,249 | $ | 533,692 | ||||
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| Liabilities and stockholders’ equity |
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| Current liabilities: |
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| Accounts payable and accrued liabilities |
$ | 84,363 | $ | 46,067 | ||||
| Accrued incentive compensation |
53,927 | 37,884 | ||||||
| Deferred revenue (2) |
365,747 | 284,935 | ||||||
| Deferred income taxes, net |
3,537 | — | ||||||
| Debt – current portion |
12,479 | — | ||||||
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| Total current liabilities |
520,053 | 368,886 | ||||||
| Deferred income taxes |
58,850 | 1,436 | ||||||
| Other liabilities |
98,641 | 83,806 | ||||||
| Debt – long term |
528,280 | — | ||||||
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| Total liabilities |
1,206,747 | 454,128 | ||||||
| Total stockholders’ equity |
115,502 | 79,564 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 1,322,249 | $ | 533,692 | ||||
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| (1) | Includes accounts receivable, net, of $52.2 million at December 31, 2012 related to the SHL segment and PDRI. |
| (2) | Includes deferred revenue of $41.6 million at December 31, 2012 related to the SHL segment and PDRI. |
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CEB Reports Fourth Quarter Results and Provides 2013 Guidance
Page 10
Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended December 31, | ||||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 37,051 | $ | 52,655 | ||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
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| Loss on disposal of discontinued operations |
— | 3,503 | ||||||
| Depreciation and amortization |
37,858 | 17,710 | ||||||
| Amortization of credit facility issuance costs |
1,771 | — | ||||||
| Deferred income taxes |
(8,457 | ) | 21,211 | |||||
| Share-based compensation |
9,214 | 8,118 | ||||||
| Excess tax benefits from share-based compensation arrangements |
(2,101 | ) | (1,949 | ) | ||||
| Foreign currency translation loss |
229 | 330 | ||||||
| Amortization of marketable securities premiums, net |
68 | 194 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
(39,714 | ) | (13,088 | ) | ||||
| Deferred incentive compensation |
(2,644 | ) | (1,723 | ) | ||||
| Prepaid expenses and other current assets |
18,481 | (11,517 | ) | |||||
| Other non-current assets |
(7,444 | ) | (2,661 | ) | ||||
| Accounts payable and accrued liabilities |
405 | (5,464 | ) | |||||
| Accrued incentive compensation |
10,742 | (2,708 | ) | |||||
| Deferred revenue |
58,871 | 34,200 | ||||||
| Other liabilities |
7,825 | 1,440 | ||||||
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|
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| Net cash flows provided by operating activities |
122,155 | 100,251 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchases of property and equipment |
(17,498 | ) | (10,203 | ) | ||||
| Acquisition of businesses, net of cash acquired |
(669,086 | ) | (6,193 | ) | ||||
| Proceeds from sale of discontinued operations |
— | 1,779 | ||||||
| Cost method investment |
— | (150 | ) | |||||
| Maturities of marketable securities |
10,254 | 9,845 | ||||||
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|
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| Net cash flows used in investing activities |
(676,330 | ) | (4,922 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Proceeds from credit facility |
555,000 | — | ||||||
| Payments of credit facility |
(10,000 | ) | — | |||||
| Credit facility issuance costs |
(19,176 | ) | (542 | ) | ||||
| Proceeds from the exercise of common stock options |
1,423 | 1,660 | ||||||
| Proceeds from issuance of common stock under the employee stock purchase plan |
613 | 502 | ||||||
| Acquisition of businesses, contingent consideration |
— | (3,650 | ) | |||||
| Excess tax benefits from share-based compensation arrangements |
2,101 | 1,949 | ||||||
| Withholding of shares to satisfy minimum employee tax withholding for restricted stock units |
(3,767 | ) | (3,001 | ) | ||||
| Purchase of treasury shares |
(10,007 | ) | (40,307 | ) | ||||
| Payment of dividends |
(23,403 | ) | (20,426 | ) | ||||
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| Net cash flows provided by (used in) financing activities |
492,784 | (63,815 | ) | |||||
| Effect of exchange rates on cash |
661 | (583 | ) | |||||
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|
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| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(60,730 | ) | 30,931 | |||||
| Cash and cash equivalents, beginning of year |
133,429 | 102,498 | ||||||
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| Cash and cash equivalents, end of year |
$ | 72,699 | $ | 133,429 | ||||
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- MORE -
CEB Reports Fourth Quarter Results and Provides 2013 Guidance
Page 11
Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)
A reconciliation of each of the non-GAAP measures to the most directly comparable GAAP measure is provided below.
Adjusted Revenue
| Three Months Ended December 31, 2012 | Year Ended December 31, 2012 | |||||||||||||||||||||||
| CEB | SHL | Total | CEB | SHL | Total | |||||||||||||||||||
| Revenue |
$ | 155,660 | $ | 38,060 | $ | 193,720 | $ | 564,062 | $ | 58,592 | $ | 622,654 | ||||||||||||
| Impact of the deferred revenue fair value adjustment |
— | 8,748 | 8,748 | — | 17,134 | 17,134 | ||||||||||||||||||
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| Adjusted revenue |
$ | 155,660 | $ | 46,808 | $ | 202,468 | $ | 564,062 | $ | 75,726 | $ | 639,788 | ||||||||||||
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Adjusted EBITDA
| Three Months Ended December 31, 2012 | Three Months Ended December 31, 2011 | |||||||||||||||||||||||
| CEB | SHL | Total | CEB | SHL | Total | |||||||||||||||||||
| Net income (loss) |
$ | 13,519 | $ | (6,338 | ) | $ | 7,181 | $ | 16,950 | $ | — | $ | 16,950 | |||||||||||
| Loss from discontinued operations, net of provision for income taxes |
— | — | — | 2,923 | — | 2,923 | ||||||||||||||||||
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| Income (loss) from continuing operations |
13,519 | (6,338 | ) | 7,181 | 19,873 | — | 19,873 | |||||||||||||||||
| Interest expense (income), net |
6,546 | — | 6,546 | 13 | — | 13 | ||||||||||||||||||
| Depreciation and amortization |
7,351 | 8,246 | 15,597 | 4,702 | — | 4,702 | ||||||||||||||||||
| Provision for income taxes |
11,577 | (754 | ) | 10,823 | 14,055 | — | 14,055 | |||||||||||||||||
| Impact of the deferred revenue fair value adjustment |
— | 8,748 | 8,748 | — | — | — | ||||||||||||||||||
| Acquisition related costs |
1,673 | 1,570 | 3,243 | — | — | — | ||||||||||||||||||
| Share-based compensation |
2,371 | 126 | 2,497 | 1,976 | — | 1,976 | ||||||||||||||||||
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| Adjusted EBITDA |
$ | 43,037 | $ | 11,598 | $ | 54,635 | $ | 40,619 | $ | — | $ | 40,619 | ||||||||||||
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| Adjusted EBITDA margin |
27.6 | % | 24.8 | % | 27.0 | % | 30.8 | % | — | 30.8 | % | |||||||||||||
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| Year Ended December 31, 2012 | Year Ended December 31, 2011 | |||||||||||||||||||||||
| CEB | SHL | Total | CEB | SHL | Total | |||||||||||||||||||
| Net income (loss) |
$ | 46,440 | $ | (9,389 | ) | $ | 37,051 | $ | 52,655 | $ | — | $ | 52,655 | |||||||||||
| Loss from discontinued operations, net of provision for income taxes |
— | — | — | 4,792 | — | 4,792 | ||||||||||||||||||
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| Income (loss) from continuing operations |
46,440 | (9,389 | ) | 37,051 | 57,447 | — | 57,447 | |||||||||||||||||
| Interest expense (income), net |
10,834 | — | 10,834 | (596 | ) | — | (596 | ) | ||||||||||||||||
| Depreciation and amortization |
24,371 | 13,487 | 37,858 | 16,928 | — | 16,928 | ||||||||||||||||||
| Provision for income taxes |
41,463 | (3,894 | ) | 37,569 | 38,860 | — | 38,860 | |||||||||||||||||
| Impact of the deferred revenue fair value adjustment |
— | 17,134 | 17,134 | — | — | — | ||||||||||||||||||
| Acquisition related costs |
22,430 | 2,099 | 24,529 | — | — | — | ||||||||||||||||||
| Share-based compensation |
9,062 | 152 | 9,214 | 8,118 | — | 8,118 | ||||||||||||||||||
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| Adjusted EBITDA |
$ | 154,600 | $ | 19,589 | $ | 174,189 | $ | 120,757 | $ | — | $ | 120,757 | ||||||||||||
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| Adjusted EBITDA margin |
27.4 | % | 25.9 | % | 27.2 | % | 24.9 | % | — | 24.9 | % | |||||||||||||
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- MORE -
CEB Reports Fourth Quarter Results and Provides 2013 Guidance
Page 12
Feb. 6, 2013
THE CORPORATE EXECUTIVE BOARD COMPANY
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)
Adjusted Net Income
| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net income |
$ | 7,181 | $ | 16,950 | $ | 37,051 | $ | 52,655 | ||||||||
| Loss from discontinued operations, net of provision for income taxes |
— | 2,923 | — | 4,792 | ||||||||||||
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| Income from continuing operations |
7,181 | 19,873 | 37,051 | 57,447 | ||||||||||||
| Impact of the deferred revenue fair value adjustment (1) |
6,369 | — | 12,474 | — | ||||||||||||
| Acquisition related costs (1) |
2,200 | — | 18,427 | — | ||||||||||||
| Share-based compensation (1) |
1,523 | 1,186 | 5,587 | 4,839 | ||||||||||||
| Amortization of acquisition related intangibles (1) |
6,288 | 647 | 12,614 | 2,031 | ||||||||||||
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| Adjusted net income |
$ | 23,561 | $ | 21,706 | $ | 86,153 | $ | 64,317 | ||||||||
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Non-GAAP Earnings per Diluted Share
| Three Months Ended December 31, |
Year Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Earnings per diluted share |
$ | 0.21 | $ | 0.50 | $ | 1.10 | $ | 1.53 | ||||||||
| Loss from discontinued operations, net of provision for income taxes |
— | 0.09 | — | 0.14 | ||||||||||||
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| Earnings per diluted share from continuing operations |
0.21 | 0.59 | 1.10 | 1.67 | ||||||||||||
| Impact of the deferred revenue fair value adjustment (1) |
0.19 | — | 0.37 | — | ||||||||||||
| Acquisition related costs (1) |
0.06 | — | 0.54 | — | ||||||||||||
| Share-based compensation (1) |
0.04 | 0.04 | 0.16 | 0.14 | ||||||||||||
| Amortization of acquisition related intangibles (1) |
0.19 | 0.02 | 0.38 | 0.06 | ||||||||||||
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| Non-GAAP diluted earnings per share |
$ | 0.69 | $ | 0.65 | $ | 2.55 | $ | 1.87 | ||||||||
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| (1) | Adjustments are net of the estimated income tax effect using statutory rates based on the relative amounts allocated to each jurisdiction in the applicable period. The following income rates were used: 27% for the deferred revenue fair value adjustment; 25% for acquisition related costs; 39% for share-based compensation; and 31% for amortization of acquisition related intangibles. |
With respect to the Company’s 2013 annual guidance, reconciliations net income to Adjusted EBITDA, net income to Adjusted net income, and GAAP diluted earnings per share to Non-GAAP diluted earnings per share as projected for 2013 are not provided because the Company cannot, without unreasonable effort, determine the components of net income and GAAP diluted earnings per share to provide reconciliations for 2013 with certainty at this time.
INVESTOR DAY
CEB will hold its annual Investor Day for institutional investors and sell-side analysts at its Waterview headquarters in Arlington, Virginia on June 14, 2013. At the Investor Day, members of the Company’s senior leadership team will review the Company’s business portfolio, strategy for growth, and financial performance. The Investor Day is by invitation only and registration is required. It will also be webcast live via the Internet on the Company’s web site and a replay will be available following the event.
- END -