THE CORPORATE EXECUTIVE BOARD COMPANY 
By ARLINGTON, Va., Aug. 1, 2011 /PRNewswire/ -- The Corporate Executive Board Company ("CEB" or the "Company") (NYSE: EXBD) today announces financial results for the second quarter and six months ended June 30, 2011. Revenues increased 8.8% to $119.2 million for the second quarter of 2011 from $109.6 million for the second quarter of 2010. Net income for the second quarter of 2011 was $10.3 million, or $0.30 per diluted share, compared to $11.0 million, or $0.32 per diluted share, for the same period of 2010.
For the first six months of 2011, revenues were $234.1 million, an 11.6% increase from $209.8 million for the first six months of 2010. Net income for the first six months of 2011 was $21.7 million compared to $22.6 million for the same period in 2010. Diluted earnings per share for the first six months of 2011 was $0.62, a decrease from $0.66 for the same period in 2010.
Contract Value at June 30, 2011 increased 11.4% to $456.8 million, compared to $410.1 million at June 30, 2010, as a result of increased sales to new and existing members. Wallet retention rate at June 30, 2011 increased to 103% from 91% at June 30, 2010 as a result of improved pricing, renewals, and sales of additional products and services. Contract Value per member institution increased 4.0% at June 30, 2011 to $84,942 from $81,637 at June 30, 2010.
"Our contract value and bookings growth continued at a solid pace and keep us on track to deliver on our annual commitments," said Thomas Monahan, Chairman and Chief Executive Officer. "With our teams performing at high levels and our 2011 investment plan now largely complete, we anticipate improved revenues and earnings through the second half of the year."
OUTLOOK FOR 2011
The Company reaffirms its 2011 annual guidance of Revenues of $480 to $500 million; Non-GAAP diluted earnings per share of $1.50 to $1.65; Depreciation and amortization expense of approximately $17 to $18 million; capital expenditures of approximately $8 to $10 million; and an Adjusted EBITDA margin of between 22.0% and 23.0%.
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 Net income to EBITDA is provided below.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2011 2010 2011 2010
---- ---- ---- ----
Net income $10,344 $10,980 $21,698 $22,613
Interest income, net (149) (363) (498) (799)
Depreciation and
amortization 4,588 5,639 8,846 10,774
Provision for income
taxes 7,757 7,923 15,712 16,108
----- ----- ------ ------
EBITDA $22,540 $24,179 $45,758 $48,696
======= ======= ======= =======
There were no adjustments that require a reconciliation of EBITDA to Adjusted EBITDA, Net income to Adjusted net income, or Diluted earnings per share to non-GAAP diluted earnings per share in the three and six months ended June 30, 2011 or 2010, respectively.
With respect to the Company's 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 Company's 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 "Management's 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 August 1, 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 world's 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. CEB's 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, 5,300 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)
Selected Three Months Ended
Percentage June 30,
--------
Changes 2011 2010
------- ---- ----
Financial Highlights
(GAAP, as reported,
in thousands, except
per share data):
Revenues 8.8% $119,215 $109,577
Net income (5.8%) $10,344 $10,980
Basic earnings per
share (6.3%) $0.30 $0.32
Diluted earnings per
share (6.3%) $0.30 $0.32
Weighted average
shares outstanding:
Basic 34,516 34,214
Diluted 34,851 34,469
Other Operating
Statistics:
Contract Value (in
thousands)*
Member institutions
Contract Value per
member institution
Wallet retention
rate**
Selected Six Months Ended
Percentage June 30,
--------
Changes 2011 2010
------- ---- ----
Financial Highlights
(GAAP, as reported,
in thousands, except
per share data):
Revenues 11.6% $234,073 $209,752
Net income (4.0%) $21,698 $22,613
Basic earnings per
share (4.5%) $0.63 $0.66
Diluted earnings per
share (6.1%) $0.62 $0.66
Weighted average
shares outstanding:
Basic 34,435 34,189
Diluted 34,805 34,458
Other Operating
Statistics:
Contract Value (in
thousands)* 11.4% $456,814 $410,117
Member institutions 7.0% 5,378 5,024
Contract Value per
member institution 4.0% $84,942 $81,637
Wallet retention
rate** 13.2% 103% 91%
* 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)
Selected Three Months Ended
Percentage June 30,
--------
Changes 2011 2010
------- ---- ----
Revenues 8.8% $119,215 $109,577
Cost and expenses:
Cost of services 43,897 39,283
Member relations and
marketing 36,042 30,155
General and
administrative 16,910 14,808
Depreciation and
amortization 4,588 5,639
----- -----
Total costs and
expenses 101,437 89,885
Income from operations 17,778 19,692
Other income (expense),
net (1) 323 (789)
--- ----
Income before provision
for
income taxes 18,101 18,903
Provision for income
taxes 7,757 7,923
----- -----
Net income $10,344 $10,980
======= =======
Basic earnings per
share $0.30 $0.32
Diluted earnings per
share $0.30 $0.32
Weighted average shares
outstanding
Basic 34,516 34,214
Diluted 34,851 34,469
Percentages of Revenues
Cost of services 36.8% 35.8%
Member relations and
marketing 30.2% 27.5%
General and
administrative 14.2% 13.5%
Depreciation and
amortization 3.8% 5.1%
Income from operations 14.9% 18.0%
EBITDA (2) 18.9% 22.1%
Selected Six Months Ended
Percentage June 30,
--------
Changes 2011 2010
------- ---- ----
Revenues 11.6% $234,073 $209,752
Cost and expenses:
Cost of services 84,307 72,795
Member relations and
marketing 71,588 55,935
General and
administrative 33,750 30,280
Depreciation and
amortization 8,846 10,774
----- ------
Total costs and
expenses 198,491 169,784
Income from operations 35,582 39,968
Other income (expense),
net (1) 1,828 (1,247)
----- ------
Income before provision
for
income taxes 37,410 38,721
Provision for income
taxes 15,712 16,108
------ ------
Net income $21,698 $22,613
======= =======
Basic earnings per
share $0.63 $0.66
Diluted earnings per
share $0.62 $0.66
Weighted average shares
outstanding
Basic 34,435 34,189
Diluted 34,805 34,458
Percentages of Revenues
Cost of services 36.0% 34.7%
Member relations and
marketing 30.6% 26.7%
General and
administrative 14.4% 14.4%
Depreciation and
amortization 3.8% 5.1%
Income from operations 15.2% 19.1%
EBITDA (2) 19.5% 23.2%
(1) Other income (expense), net for the three months ended June 30, 2011
includes $0.2 million of interest income, net and a $0.1 million
foreign currency gain. Other income (expense), net for the three
months ended June 30, 2010 includes $0.4 million of interest income
and a $0.1 million foreign currency gain offset by a $0.9 million
decrease in the fair value of deferred compensation plan assets and
$0.4 million of other expense. Other income (expense), net for the
six months ended June 30, 2011 includes a $0.7 million foreign
currency gain, a $0.6 million increase in the fair value of deferred
compensation plan assets, and $0.5 million of interest income, net.
Other income (expense), net for the six months ended June 30, 2010
includes $0.8 million of interest income, offset by a $0.3 million
decrease in the fair value of deferred compensation plan assets, a
$0.8 million foreign currency loss, and $0.9 million of other
expense.
(2) See "NON-GAAP FINANCIAL MEASURES" for further explanation.
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2011 2010
--------- -------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $144,777 $102,498
Marketable securities 5,351 10,114
Membership fees receivable, net 87,808 141,322
Deferred income taxes, net 17,175 18,727
Deferred incentive compensation 16,159 15,710
Prepaid expenses and other
current assets 18,490 10,388
------ ------
Total current assets 289,760 298,759
Deferred income taxes, net 40,880 43,524
Marketable securities 9,456 10,850
Property and equipment, net 81,798 83,140
Goodwill 29,406 29,266
Intangible assets, net 11,995 13,828
Other non-current assets 33,369 30,782
------ ------
Total assets $496,664 $510,149
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable and accrued
liabilities $32,587 $52,439
Accrued incentive compensation 21,955 40,719
Deferred revenues 260,180 251,200
------- -------
Total current liabilities 314,722 344,358
Deferred income taxes 912 679
Other liabilities 85,254 82,296
------ ------
Total liabilities 400,888 427,333
Total stockholders' equity 95,776 82,816
------ ------
Total liabilities and
stockholders' equity $496,664 $510,149
======== ========
THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
--------
2011 2010
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $21,698 $22,613
Adjustments to reconcile net income to
net cash flows provided by
operating activities:
Depreciation and amortization 8,846 10,774
Deferred income taxes 3,176 (1,948)
Share-based compensation 4,159 3,174
Excess tax benefits from share-based
compensation arrangements (1,821) -
Foreign currency translation gain (746) -
Amortization of marketable securities
premiums, net 130 221
Changes in operating assets and
liabilities:
Membership fees receivable, net 53,545 47,169
Deferred incentive compensation (446) (2,602)
Prepaid expenses and other current
assets (8,020) 846
Other non-current assets (1,880) (2,651)
Accounts payable and accrued
liabilities (17,219) (18,111)
Accrued incentive compensation (18,955) (4,166)
Deferred revenues 8,934 (1,568)
Other liabilities 2,902 2,366
----- -----
Net cash flows provided by operating
activities 54,303 56,117
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,583) (1,217)
Acquisition of businesses, net of cash
acquired - (8,957)
Cost method investment (150) -
Maturities of marketable securities 5,780 20,284
----- ------
Net cash flows provided by investing
activities 1,047 10,110
----- ------
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 232 153
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 (2,721) (1,167)
Payment of dividends (10,314) (7,517)
------- ------
Net cash flows used in financing
activities (13,592) (8,531)
------- ------
Effect of exchange rates on cash 521 -
--- ---
NET INCREASE IN CASH AND CASH
EQUIVALENTS 42,279 57,696
Cash and cash equivalents, beginning of
period 102,498 31,760
------- ------
Cash and cash equivalents, end of
period $144,777 $89,456
======== =======
SOURCE The Corporate Executive Board Company
