THE CORPORATE EXECUTIVE BOARD COMPANY 
By ARLINGTON, Va., Feb. 7, 2012 /PRNewswire/ -- The Corporate Executive Board Company ("CEB" or the "Company") (NYSE: EXBD) today announces financial results for the fourth quarter and year ended December 31, 2011. Revenues from continuing operations increased 14.3% to $132.0 million for the fourth quarter of 2011 from $115.5 million for the fourth quarter of 2010. Income from continuing operations for the fourth quarter of 2011 was $19.9 million, or $0.59 per diluted share, compared to $11.5 million, or $0.33 per diluted share, for the same period of 2010.
For 2011, revenues from continuing operations were $484.7 million, a 12.1% increase from $432.4 million for 2010. Income from continuing operations for 2011 was $57.4 million, or $1.67 per diluted share, compared to $52.1 million, or $1.51 per diluted share, for the same period of 2010.
As previously reported, Toolbox.com was sold on December 30, 2011. Accordingly, its results have been accounted for as discontinued operations. For the fourth quarter and year ended December 31, 2011, revenues for Toolbox.com were $1.0 million and $5.3 million, respectively, and loss from discontinued operations, net of tax, was $2.9 million, or $0.09 per diluted share, and $4.8 million, or $0.14 per diluted share, respectively. Included in the loss from discontinued operations for the fourth quarter and year ended December 31, 2011 was a $3.5 million pre-tax loss on disposal, or $0.07 per diluted share.
Contract Value at December 31, 2011 increased 11.7% to $499.4 million compared to $447.1 million at December 31, 2010. Wallet retention rate at December 31, 2011 was 100% compared to 101% at December 31, 2010. Contract Value per member institution increased 2.6% at December 31, 2011 to $87,040 from $84,808 at December 31, 2010.
"Our fourth quarter outcomes reflect continued solid performance by our team against a backdrop of mixed market conditions," said CEB Chairman and Chief Executive Officer Thomas Monahan. "As planned, we saw strong revenue growth and increased operating leverage in the quarter, and we are well set up for continued growth in 2012.
"I'm also pleased today to announce the acquisition of Valtera, which brings us analytic depth, robust technology, and extremely talented people in the important HR space. By combining Valtera with our growing CLC and CLC Genesee businesses, we further deepen our already rich array of insights, data, and tools for helping members manage talent. Our integrated tools and resources will give leaders in HR and beyond the science to make decisions, the management best practice to turn insight into performance, and the technology to transform complex organizations.
"We enter 2012 with an improved business portfolio, a very strong team focused on immediate member impact, and expectations for sustained progress in the year ahead."
OUTLOOK FOR 2012
The Company's 2012 annual guidance is as follows: Revenues of $535 to $555 million; Non-GAAP diluted earnings per share of $1.75 to $2.00; Depreciation and amortization expense of $20 to $22 million; capital expenditures of $12 to $15 million; and an Adjusted EBITDA margin of between 23.0% and 24.0%.
QUARTERLY DIVIDEND
The Company is increasing its quarterly dividend 17% to $0.175 per share from $0.15 per share. The Company will fund its dividend payments with cash on hand and cash generated from operations. The dividend is payable on March 30, 2012 to stockholders of record on March 15, 2012.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying tables, as well as earnings discussions, includes a discussion of 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 "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 income, net; depreciation and amortization; provision for income taxes; costs associated with exit activities; restructuring costs; and gain on acquisition. 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 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 costs associated with exit activities, restructuring costs, and gain on acquisition.
We believe that 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 Adjusted EBITDA is that it does 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 Operating profit, which includes depreciation and amortization.
These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, GAAP results. We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is provided below.
Three Months Ended Year Ended
December 31, December 31,
2011 2010 2011 2010
---- ---- ---- ----
Net income $16,950 $10,761 $52,655 $40,363
Loss from discontinued
operations, net of
provision for income
taxes 2,923 708 4,792 11,736
----- --- ----- ------
Income from continuing
operations/Adjusted
net income 19,873 11,469 57,447 52,099
Interest expense (income),
net 13 (410) (596) (1,526)
Depreciation and
amortization 4,702 4,967 16,928 18,039
Provision for income taxes 14,055 7,840 38,860 34,015
------ ----- ------ ------
Adjusted EBITDA $38,643 $23,866 $112,639 $102,627
======= ======= ======== ========
There were no adjustments that required a reconciliation of net income before loss from discontinued operations to Adjusted net income or GAAP diluted earnings per share before the per share effect of loss from discontinued operations to Non-GAAP diluted earnings per share for the three months and years ended December 31, 2011 and 2010, respectively.
With respect to the Company's 2012 annual guidance, reconciliations of GAAP diluted earnings per share to Non-GAAP diluted earnings per share, net income to Adjusted net income, and net income to Adjusted EBITDA as projected for 2012 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 2012 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 Thursday, May 17, 2012. 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.
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 2012 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 February 7, 2012, 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, 5,700 individual organizations, and 225,000 business professionals. For more information, visit www.executiveboard.com.
THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights and Other Operating Statistics
Selected Three Months Ended Selected Year Ended
Percentage December 31, Percentage December 31,
------------ ------------
Changes 2011 2010 Changes 2011 2010
------- ---- ---- ------- ---- ----
(Unaudited) (Unaudited)
Financial
Highlights:
(In
thousands,
except
per
share
data)
Revenues
from
continuing
operations 14.3% $131,951 $115,479 12.1% $484,663 $432,431
Income
from
continuing
operations 19,873 11,469 57,447 52,099
Loss
from
discontinued
operations,
net
of
provision
for
income
taxes (2,923) (708) (4,792) (11,736)
Net
income $16,950 $10,761 $52,655 $40,363
Other
Operating
Statistics:
Contract
Value
(in
thousands)* 11.7% $499,424 $447,051
Member
institutions 8.9% 5,738 5,271
Contract
Value
per
member
institution 2.6% $87,040 $84,808
Wallet
retention
rate** 100% 101%
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)
Three Months Ended Year Ended
December 31, December 31,
2011 2010 2011 2010
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenues $131,951 $115,479 $484,663 $432,431
Cost
and
expenses:
Cost
of
services 43,302 42,117 167,258 153,283
Member
relations
and
marketing 35,923 35,039 142,324 121,239
General
and
administrative 14,635 15,309 61,668 56,896
Depreciation
and
amortization 4,702 4,967 16,928 18,039
----- ----- ------ ------
Total
costs
and
expenses 98,562 97,432 388,178 349,457
------ ------ ------- -------
Operating
profit 33,389 18,047 96,485 82,974
Other
income
(expense),
net(1) 539 1,262 (178) 3,140
--- ----- ---- -----
Income
from
continuing
operations
before
provision
for
income
taxes 33,928 19,309 96,307 86,114
Provision
for
income
taxes 14,055 7,840 38,860 34,015
------ ----- ------ ------
Income
from
continuing
operations 19,873 11,469 57,447 52,099
Loss
from
discontinued
operations,
net
of
provision
for
income
taxes (2,923) (708) (4,792) (11,736)
------ ---- ------ -------
Net
income $16,950 $10,761 $52,655 $40,363
======= ======= ======= =======
Basic
earnings
(loss)
per
share $0.51 $0.31 $1.55 $1.18
Continuing
operations 0.60 0.33 1.69 1.52
Discontinued
operations $(0.09) $(0.02) $(0.14) $(0.34)
Diluted
earnings
(loss)
per
share $0.50 $0.31 $1.53 $1.17
Continuing
operations 0.59 0.33 1.67 1.51
Discontinued
operations $(0.09) $(0.02) $(0.14) $(0.34)
Weighted
average
shares
outstanding
Basic 33,298 34,310 34,071 34,256
Diluted 33,583 34,666 34,419 34,553
Percentages
of
Revenues
Cost
of
services 32.8% 36.5% 34.5% 35.4%
Member
relations
and
marketing 27.2% 30.3% 29.4% 28.0%
General
and
administrative 11.1% 13.3% 12.7% 13.2%
Depreciation
and
amortization 3.6% 4.3% 3.5% 4.2%
Operating
profit 25.3% 15.6% 19.9% 19.2%
Adjusted
EBITDA(2) 29.3% 20.7% 23.2% 23.7%
Other income (expense), net for the three months ended December 31, 2011 includes a
$0.9 million increase in the fair value of deferred compensation plan assets
offset by a $0.4 million foreign currency loss. Other income (expense), net for
the three months ended December 31, 2010 includes $0.4 million of interest income,
a $0.9 million increase in the fair value of deferred compensation plan assets,
and a $0.1 million foreign currency gain offset by other expense of $0.1 million.
Other income (expense), net for the year ended December 31, 2011 includes $0.6
million of net interest income offset by a $0.5 million decrease in the fair value
of deferred compensation plan assets and a $0.3 million foreign currency loss.
Other income (expense), net for the year ended December 31, 2010 includes $1.5
million of interest income, a $1.7 million increase in the fair value of deferred
compensation plan assets, and a $0.1 million foreign currency gain offset by $0.2
(1) million of other expense.
(2) See "NON-GAAP Financial Measures" for further explanation.
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec. 31, Dec. 31,
2011 2010
--------- ---------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $133,429 $102,498
Marketable securities 3,794 10,114
Membership fees receivable,
net 154,255 141,322
Deferred income taxes, net 17,844 18,727
Deferred incentive
compensation 17,330 15,710
Prepaid expenses and other
current assets 21,624 10,388
------ ------
Total current assets 348,276 298,759
Deferred income taxes, net 20,490 43,524
Marketable securities 6,722 10,850
Property and equipment, net 80,981 83,140
Goodwill 29,492 29,266
Intangible assets, net 13,581 13,828
Other non-current assets 34,150 30,782
------ ------
Total assets $533,692 $510,149
======== ========
Liabilities and
stockholders' equity
Current liabilities:
Accounts payable and
accrued liabilities $46,067 $52,439
Accrued incentive
compensation 37,884 40,719
Deferred revenues 284,935 251,200
------- -------
Total current liabilities 368,886 344,358
Deferred income taxes 1,436 679
Other liabilities 83,806 82,296
------ ------
Total liabilities 454,128 427,333
Total stockholders' equity 79,564 82,816
------ ------
Total liabilities and
stockholders' equity $533,692 $510,149
======== ========
THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
------------
2011 2010
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES: (Unaudited)
Net income $52,655 $40,363
Adjustments to reconcile net income
to net cash flows provided by
operating activities:
Loss on disposal of discontinued
operations 3,503 -
Impairment loss - 12,645
Depreciation and amortization 17,710 20,462
Deferred income taxes 21,211 (11,628)
Share-based compensation 8,118 7,490
Excess tax benefits from share-
based compensation arrangements (1,949) (942)
Foreign currency translation loss 330 -
Amortization of marketable
securities premiums 194 357
Changes in operating assets and
liabilities:
Membership fees receivable, net (13,088) (13,231)
Deferred incentive compensation (1,723) (5,989)
Prepaid expenses and other current
assets (11,517) (446)
Other non-current assets (2,661) (5,387)
Accounts payable and accrued
liabilities (5,464) (2,792)
Accrued incentive compensation (2,708) 12,744
Deferred revenues 34,200 22,413
Other liabilities 1,440 9,036
----- -----
Net cash flows provided by
operating activities 100,251 85,095
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment (10,203) (8,322)
Acquisition of businesses, net of
cash acquired (6,193) (13,957)
Proceeds from sale of discontinued
operations 1,779 -
Cost method investment (150) -
Maturities of marketable securities 9,845 22,381
----- ------
Net cash flows (used in) provided
by investing activities (4,922) 102
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from the exercise of
common stock options 1,660 436
Proceeds from the issuance of
common stock under the
employee stock purchase plan 502 451
Acquisition of businesses,
contingent consideration (3,650) -
Credit facility issuance costs (542) -
Excess tax benefits from share-
based compensation arrangements 1,949 942
Purchases of treasury shares (43,308) (1,237)
Payment of dividends (20,426) (15,051)
------- -------
Net cash flows used in financing
activities (63,815) (14,459)
Effect of exchange rates on cash (583) -
---- ---
NET INCREASE IN CASH AND CASH
EQUIVALENTS 30,931 70,738
Cash and cash equivalents,
beginning of period 102,498 31,760
------- ------
Cash and cash equivalents, end of
period $133,429 $102,498
======== ========
THE CORPORATE EXECUTIVE BOARD COMPANY
Pro Forma Statements of Operations
Three Months Ended Three Months Ended
------------------ ------------------
December 31, 2011 December 31, 2010
----------------- -----------------
GAAP, as Pro Forma GAAP, as Pro Forma
reported Discontinued Operations reported Discontinued Operations
--------- ------------ ---------- --------- ------------ ----------
Operations Operations
---------- ----------
Revenues $131,951 $1,037 $132,988 $115,479 $1,563 $117,042
Costs and
expenses:
Cost of services 43,302 961 44,263 42,117 786 42,903
Member relations
and marketing 35,923 320 36,243 35,039 694 35,733
General and
administrative 14,635 508 15,143 15,309 947 16,256
Depreciation and
amortization 4,702 186 4,888 4,967 205 5,172
Loss on disposal
of discontinued
operations - 3,503 3,503 - - -
--- ----- ----- --- --- ---
Total costs and
expenses 98,562 5,478 104,040 97,432 2,632 100,064
------ ----- ------- ------ ----- -------
Operating profit 33,389 (4,441) 28,948 18,047 (1,069) 16,978
Other income
(expense), net 539 - 539 1,262 - 1,262
--- --- --- ----- --- -----
Income from
continuing
operations
before
provision for
income taxes 33,928 (4,441) 29,487 19,309 (1,069) 18,240
Provision for
income taxes 14,055 (1,518) 12,537 7,840 (361) 7,479
------ ------ ------ ----- ---- -----
Income from
continuing
operations 19,873 (2,923) 16,950 11,469 (708) 10,761
Discontinued
operations:
Loss from
discontinued
operations (4,441) 4,441 - (1,069) 1,069 -
Provision for
income taxes (1,518) 1,518 - (361) 361 -
------ ----- --- ---- --- ---
Loss from
discontinued
operations, net
of provision
for income
taxes (2,923) 2,923 - (708) 708 -
------ ----- --- ---- --- ---
Net income $16,950 $- $16,950 $10,761 $- $10,761
======= === ======= ======= === =======
Adjusted EBITDA
Three Months Ended Three Months Ended
------------------ ------------------
December 31, 2011 December 31, 2010
----------------- -----------------
GAAP, as Pro Forma GAAP, as Pro Forma
reported Discontinued Operations reported Discontinued Operations
--------- ------------ ---------- --------- ------------ ----------
Operations Operations
---------- ----------
Income
(loss)
from
operations $19,873 $(2,923) $16,950 $11,469 $(708) $10,761
Interest
expense
(income) 13 - 13 (410) - (410)
Depreciation
and
amortization 4,702 186 4,888 4,967 205 5,172
Loss
on
disposal
of
discontinued
operations - 3,503 3,503 - - -
Provision
for
income
taxes 14,055 (1,518) 12,537 7,840 (361) 7,479
------ ------ ------ ----- ---- -----
Adjusted
EBITDA $38,643 $(752) $37,891 $23,866 $(864) $23,002
======= ===== ======= ======= ===== =======
Adjusted
EBITDA
margin 29.3% 28.5% 20.7% 19.7%
==== ==== ==== ====
THE CORPORATE EXECUTIVE BOARD COMPANY
Pro Forma Statements of Operations
Year Ended Year Ended
---------- ----------
December 31, 2011 December 31, 2010
----------------- -----------------
GAAP, as Pro Forma GAAP, as Pro Forma
reported Discontinued Operations reported Discontinued Operations
--------- ------------ ---------- --------- ------------ ----------
Operations Operations
---------- ----------
Revenues $484,663 $5,251 $489,914 $432,431 $6,476 $438,907
Costs and
expenses:
Cost of services 167,258 3,202 170,460 153,283 2,486 155,769
Member relations
and marketing 142,324 2,115 144,439 121,239 2,651 123,890
General and
administrative 61,668 2,930 64,598 56,896 3,975 60,871
Depreciation and
amortization 16,928 782 17,710 18,039 2,423 20,462
Impairment loss - - - - 12,645 12,645
Loss on disposal
of discontinued
operations - 3,503 3,503 - - -
--- ----- ----- --- --- ---
Total costs and
expenses 388,178 12,532 400,710 349,457 24,180 373,637
------- ------ ------- ------- ------ -------
Operating profit 96,485 (7,281) 89,204 82,974 (17,704) 65,270
Other income
(expense), net (178) - (178) 3,140 - 3,140
---- --- ---- ----- --- -----
Income from
continuing
operations
before
provision for
income taxes 96,307 (7,281) 89,026 86,114 (17,704) 68,410
Provision for
income taxes 38,860 (2,489) 36,371 34,015 (5,968) 28,047
------ ------ ------ ------ ------ ------
Income from
continuing
operations 57,447 (4,792) 52,655 52,099 (11,736) 40,363
Discontinued
operations:
Loss from
discontinued
operations (7,281) 7,281 - (17,704) 17,704 -
Provision for
income taxes (2,489) 2,489 - (5,968) 5,968 -
------ ----- --- ------ ----- ---
Loss from
discontinued
operations, net
of provision
for income
taxes (4,792) 4,792 - (11,736) 11,736 -
------ ----- --- ------- ------ ---
Net income $52,655 $- $52,655 $40,363 $- $40,363
======= === ======= ======= === =======
Adjusted EBITDA
Year Ended Year Ended
---------- ----------
December 31, 2011 December 31, 2010
----------------- -----------------
GAAP, as Pro Forma GAAP, as Pro Forma
reported Discontinued Operations reported Discontinued Operations
--------- ------------ ---------- --------- ------------ ----------
Operations Operations
---------- ----------
Income (loss)
from operations $57,447 $(4,792) $52,655 $52,099 $(11,736) $40,363
Interest expense
(income) (596) - (596) (1,526) - (1,526)
Depreciation and
amortization 16,928 782 17,710 18,039 2,423 20,462
Impairment loss - - - - 12,645 12,645
Loss on disposal
of discontinued
operations - 3,503 3,503 - - -
Provision for
income taxes 38,860 (2,489) 36,371 34,015 (5,968) 28,047
------ ------ ------ ------ ------ ------
Adjusted EBITDA $112,639 $(2,996) $109,643 $102,627 $(2,636) $99,991
======== ======= ======== ======== ======= =======
Adjusted EBITDA
margin 23.2% 22.4% 23.7% 22.8%
==== ==== ==== ====
SOURCE The Corporate Executive Board Company
