The Advisory Board Company Reports Results For Quarter And Nine Month Period Ended December 31, 2014

WASHINGTON, Feb. 11, 2015 /PRNewswire/ -- The Advisory Board Company (NASDAQ: ABCO), a global technology, research, and services company providing the leading cloud-based comprehensive performance platform for the health care and higher education industries, today announced financial results for the quarter and nine month period ended December 31, 2014, highlighted by 15% growth in contract value and quarterly revenue.

Robert Musslewhite, Chairman and Chief Executive Officer of The Advisory Board Company, commented, "Overall, 2014 was another successful year for The Advisory Board Company, continuing our track record of incredible value delivered to our members, transformational impact on the industries we serve, mid-teens growth, and strong margin performance.  In addition, our acquisition of Royall & Company, which became effective on January 9, was a key addition to the firm, expanding our impact and membership while maintaining all key attributes of our successful business model.  Our subscription based model and high renewal rates typically provide reliable forward insight into future performance, and I am pleased to have visibility into another strong year for calendar 2015, with expectations for revenue growth of 14-17% and significant margin expansion."

Mr. Musslewhite continued, "I am pleased to announce today two new product launches.  First, on the health care side, we launched the Purchased Services Management Program.  Purchased outsourced functions such as food, transcription, clinical engineering, and facilities maintenance comprise 40% or more of the average hospital's expenses but are often poorly managed, with unscrutinized long-term contracts.  Further, when contracts are re-negotiated or bid out, hospitals often lack the data and skills to negotiate not only the contract price but also the various other terms and conditions that ultimately determine the value of the service.  The Purchased Services Management Program is a templatized service offering which leverages know-how and proven practices to develop strategies for effectively negotiating purchased services contracts.  Through our deep category knowledge and significant experience negotiating and executing service contracts, the program delivers contract savings and elevated performance standards.  With pilot projects that have yielded multi-million dollar ROI, the Purchased Services Management Program has had a strong kick-off, and we are excited about its potential."

Mr. Musslewhite concluded, "I am also pleased to announce today our latest launch into the higher education industry, the Enrollment Management Forum, a renewable research program focused on the critical strategic issues surrounding enrollment at colleges and universities today.  With best practice research, peer networking, and benchmarking tools, the Enrollment Management Forum addresses such topics as elevating net revenue management, maximizing student yield, meeting the student success imperative, and building a high-performance, data-driven enrollment function.  A strong complement to the capabilities we gained through the Royall & Company acquisition, the Enrollment Management Forum is off to a great start, and we are confident that it will provide outstanding value to members, both as a stand-alone program and through its synergies with the capabilities Royall & Company brings to the company." 

Revenue for the quarter increased 15% to $150.2 million, from $131.0 million for the quarter ended December 31, 2013. Contract value increased 15% to $601.8 million as of December 31, 2014, up from $522.5 million as of December 31, 2013. For the quarter ended December 31, 2014, net loss attributable to common stockholders was $5.0 million, or $0.14 per diluted share, compared to net income attributable to common stockholders of $3.8 million, or $0.10 per diluted share, for the quarter ended December 31, 2013. For the quarter ended December 31, 2014, adjusted EBITDA was $22.6 million, up from $21.4 million for the quarter ended December 31, 2013. Adjusted net income for the quarter ended December 31, 2014 was $9.5 million, or $0.26 per diluted share, which was unchanged from the quarter ended December 31, 2013. Adjusted EBITDA, adjusted net income, and non-GAAP earnings per diluted share are all non-GAAP financial measures.

For the nine month period ended December 31, 2014, revenue increased 14% to $436.2 million, from $382.6 million for the nine months ended December 31, 2013. Net loss attributable to common stockholders was $1.7 million, or $0.05 per diluted share, for the nine month period ended December 31, 2014, compared to net income attributable to common stockholders of $16.5 million, or $0.45 per diluted share, for the nine months ended December 31, 2013. For the nine month period ended December 31, 2014, adjusted EBITDA was $72.0 million, up from $66.2 million for the nine months ended December 31, 2013. Adjusted net income for the nine month period ended December 31, 2014 was $36.4 million, or $1.00 per diluted share, compared to $32.3 million, or $0.88 per diluted share, for the nine months ended December 31, 2013. 

Outlook for Calendar Year 2015 

The Company is providing financial guidance for calendar year 2015. For calendar year 2015, the Company expects adjusted revenue to be in a range of approximately $780 million to $800 million, adjusted EBITDA to be in a range of approximately $170 million to $180 million, and non-GAAP earnings per diluted share to be in a range of approximately $1.22 to $1.35.  For calendar year 2015, the Company expects stock-based compensation expense to be approximately $32.5 million, debt expense to be approximately $27.0 million, amortization from acquisition-related intangible assets to be approximately $31 million, and amortization from non-acquisition related assets to be approximately $47 million. For calendar year 2015, the Company expects capital expenditures to be in a range of approximately $60 million to $65 million and an effective tax rate in a range of approximately 45% to 47%. 

Non-GAAP Financial Measures 

This press release and the accompanying tables present information about the Company's adjusted EBITDA, adjusted net income, and non-GAAP earnings per diluted 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" for the three and nine months ended December 31, 2014 and 2013 refers to net income attributable to common stockholders before adjustment for the items set forth in the first table. The term "adjusted net income" for the three and nine months ended December 31, 2014 and 2013 refers to net income attributable to common stockholders excluding the net of tax effect of the items set forth in the second table below. The term "non-GAAP earnings per diluted share" for the three and nine months ended December 31, 2014 and 2013 refers to earnings per diluted share excluding the net of tax effect of the items set forth in the third table below. The term adjusted revenue for fiscal year 2015 refers to revenue before the effect of the fair value adjustment to the acquired deferred revenue of Royall & Company in accordance with purchase accounting.

A reconciliation of the foregoing historical non-GAAP financial measures to the most directly comparable historical GAAP financial measures is provided below for each of the periods indicated. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA or non-GAAP earnings per diluted share to the most directly comparable GAAP financial measures because certain items required for the forecast of such GAAP financial measures, including fair value adjustments to acquisition-related earn-out liabilities, equity in loss of unconsolidated entity, and gains and losses on investment in common stock warrants, cannot reasonably be estimated or predicted at this time.

Web and Conference Call Information

As previously announced, the Company will hold a conference call to discuss its third quarter performance this evening, February 11, 2015, at 5:30 p.m. Eastern Time. The conference call will be available via live webcast on the Company's website at www.advisory.com/IR. To participate by telephone, the dial-in number is 888.336.7150. Participants are advised to dial in at least five minutes prior to the call to register. The webcast will be archived for seven days from 8:00 p.m. Eastern Time on Wednesday, February 11, 2015, until 11:00 p.m. Eastern Time on Wednesday, February 18, 2015.

About The Advisory Board Company

The Advisory Board Company is a global technology, research, and services firm partnering with 5,000 organizations and more than 230,000 leaders across health care and higher education. Through its innovative membership model, the Company collaborates with executives and their teams to elevate performance and solve their most pressing challenges. The Company provides strategic guidance, actionable insights, web-based software solutions, and comprehensive implementation and management services. For more information, visit the firm's website, www.advisory.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including the Company's expectations regarding its revenue, adjusted EBITDA, non-GAAP earnings per diluted share, stock-based compensation expense, debt expense, amortization from acquisition-related intangible assets, amortization from non-acquisition related intangible assets and effective tax rate for calendar year 2015 are based on information available to the Company as of February 11, 2015, the date of this news release, as well as the Company's current projections, forecasts, and assumptions, and are subject to risks and uncertainties. You are hereby cautioned that these statements may be affected by certain factors, including those set forth below. Consequently, actual operations and results may differ materially from the results discussed or implied in the forward-looking statements, and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ materially from those indicated or implied by the forward-looking statements include, among others, changes in the financial condition of the health care industry, our dependence on renewal of membership-based services, the need to attract new business and retain current members and qualified personnel, new product development, competition, risks associated with the Company's software tools and management and advisory services, risks relating to privacy, information security, and other laws and standards related to the health care and education industries, maintaining our third-party provider relationships and strategic alliances, our ability to license technology from third parties, impairment of goodwill, our level of indebtedness, various factors related to income and other taxes, and any failure to recognize the anticipated benefits of our acquisition of Royall Acquisition Co., as well as other risks and uncertainties described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2014 and in our subsequent filings with the Securities and Exchange Commission, which are available for review at the Securities and Exchange Commission's website at www.sec.gov. Additional information will also be set forth in the Company's Report on Form 10-KT for the transition period ended December 31, 2014 to be filed with the Securities and Exchange Commission. 

Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements made in this news release, which speak only as of the date of this news release. The Company does not undertake to update any of its forward-looking statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.

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SOURCE The Advisory Board Company

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