The Corporate Executive Board Reports First Quarter Results and Updates 2011 Guidance
ARLINGTON, Va., May 2, 2011 /PRNewswire/ -- The Corporate Executive Board Company (the "Company") (NYSE: EXBD) today announces financial results for the first quarter ended March 31, 2011. Revenues for the first quarter of 2011 increased 14.7% to $114.9 million from $100.2 million for the first quarter of 2010. Net income for the first quarter of 2011 was $11.4 million, or $0.33 per diluted share, compared to $11.6 million, or $0.34 per diluted share, for the same period of 2010.
Contract Value at March 31, 2011 was $444.6 million, an increase of 16.4% compared to March 31, 2010, as a result of increased sales to new and existing members and the acquisition of Iconoculture in May 2010. Wallet retention rate, which the Company defines as the total current year Contract Value from prior year members as a percentage of the total prior year Contract Value, at March 31, 2011 increased to 104% from 81% at March 31, 2010. Contract Value per member institution increased 5.8% at March 31, 2011 to $84,296 from $79,662 at March 31, 2010.
"Our first quarter performance reflects continued progress on key elements of our growth strategy," said Thomas Monahan, Chairman and Chief Executive Officer. "We saw solid year over year gains in top-line metrics across the quarter, and as planned, we invested additional staff and resources in attractive growth opportunities. With this added bench strength, our highly-committed teams are delivering uniquely valuable insights, driving greater member engagement, and expanding institutional relationships. We are updating our guidance based on these trends and our improved visibility into potential 2011 outcomes."
OUTLOOK FOR 2011
The Company's updated 2011 annual guidance, which includes an increase in Revenues and non-GAAP diluted earnings per share, is as follows: Revenues of $480 to $500 million; Non-GAAP diluted earnings per share of $1.50 to $1.65; Depreciation and amortization expense of $17.0 to $18.0 million; capital expenditures of approximately $8.0 to $10.0 million; and an Adjusted EBITDA margin of between 22.0% and 23.0%.
QUARTERLY DIVIDEND
The Company today announces that its Board of Directors has approved a cash dividend on its common stock for the second quarter of 2011 of $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 June 30, 2011 to stockholders of record at the close of business on June 15, 2011.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying tables, as well as earnings discussions, 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 |
|||
March 31, |
|||
2011 |
2010 |
||
Net income |
$11,354 |
$11,633 |
|
Interest income, net |
(349) |
(436) |
|
Depreciation and amortization |
4,258 |
5,135 |
|
Provision for income taxes |
7,955 |
8,185 |
|
EBITDA |
$23,218 |
$24,517 |
|
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 months ended March 31, 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 news 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 updated 2011 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 May 2, 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
The Corporate Executive Board drives faster, more effective decision making among the world's leading executives and business professionals. As the premier, network-based knowledge resource, The Corporate Executive Board provides customers with the authoritative and timely guidance needed to excel in their roles, take decisive action and improve company performance. Powered by an executive network that spans more than 50 countries and represents approximately 85% of the world's Fortune 500 companies, The Corporate Executive Board offers unique research insights along with an integrated suite of exclusive tools and resources that enable the world's most successful organizations to deliver superior business outcomes. For more information, visit www.exbd.com.
THE CORPORATE EXECUTIVE BOARD COMPANY |
||||
Financial Highlights and Other Operating Statistics |
||||
(Unaudited) |
||||
Selected |
||||
Percentage |
Three Months Ended |
|||
Changes |
March 31, |
|||
Financial Highlights (GAAP, as reported): |
||||
(In thousands, except per share data) |
||||
2011 |
2010 |
|||
Revenues |
14.7 % |
$114,858 |
$100,175 |
|
Net income |
(2.4)% |
$11,354 |
$11,633 |
|
Basic earnings per share |
(2.9)% |
$0.33 |
$0.34 |
|
Diluted earnings per share |
(2.9)% |
$0.33 |
$0.34 |
|
Weighted average shares outstanding: |
||||
Basic |
34,351 |
34,155 |
||
Diluted |
34,746 |
34,429 |
||
Other Operating Statistics: |
||||
Contract Value (In thousands)* |
16.4% |
$444,636 |
$382,147 |
|
Member institutions |
10.0% |
5,275 |
4,797 |
|
Contract Value per member institution |
5.8% |
$84,296 |
$79,662 |
|
Wallet retention rate** |
28.4% |
104% |
81% |
|
* 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 |
March 31, |
|||
Changes |
2011 |
2010 |
||
Revenues |
14.7% |
$114,858 |
$100,175 |
|
Costs and expenses: |
||||
Cost of services |
40,410 |
33,512 |
||
Member relations and marketing |
35,546 |
25,780 |
||
General and administrative |
16,840 |
15,472 |
||
Depreciation and amortization |
4,258 |
5,135 |
||
Total costs and expenses |
97,054 |
79,899 |
||
Income from operations |
(12.2)% |
17,804 |
20,276 |
|
Other income (expense), net (1) |
1,505 |
(458) |
||
Income before provision for income taxes |
19,309 |
19,818 |
||
Provision for income taxes |
7,955 |
8,185 |
||
Net income |
(2.4)% |
$11,354 |
$11,633 |
|
Basic earnings per share |
(2.9)% |
$0.33 |
$0.34 |
|
Diluted earnings per share |
(2.9)% |
$0.33 |
$0.34 |
|
Weighted average shares outstanding |
||||
Basic |
34,351 |
34,155 |
||
Diluted |
34,746 |
34,429 |
||
Percentages of Revenues |
||||
Cost of services |
35.2% |
33.5% |
||
Member relations and marketing |
30.9% |
25.7% |
||
General and administrative |
14.7% |
15.4% |
||
Depreciation and amortization |
3.7% |
5.1% |
||
Income from operations |
15.5% |
20.2% |
||
EBITDA(2) |
20.2% |
24.5% |
||
(1) Other income (expense), net for the three months ended March 31, 2011 includes $0.3 million of interest income, a $0.6 million increase in the fair value of deferred compensation plan assets, and a $0.6 million foreign currency gain. Other income (expense), net for the three months ended March 31, 2010 includes $0.4 million of interest income and a $0.5 million increase in the fair value of deferred compensation plan assets offset by a $0.8 million foreign currency loss and $0.6 million of other expense.
(2) See "NON-GAAP FINANCIAL MEASURES" for further explanation.
THE CORPORATE EXECUTIVE BOARD COMPANY |
|||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(In thousands) |
|||
March 31, 2011 |
December 31, 2010 |
||
(Unaudited) |
|||
Assets |
|||
Current assets: |
|||
Cash and cash equivalents |
$180,648 |
$102,498 |
|
Marketable securities |
9,978 |
10,114 |
|
Membership fees receivable, net |
89,411 |
141,322 |
|
Deferred income taxes, net |
17,153 |
18,727 |
|
Deferred incentive compensation |
17,148 |
15,710 |
|
Prepaid expenses and other current assets |
11,054 |
10,388 |
|
Total current assets |
325,392 |
298,759 |
|
Deferred income taxes, net |
42,332 |
43,524 |
|
Marketable securities |
10,784 |
10,850 |
|
Property and equipment, net |
82,632 |
83,140 |
|
Goodwill |
29,387 |
29,266 |
|
Intangible assets, net |
12,936 |
13,828 |
|
Other non-current assets |
32,276 |
30,782 |
|
Total assets |
$535,739 |
$510,149 |
|
Liabilities and stockholders’ equity |
|||
Current liabilities: |
|||
Accounts payable and accrued liabilities |
$42,144 |
$52,439 |
|
Accrued incentive compensation |
38,798 |
40,719 |
|
Deferred revenues |
281,620 |
251,200 |
|
Total current liabilities |
362,562 |
344,358 |
|
Deferred income taxes |
790 |
679 |
|
Other liabilities |
83,672 |
82,296 |
|
Total liabilities |
447,024 |
427,333 |
|
Total stockholders’ equity |
88,715 |
82,816 |
|
Total liabilities and stockholders’ equity |
$535,739 |
$510,149 |
|
THE CORPORATE EXECUTIVE BOARD COMPANY |
|||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
(In thousands) |
|||
(Unaudited) |
|||
Three Months Ended |
|||
March 31, |
|||
2011 |
2010 |
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
Net income |
$11,354 |
$11,633 |
|
Adjustments to reconcile net income to net cash flows provided by |
|||
operating activities: |
|||
Depreciation and amortization |
4,258 |
5,135 |
|
Deferred income taxes |
1,535 |
213 |
|
Share-based compensation |
2,004 |
1,438 |
|
Excess tax benefits from share-based compensation arrangements |
(1,396) |
- |
|
Foreign currency translation gain |
(695) |
- |
|
Amortization of marketable securities premiums, net |
69 |
134 |
|
Changes in operating assets and liabilities: |
|||
Membership fees receivable, net |
51,934 |
44,945 |
|
Deferred incentive compensation |
(1,435) |
(2,675) |
|
Prepaid expenses and other current assets |
(584) |
1,435 |
|
Other non-current assets |
(1,329) |
(153) |
|
Accounts payable and accrued liabilities |
(10,413) |
(13,351) |
|
Accrued incentive compensation |
(2,009) |
4,296 |
|
Deferred revenues |
30,378 |
18,214 |
|
Other liabilities |
1,317 |
519 |
|
Net cash flows provided by operating activities |
84,988 |
71,783 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
Purchases of property and equipment |
(2,602) |
(283) |
|
Cost method investment |
(150) |
- |
|
Maturities of marketable securities, net |
- |
12,500 |
|
Net cash flows (used in) provided by investing activities |
(2,752) |
12,217 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
Proceeds from the exercise of common stock options |
774 |
- |
|
Proceeds from the issuance of common stock under the |
|||
employee stock purchase plan |
108 |
114 |
|
Excess tax benefits from share-based compensation arrangements |
1,396 |
- |
|
Purchase of treasury shares |
(1,786) |
(183) |
|
Payment of dividends |
(5,145) |
(3,753) |
|
Net cash flows used in financing activities |
(4,653) |
(3,822) |
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
77,583 |
80,178 |
|
Effect of exchange rates on cash |
567 |
- |
|
Cash and cash equivalents, beginning of period |
102,498 |
31,760 |
|
Cash and cash equivalents, end of period |
$180,648 |
$111,938 |
|
SOURCE Corporate Executive Board Company
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