Press Releases

The Corporate Executive Board Company Reports Fourth Quarter Results; Acquires Valtera Corporation

CEB Reports Revenue Growth of 14.3%, Contract Value Growth of 11.7%, Increases Quarterly Cash Dividend, and Provides 2012 Guidance

Feb 7, 2012

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

December 31,

Year Ended

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%










(1)

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 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, 2011


Dec. 31, 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

December 31, 2011

Three Months Ended

December 31, 2010



GAAP, as reported


Discontinued

Operations


Pro Forma Operations


GAAP, as reported


Discontinued

Operations


Pro Forma 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

December 31, 2011

Three Months Ended

December 31, 2010


GAAP, as reported

Discontinued

Operations

Pro Forma Operations

GAAP, as reported

Discontinued

Operations

Pro Forma 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

December 31, 2011

Year Ended

December 31, 2010



GAAP, as reported


Discontinued

Operations


Pro Forma Operations


GAAP, as reported


Discontinued

Operations


Pro Forma 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

December 31, 2011

Year Ended

December 31, 2010


GAAP, as reported

Discontinued

Operations

Pro Forma Operations

GAAP, as reported

Discontinued

Operations

Pro Forma 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

For further information: Richard S. Lindahl, Chief Financial Officer, +1-571-303-6956, jconnor@executiveboard.com