The Corporate Executive Board Company (“CEB” or the “Company”) (NYSE:
CEB) today announced financial results for the first quarter ended March
31, 2015. Revenue increased 5.8% to $221.6 million in the first quarter
of 2015 from $209.4 million in the first quarter of 2014. Net income in
the first quarter of 2015 was $19.1 million, or $0.56 per diluted share,
compared to $7.7 million, or $0.22 per diluted share, in the same period
of 2014. Included in net income for the first quarter of 2015 was $6.2
million of pretax net non-operating foreign currency gains. Included in
net income for the first quarter of 2014 was $0.9 million of pretax net
non-operating foreign currency losses. Adjusted net income was $24.6
million and Non-GAAP diluted earnings per share were $0.73 in the first
quarter of 2015 compared to $19.1 million and $0.56 in the same period
of 2014, respectively.
“During the first quarter, we saw solid performance from all of our
major markets,” said Tom Monahan, Chairman and CEO. “Our results put us
in position to achieve our revenue and profit goals on a constant
currency basis, and we are focused on sharp execution to achieve all we
set out to accomplish this year. As planned, we began executing our
enhanced strategy for capital return, even as we maintained flexibility
to act strategically. And, most importantly we continued to lay the
groundwork for sustained performance in 2015 and beyond by continuing to
innovate in how we create impact for members and clients.”
OUTLOOK FOR 2015
The Company updates its 2015 annual guidance based on foreign currency
exchange rates in effect at March 31, 2015 as follows: Adjusted revenue
of $945 to $970 million, revenue of $944 to $969 million (reflecting a
constant currency revenue growth in the range of 8% to 11%), capital
expenditures of $32 to $34 million, Non-GAAP diluted earnings per share
of $3.50 to $3.85, an Adjusted EBITDA margin between 25.5% and 26.0%,
and depreciation and amortization expense of $68 to $70 million.
Adjusted revenue refers to revenue before the impact of the reduction of
the revenue of SHL Talent Measurement™ and KnowledgeAdvisors™ (referred
to as “Metrics That Matter™”) recognized in the post-acquisition period
to reflect the adjustment of deferred revenue at the acquisition dates
to fair value. The estimated reduction in 2015 revenue to reflect the
impact of the deferred revenue fair value adjustment is approximately $1
million. This guidance assumes an average foreign currency exchange rate
of 1.48 USD to the British Pound, 1.08 USD to the Euro, and 0.76 USD to
the Australian Dollar.
In the first quarter of 2015, the Company adjusted its non-GAAP
financial measures to exclude the impact of net non-operating foreign
currency gains (losses) included in other income (expense). These items
primarily result from the remeasurement of foreign currency cash
balances held by CEB US and subsidiaries with the USD as their
functional currency, USD cash balances held by subsidiaries with a
functional currency other than the USD, certain intercompany notes, and
the balance sheets of non-US subsidiaries whose functional currency is
the USD.
SEGMENT HIGHLIGHTS
The CEB segment includes the historical CEB products and services
provided to senior executives and their teams to drive corporate
performance. In addition, the CEB segment includes the previously
disclosed acquisitions in February 2014 of Talent Neuron™, a provider of
market intelligence technology tools based on large-scale data
analytics, and Metrics That Matter, a provider of analytics solutions
for talent development professionals. The 2014 financial results only
include the results of operations of Talent Neuron and Metrics That
Matter from their respective dates of acquisition. The SHL Talent
Measurement segment includes the SHL products and services of
cloud-based solutions for talent assessment and talent mobility, as well
as professional services that support those solutions. PDRI, a
subsidiary acquired as part of the SHL acquisition, is included in the
CEB segment. PDRI provides customized personnel assessment and
performance management tools and services primarily to various agencies
of the US government and also to commercial enterprises.
CEB Segment
Revenue increased in the first quarter of 2015 to $172.9 million from
$160.7 million in the same period of 2014, an increase of 7.6%. Adjusted
revenue increased 7.4% (9.0% increase on a constant currency basis) in
the first quarter of 2015 to $172.9 million from $161.0 million in the
same period of 2014. Adjusted EBITDA in the first quarter of 2015 was
$44.4 million compared to $35.6 million in the same period of 2014, an
increase of 24.5% (24.9% increase on a constant currency basis).
Adjusted EBITDA margin in the first quarter of 2015 was 25.7% of segment
Adjusted revenue compared to 22.1% in the first quarter of 2014.
Contract Value at March 31, 2015 increased 6.8% (9.1% increase on a
constant currency basis) to $663.1 million compared to $620.8 million at
March 31, 2014. Wallet retention rate at March 31, 2015 was 95% (97% on
a constant currency basis) compared to 99% at March 31, 2014. Contract
Value per member institution was $95.1 thousand ($97.2 thousand on a
constant currency basis) at March 31, 2015 compared to $94.5 thousand at
March 31, 2014.
SHL Talent Measurement Segment
Revenue was $48.7 million in the first quarter of 2015 and in the same
period of 2014. Adjusted revenue decreased 1.3% (8.0% increase on a
constant currency basis) in the first quarter of 2015 to $49.1 million
from $49.7 million in the same period of 2014. Adjusted EBITDA in the
first quarter of 2015 was $8.8 million compared to $6.2 million in the
same period of 2014, an increase of 41.6% (64.5% increase on a constant
currency basis). Adjusted EBITDA margin in the first quarter of 2015 was
17.9% of segment Adjusted revenue compared to 12.5% in the first quarter
of 2014.
Wallet retention rate at March 31, 2015 was 104% compared to 103% at
March 31, 2014. Unlike CEB members, a majority of SHL Talent Measurement
customers do not typically enter into contracts for fixed periods, so
Contract Value is not a relevant operating statistic for the segment.
QUARTERLY DIVIDEND
The Company announces that its Board of Directors has approved a cash
dividend on its common stock for the second quarter of 2015 of $0.375
per share. The dividend is payable on June 30, 2015 to stockholders of
record on June 15, 2015. The Company will fund its dividend payments
with cash on hand and cash generated from operations.
SHARE REPURCHASE
In the first quarter of 2015, the Company repurchased approximately
84,000 shares of its common stock at a total cost of $6.6 million. These
purchases were made pursuant to the Company’s $100 million stock
repurchase program, approved by the Company’s Board of Directors on
February 2, 2015, which is authorized through December 31, 2016.
CHANGE OF CORPORATE NAME
Effective May 15, 2015, CEB will change the name of its Delaware
corporate entity from The Corporate Executive Board Company to CEB Inc.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying tables, as well as earnings
discussions, include a discussion of Adjusted revenue, Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted net income, Non-GAAP diluted earnings
per share, and constant currency financial information, all of 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 revenue” refers to revenue before the impact of the
reduction of SHL and Metrics That Matter revenue recognized in the
post-acquisition period to reflect the adjustment of deferred revenue at
the acquisition date to fair value (the “deferred revenue fair value
adjustment”).
The term “Adjusted EBITDA” refers to net income (loss) before loss from
discontinued operations, net of provision for income taxes and excludes
the provision for income taxes; interest expense, net; net non-operating
foreign currency gain (loss); equity method investment loss;
depreciation and amortization; the impact of the deferred revenue fair
value adjustment; acquisition related costs; restructuring costs;
share-based compensation; gain on cost method investment; debt
extinguishment costs; impairment loss; costs associated with exit
activities; and gain on acquisition.
The term “Adjusted EBITDA margin” refers to Adjusted EBITDA as a
percentage of Adjusted revenue.
The term “Adjusted net income” refers to net income (loss) before loss
from discontinued operations, net of provision for income taxes and
excludes the after tax effects of the impact of net non-operating
foreign currency gain (loss); equity method investment loss;
amortization of acquisition related intangibles; the deferred revenue
fair value adjustment; acquisition related costs; restructuring costs;
share-based compensation; gain on cost method investment; debt
extinguishment costs; impairment loss; costs associated with exit
activities; and gain on acquisition.
“Non-GAAP diluted earnings per share” refers to diluted earnings (loss)
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 net non-operating foreign currency gain (loss);
equity method investment loss; amortization of acquisition related
intangibles; the impact of the deferred revenue fair value adjustment;
acquisition related costs; restructuring costs; share-based
compensation; gain on cost method investment; debt extinguishment costs;
impairment loss; costs associated with exit activities; and gain on
acquisition.
We believe that these non-GAAP financial measures are relevant and
useful supplemental information for evaluating our results of operations
as compared from period to period and as compared to our competitors. We
use these non-GAAP financial measures for internal budgeting and other
managerial purposes, including comparison against our competitors, when
publicly providing our business outlook, and as a measurement for
potential acquisitions. These non-GAAP financial measures are not
defined in the same manner by all companies and therefore may not be
comparable to other similarly titled measures used by other companies.
Our non-GAAP financial measures reflect adjustments based on the
following items, as well as the related income tax effects:
-
Certain business combination accounting entries
and expenses related to acquisitions: We have adjusted for the
impact of the deferred revenue fair value adjustment, amortization of
acquisition related intangibles, and acquisition related costs. We
incurred transaction and certain other operating expenses in
connection with our acquisitions which we generally would not have
otherwise incurred in the periods presented as a part of our
continuing operations. We believe that excluding these acquisition
related items from our non-GAAP financial measures provides useful
supplemental information to our investors and is important in
illustrating what our core operating results would have been had we
not incurred these acquisition related items since the nature, size,
and number of acquisitions can vary from period to period.
-
Share-based compensation: Although
share-based compensation is a key incentive offered to our employees,
we evaluate our operating results excluding such expense. Accordingly,
we exclude share-based compensation from our non-GAAP financial
measures because we believe it provides valuable supplemental
information that helps investors have a more complete understanding of
our operating results. In addition, we believe the exclusion of this
expense facilitates the ability of our investors to compare our
operating results with those of other peer companies, many of which
also exclude such expense in determining their non-GAAP measures,
given varying valuation methodologies, subjective assumptions, and the
variety and amount of award types that may be utilized.
-
Net non-operating foreign currency gain (loss):
Beginning in the first quarter of 2015, we adjusted for the impact of
net non-operating foreign currency gains (losses) included in other
income (expense). These items primarily result from the remeasurement
of foreign currency cash balances held by CEB US and subsidiaries with
the USD as their functional currency, USD cash balances held by
subsidiaries with a functional currency other than the USD, certain
intercompany notes, and the balance sheets of non-US subsidiaries
whose functional currency is the USD. We believe this information is
useful to investors to facilitate comparison of operating results and
better identify trends in our businesses.
-
Equity method investment loss and restructuring
costs: We believe that excluding these items from our non-GAAP
financial measures provides useful supplemental information to our
investors and is important in illustrating what our core operating
results would have been had we not incurred these items. We exclude
these items because management does not believe they correlate to the
ongoing operating results of the business.
CEB is a global company that reports financial information in USD.
Foreign currency exchange rate fluctuations affect the amounts reported
from translating foreign revenues and expenses into USD. These rate
fluctuations can have a significant effect on our reported operating
results. As a supplement to our reported operating results, we present
constant currency financial information. We use constant currency
financial information to provide a framework to assess how our business
performed excluding the effects of changes in foreign currency
translation rates. Management believes this information is useful to
investors to facilitate comparison of operating results and better
identify trends in our businesses. To calculate financial information on
a constant currency basis, financial information in the current period
for amounts recorded in currencies other than the USD is translated into
USD at the average exchange rates in effect during the comparable period
of the prior year (rather than the actual exchange rates in effect
during the current year period).
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 included in the accompanying tables.
With respect to our 2015 annual guidance, reconciliations of net income
to Adjusted EBITDA, net income to Adjusted net income, and GAAP diluted
earnings per share to Non-GAAP diluted earnings per share as projected
for 2015 are not provided because we cannot, without unreasonable
effort, determine the components of net income and GAAP diluted earnings
per share to provide reconciliations with certainty.
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, all statements other than
statements of historical fact are statements that could be deemed
forward-looking statements, including but not limited to our 2015 annual
guidance. 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 US Securities and Exchange Commission
(“SEC”), 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 failure to develop and sell, or expand sales markets for our
SHL Talent Measurement tools and services, our potential inability to
attract and retain a significant number of highly skilled employees or
successfully manage succession planning issues, fluctuations in
operating results, our potential inability to protect our intellectual
property rights, our potential inability to adequately maintain and
protect our information technology infrastructure and our member and
client data, potential confusion about our rebranding, including our
integration of the SHL Talent Measurement brand, 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, assumptions or
revenue recognition policies used to prepare our consolidated financial
statements, including those related to testing for potential goodwill
impairment, our potential inability to make, integrate and maintain
acquisitions and investments, the amount and timing of the benefits
expected from acquisitions and investments, the risk that we will be
required to recognize additional impairments to the carrying value of
the significant goodwill and amortizable intangible asset amounts
included in our balance sheet as a result of our acquisitions, which
would require us to record charges that would reduce our reported
results, our potential inability to effectively manage the risks
associated with the indebtedness we incurred and the senior secured
credit facilities we entered into in connection with our acquisition of
SHL or any additional indebtedness we may incur in the future, our
potential inability to effectively manage the risks associated with our
international operations, including the risk of foreign currency
exchange fluctuations, our potential inability to effectively
anticipate, plan for and respond to changing economic and financial
market conditions, especially in light of ongoing uncertainty in the
worldwide economy, the US economy, and possible volatility of our stock
price. Various important factors that could cause our actual results to
differ from our expected or historical results 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 SEC, including, but not limited to, our 2014 Annual Report on Form
10-K filed on February 27, 2015. The forward-looking statements in this
press release are made as of April 28, 2015, and we undertake no
obligation to update any forward-looking statements, whether as a result
of new information, future events, or otherwise.
INVESTOR DAY
CEB will hold its annual Investor Day for institutional investors and
sell-side analysts at its Waterview headquarters in Arlington, Virginia
on June 18, 2015. At the Investor Day, members of our 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.
ABOUT CEB
CEB, the leading member-based advisory company, equips more than 10,000
organizations around the globe with insights, tools and actionable
solutions to transform enterprise performance. By combining advanced
research and analytics with best practices from member companies, CEB
helps leaders realize outsized returns by more effectively managing
talent, information, customers and risk. Member companies include nearly
90% of the Fortune 500, more than 75% of the Dow Jones Asian Titans, and
85% of the FTSE 100. More at www.cebglobal.com.
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THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights and Other Operating Statistics
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Selected Percentages
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Three Months Ended March 31,
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2015
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2014
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Financial Highlights:
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(In thousands, except per share data)
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Revenue
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5.8
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%
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$
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221,599
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$
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209,437
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Adjusted revenue (1)
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5.4
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%
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$
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222,018
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$
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210,721
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Net income
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149.3
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%
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$
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19,090
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$
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7,656
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Adjusted net income (1)
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28.4
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%
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$
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24,550
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$
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19,118
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Adjusted EBITDA (1)
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27.0
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%
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$
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53,137
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$
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41,824
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Adjusted EBITDA margin (1)
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23.9
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%
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19.8
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%
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Diluted earnings per share
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154.5
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%
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$
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0.56
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$
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0.22
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Non-GAAP diluted earnings per share (1)
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30.4
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%
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$
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0.73
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$
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0.56
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Other Operating Statistics:
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CEB segment Contract Value (in thousands) (2)
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6.8
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%
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$
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663,095
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$
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620,830
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Constant currency CEB segment Contract Value (in thousands) (3)
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9.1
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%
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$
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677,592
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CEB segment Member institutions (4)
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6.1
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%
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6,961
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6,559
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CEB segment Contract Value per member institution (4)
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0.7
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%
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$
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95,112
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$
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94,462
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Constant currency CEB segment Contract Value per member institution (3)
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2.9
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%
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$
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97,177
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CEB segment Wallet retention rate (5)
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95
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%
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99
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%
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Constant currency CEB segment Wallet retention rate (3)
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97
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%
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SHL Talent Measurement segment Wallet retention rate (6)
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104
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%
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103
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%
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(1)
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See “Non-GAAP Financial Measures” for further explanation.
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(2)
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We define “CEB segment 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. CEB segment Contract Value does not include the
impact of PDRI.
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(3)
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Calculated on a constant currency basis whereby financial
information in the current period for amounts recorded in currencies
other than the USD is translated into USD at the average exchange
rates in effect during the comparable period of the prior year
(rather than the actual exchange rates in effect during the current
year period).
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(4)
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We define “CEB segment Member institutions,” at the end of the
quarter, as member institutions with Contract Value in excess of
$10,000. The same definition is applied to “CEB segment Contract
Value per member institution.”
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(5)
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We define “CEB segment Wallet retention rate,” at the end of the
quarter, as the total current year segment Contract Value from prior
year members as a percentage of the total prior year segment
Contract Value. The CEB segment Wallet retention rate does not
include the impact of PDRI.
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(6)
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We define “SHL Talent Measurement segment Wallet retention rate,” at
the end of the quarter on a constant currency basis, as the last
current 12 months of total segment Adjusted revenue from prior year
customers as a percentage of the prior 12 months of total segment
Adjusted revenue.
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THE CORPORATE EXECUTIVE BOARD COMPANY
Consolidated Statements of Operations
(In thousands, except per share data)
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Three Months Ended March 31,
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2015
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2014
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(Unaudited)
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Revenue (1)
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$
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221,599
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$
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209,437
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Costs and expenses:
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Cost of services (2)
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78,659
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77,238
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Member relations and marketing (2)
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66,085
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66,763
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General and administrative (2)
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28,805
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29,125
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Acquisition related costs (3)
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—
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1,339
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Restructuring costs
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1,238
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—
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Depreciation and amortization
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16,842
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16,494
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Total costs and expenses
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191,629
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190,959
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Operating profit
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29,970
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18,478
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Other income (expense), net
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Interest income and other (4)
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5,726
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(510
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Interest expense
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(4,439
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(4,926
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Other income (expense), net
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1,287
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(5,436
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Income before provision for income taxes
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31,257
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13,042
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Provision for income taxes
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12,167
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5,386
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Net income
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$
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19,090
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$
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7,656
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Basic earnings per share
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$
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0.57
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$
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0.23
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Diluted earnings per share
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$
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0.56
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$
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0.22
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Weighted average shares outstanding
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Basic
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33,517
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33,639
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Diluted
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33,855
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34,072
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Percentage of Adjusted Revenue
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|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
35.4
|
%
|
|
|
|
36.7
|
%
|
Member relations and marketing
|
|
|
|
29.8
|
%
|
|
|
|
31.7
|
%
|
General and administrative
|
|
|
|
13.0
|
%
|
|
|
|
13.8
|
%
|
Depreciation and amortization
|
|
|
|
7.6
|
%
|
|
|
|
7.8
|
%
|
Operating profit
|
|
|
|
13.5
|
%
|
|
|
|
8.8
|
%
|
Adjusted EBITDA (5)
|
|
|
|
23.9
|
%
|
|
|
|
19.8
|
%
|
(1)
|
Net of a $0.4 million and $1.3 million reduction to reflect the
impact of the deferred revenue fair value adjustment in the three
months ended March 31, 2015 and 2014, respectively.
|
(2)
|
The Company adjusted its allocation of certain costs in the three
months ended March 31, 2014 to conform to the current period
presentation. The reclassification did not have an impact on total
costs and expenses or operating profit.
|
(3)
|
Acquisition related costs in the three months ended March 31, 2014
primarily relate to transaction and integration costs associated
with the acquisitions of Metrics That Matter and Talent Neuron.
|
(4)
|
Interest income and other in the three months ended March 31, 2015
includes a $6.2 million net non-operating foreign currency gain,
$0.1 million of interest income, and a $0.4 million increase in the
fair value of deferred compensation plan assets offset by $0.8
million of equity method investment losses and $0.2 million of other
losses. Interest income and other in the three months ended March
31, 2014 includes a $0.2 million increase in the fair value of
deferred compensation plan assets, $0.1 million of interest income,
and $0.1 million of other income offset by a $0.9 million net
non-operating foreign currency loss.
|
(5)
|
See “Non-GAAP Financial Measures” for further explanation.
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
Segment Operating Results
(In thousands)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
Adjusted Revenue (1)
|
|
|
|
|
|
|
|
|
|
|
CEB segment
|
|
|
$
|
172,948
|
|
|
|
$
|
161,019
|
|
SHL Talent Measurement segment
|
|
|
|
49,070
|
|
|
|
|
49,702
|
|
|
|
|
$
|
222,018
|
|
|
|
$
|
210,721
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1)(2)
|
|
|
|
|
|
|
|
|
|
|
CEB segment
|
|
|
$
|
44,363
|
|
|
|
$
|
35,628
|
|
SHL Talent Measurement segment
|
|
|
|
8,774
|
|
|
|
|
6,196
|
|
|
|
|
$
|
53,137
|
|
|
|
$
|
41,824
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin (1)(2)
|
|
|
|
|
|
|
|
|
|
|
CEB segment
|
|
|
|
25.7
|
%
|
|
|
|
22.1
|
%
|
SHL Talent Measurement segment
|
|
|
|
17.9
|
%
|
|
|
|
12.5
|
%
|
Consolidated
|
|
|
|
23.9
|
%
|
|
|
|
19.8
|
%
|
(1)
|
See “Non-GAAP Financial Measures” for further explanation.
|
(2)
|
Net non-operating foreign currency gains (losses) included in Other
income were $6.2 million and $(0.9) million in the three months
ended March 31, 2015 and 2014, respectively.
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
Condensed Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
March 31, 2015
|
|
|
December 31, 2014
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
204,207
|
|
|
|
$
|
114,934
|
Accounts receivable, net (1)
|
|
|
|
190,915
|
|
|
|
|
283,069
|
Deferred income taxes, net
|
|
|
|
19,936
|
|
|
|
|
19,834
|
Deferred incentive compensation
|
|
|
|
28,397
|
|
|
|
|
25,779
|
Prepaid expenses and other current assets
|
|
|
|
28,000
|
|
|
|
|
21,245
|
Total current assets
|
|
|
|
471,455
|
|
|
|
|
464,861
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes, net
|
|
|
|
848
|
|
|
|
|
909
|
Property and equipment, net
|
|
|
|
109,317
|
|
|
|
|
112,524
|
Goodwill
|
|
|
|
423,153
|
|
|
|
|
441,207
|
Intangible assets, net
|
|
|
|
241,330
|
|
|
|
|
260,383
|
Other non-current assets
|
|
|
|
82,249
|
|
|
|
|
77,500
|
Total assets
|
|
|
$
|
1,328,352
|
|
|
|
$
|
1,357,384
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
68,672
|
|
|
|
$
|
89,696
|
Accrued incentive compensation
|
|
|
|
65,527
|
|
|
|
|
65,731
|
Deferred revenue (2)
|
|
|
|
478,665
|
|
|
|
|
452,679
|
Deferred income taxes, net
|
|
|
|
396
|
|
|
|
|
190
|
Debt – current portion
|
|
|
|
17,769
|
|
|
|
|
15,269
|
Total current liabilities
|
|
|
|
631,029
|
|
|
|
|
623,565
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
31,556
|
|
|
|
|
34,563
|
Other liabilities
|
|
|
|
124,730
|
|
|
|
|
122,832
|
Debt – long term
|
|
|
|
485,218
|
|
|
|
|
490,287
|
Total liabilities
|
|
|
|
1,272,533
|
|
|
|
|
1,271,247
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
|
55,819
|
|
|
|
|
86,137
|
Total liabilities and stockholders’ equity
|
|
|
$
|
1,328,352
|
|
|
|
$
|
1,357,384
|
(1)
|
Includes accounts receivable, net of $57.7 million and $61.7 million
at March 31, 2015 and December 31, 2014, respectively, related to
the SHL Talent Measurement segment.
|
(2)
|
Includes deferred revenue of $71.2 million and $67.4 million at
March 31, 2015 and December 31, 2014, respectively, related to the
SHL Talent Measurement segment.
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
(Unaudited)
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
19,090
|
|
|
|
$
|
7,656
|
|
Adjustments to reconcile net income to net cash flows provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Equity method investment loss
|
|
|
|
837
|
|
|
|
|
—
|
|
Depreciation and amortization
|
|
|
|
16,842
|
|
|
|
|
16,494
|
|
Amortization of credit facility issuance costs
|
|
|
|
649
|
|
|
|
|
642
|
|
Deferred income taxes
|
|
|
|
(879
|
)
|
|
|
|
(1,150
|
)
|
Share-based compensation
|
|
|
|
4,403
|
|
|
|
|
3,980
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
(3,829
|
)
|
|
|
|
(2,627
|
)
|
Net foreign currency remeasurement (gain) loss
|
|
|
|
(3,132
|
)
|
|
|
|
259
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
90,359
|
|
|
|
|
82,742
|
|
Deferred incentive compensation
|
|
|
|
(2,718
|
)
|
|
|
|
(2,140
|
)
|
Prepaid expenses and other current assets
|
|
|
|
(7,065
|
)
|
|
|
|
(7,190
|
)
|
Other non-current assets
|
|
|
|
(6,008
|
)
|
|
|
|
5
|
|
Accounts payable and accrued liabilities
|
|
|
|
(16,607
|
)
|
|
|
|
(15,280
|
)
|
Accrued incentive compensation
|
|
|
|
386
|
|
|
|
|
1,576
|
|
Deferred revenue
|
|
|
|
29,537
|
|
|
|
|
28,946
|
|
Other liabilities
|
|
|
|
2,253
|
|
|
|
|
605
|
|
Net cash flows provided by operating activities
|
|
|
|
124,118
|
|
|
|
|
114,518
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(6,112
|
)
|
|
|
|
(11,033
|
)
|
Cost method and other investments
|
|
|
|
(339
|
)
|
|
|
|
—
|
|
Acquisition of businesses, net of cash acquired
|
|
|
|
—
|
|
|
|
|
(58,959
|
)
|
Net cash flows used in investing activities
|
|
|
|
(6,451
|
)
|
|
|
|
(69,992
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments of credit facility
|
|
|
|
(2,688
|
)
|
|
|
|
(2,688
|
)
|
Proceeds from the issuance of common stock under the employee stock
purchase plan
|
|
|
|
366
|
|
|
|
|
249
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
3,829
|
|
|
|
|
2,627
|
|
Purchase of treasury shares
|
|
|
|
(6,092
|
)
|
|
|
|
—
|
|
Withholding of shares to satisfy minimum employee tax withholding
for equity awards
|
|
|
|
(6,605
|
)
|
|
|
|
(4,490
|
)
|
Payment of dividends
|
|
|
|
(12,530
|
)
|
|
|
|
(8,826
|
)
|
Net cash flows used in financing activities
|
|
|
|
(23,720
|
)
|
|
|
|
(13,128
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash
|
|
|
|
(4,674
|
)
|
|
|
|
690
|
|
Net increase in cash and cash equivalents
|
|
|
|
89,273
|
|
|
|
|
32,088
|
|
Cash and cash equivalents, beginning of year
|
|
|
|
114,934
|
|
|
|
|
119,554
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
204,207
|
|
|
|
$
|
151,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)
|
|
A reconciliation of each of the non-GAAP measures to the most
directly comparable GAAP measure is provided below.
|
|
Adjusted Revenue
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
CEB
|
|
|
|
SHL
|
|
|
Total
|
|
|
CEB
|
|
|
SHL
|
|
|
|
Total
|
Revenue
|
|
|
$
|
172,894
|
|
|
|
$
|
48,705
|
|
|
$
|
221,599
|
|
|
$
|
160,719
|
|
|
$
|
48,718
|
|
|
$
|
209,437
|
Impact of the deferred revenue fair value adjustment
|
|
|
|
54
|
|
|
|
|
365
|
|
|
|
419
|
|
|
|
300
|
|
|
|
984
|
|
|
|
1,284
|
Adjusted revenue
|
|
|
$
|
172,948
|
|
|
|
$
|
49,070
|
|
|
$
|
222,018
|
|
|
$
|
161,019
|
|
|
$
|
49,702
|
|
|
$
|
210,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
|
CEB
|
|
|
|
SHL
|
|
|
|
Total
|
|
|
|
CEB
|
|
|
|
SHL
|
|
|
|
Total
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,656
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,386
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,808
|
|
Other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,631
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
628
|
|
Operating profit (loss)
|
|
|
$
|
30,935
|
|
|
|
$
|
(965
|
)
|
|
|
|
29,970
|
|
|
|
$
|
22,374
|
|
|
|
$
|
(3,896
|
)
|
|
|
|
18,478
|
|
Other income (expense), net
|
|
|
|
3,408
|
|
|
|
|
2,223
|
|
|
|
|
5,631
|
|
|
|
|
(81
|
)
|
|
|
|
(547
|
)
|
|
|
|
(628
|
)
|
Net non-operating foreign currency (gain) loss
|
|
|
|
(3,810
|
)
|
|
|
|
(2,393
|
)
|
|
|
|
(6,203
|
)
|
|
|
|
387
|
|
|
|
|
490
|
|
|
|
|
877
|
|
Equity method investment loss
|
|
|
|
643
|
|
|
|
|
194
|
|
|
|
|
837
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Depreciation and amortization
|
|
|
|
8,822
|
|
|
|
|
8,020
|
|
|
|
|
16,842
|
|
|
|
|
7,792
|
|
|
|
|
8,702
|
|
|
|
|
16,494
|
|
Impact of the deferred revenue fair value adjustment
|
|
|
|
54
|
|
|
|
|
365
|
|
|
|
|
419
|
|
|
|
|
300
|
|
|
|
|
984
|
|
|
|
|
1,284
|
|
Acquisition related costs
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,339
|
|
|
|
|
—
|
|
|
|
|
1,339
|
|
Restructuring costs
|
|
|
|
290
|
|
|
|
|
948
|
|
|
|
|
1,238
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Share-based compensation
|
|
|
|
4,021
|
|
|
|
|
382
|
|
|
|
|
4,403
|
|
|
|
|
3,517
|
|
|
|
|
463
|
|
|
|
|
3,980
|
|
Adjusted EBITDA
|
|
|
$
|
44,363
|
|
|
|
$
|
8,774
|
|
|
|
$
|
53,137
|
|
|
|
$
|
35,628
|
|
|
|
$
|
6,196
|
|
|
|
$
|
41,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
|
25.7
|
%
|
|
|
|
17.9
|
%
|
|
|
|
23.9
|
%
|
|
|
|
22.1
|
%
|
|
|
|
12.5
|
%
|
|
|
|
19.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
Reconciliation of Non-GAAP Financial Measures (Continued)
(In thousands, except per share data)
|
|
Adjusted Net Income
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2015
|
|
|
|
2014
|
Net income
|
|
|
$
|
19,090
|
|
|
|
$
|
7,656
|
Net non-operating foreign currency (gain) loss (1)
|
|
|
|
(5,388
|
)
|
|
|
|
794
|
Equity method investment loss (1)
|
|
|
|
577
|
|
|
|
|
—
|
Amortization of acquisition related intangibles (1)
|
|
|
|
6,368
|
|
|
|
|
6,500
|
Impact of the deferred revenue fair value adjustment (1)
|
|
|
|
310
|
|
|
|
|
908
|
Acquisition related costs (1)
|
|
|
|
—
|
|
|
|
|
802
|
Restructuring costs (1)
|
|
|
|
860
|
|
|
|
|
—
|
Share-based compensation (1)
|
|
|
|
2,733
|
|
|
|
|
2,458
|
Adjusted net income
|
|
|
$
|
24,550
|
|
|
|
$
|
19,118
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted Earnings per Share
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2015
|
|
|
|
2014
|
Diluted earnings per share
|
|
|
$
|
0.56
|
|
|
|
$
|
0.22
|
Net non-operating foreign currency (gain) loss (1)
|
|
|
|
(0.16
|
)
|
|
|
|
0.02
|
Equity method investment loss (1)
|
|
|
|
0.02
|
|
|
|
|
—
|
Amortization of acquisition related intangibles (1)
|
|
|
|
0.19
|
|
|
|
|
0.19
|
Impact of the deferred revenue fair value adjustment (1)
|
|
|
|
0.01
|
|
|
|
|
0.03
|
Acquisition related costs (1)
|
|
|
|
—
|
|
|
|
|
0.03
|
Restructuring costs (1)
|
|
|
|
0.03
|
|
|
|
|
—
|
Share-based compensation (1)
|
|
|
|
0.08
|
|
|
|
|
0.07
|
Non-GAAP diluted earnings per share
|
|
|
$
|
0.73
|
|
|
|
$
|
0.56
|
(1)
|
Adjustments are net of the annual estimated income tax effect using
statutory rates based on the relative amounts allocated to each
jurisdiction in the applicable period. The following income tax
rates were used: 13% in 2015 and 10% in 2014 for the net
non-operating foreign currency (gain) loss; 31% in 2015 for the
equity method investment loss; 29% in 2015 and 30% in 2014 for the
amortization of acquisition related intangibles; 26% in 2015 and 29%
in 2014 for the impact of the deferred revenue fair value
adjustment; 40% in 2014 for acquisition related costs; 31% in 2015
for restructuring costs; and 38% in 2015 and 2014 for share-based
compensation.
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
Reconciliation of Non-GAAP Financial Measures (Continued)
(In thousands, except per share data)
|
|
Constant Currency
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
CEB
|
|
|
SHL
|
|
|
Total
|
Adjusted revenue
|
|
|
$
|
172,948
|
|
|
|
$
|
49,070
|
|
|
|
$
|
222,018
|
Currency exchange rate fluctuations
|
|
|
|
2,626
|
|
|
|
|
4,594
|
|
|
|
|
7,220
|
Constant currency Adjusted revenue
|
|
|
$
|
175,574
|
|
|
|
$
|
53,664
|
|
|
|
$
|
229,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
44,363
|
|
|
|
$
|
8,774
|
|
|
|
$
|
53,137
|
Currency exchange rate fluctuations
|
|
|
|
148
|
|
|
|
|
1,416
|
|
|
|
|
1,564
|
Constant currency Adjusted EBITDA
|
|
|
$
|
44,511
|
|
|
|
$
|
10,190
|
|
|
|
$
|
54,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copyright Business Wire 2015