| Contact: | Timothy R. Yost | 2000 Pennsylvania Avenue, N.W. | ||
| Chief Financial Officer | Suite 6000 | |||
| (202) 777-5455 | Washington, D.C. 20006 | |||
| heroldl@executiveboard.com | www.executiveboard.com |
THE CORPORATE EXECUTIVE BOARD REPORTS
FIRST QUARTER EARNINGS OF $0.22 PER DILUTED SHARE
WASHINGTON, D.C. (April 23, 2003)— The Corporate Executive Board Company (CEB) (NASDAQ/NM:EXBD) today announced financial results for the first quarter ended March 31, 2003. Revenues for the first quarter increased 27.7% to $47,283,000 from $37,023,000 for the first quarter of 2002. Net income rose 40.5% to $8,336,000 from $5,931,000. Earnings per diluted share for the latest quarter were $0.22, up 37.5% from $0.16 for the comparable period in 2002. The Company has discontinued reporting pro forma financial results as of the first quarter of 2003 as the impact of stock option and related expenses on the financial results is no longer material.
Jay McGonigle, Chairman and CEO of the Corporate Executive Board commented, “We are very pleased with our first-quarter results and continued strong performance in a difficult economy. We achieved our stated target of 25%-plus revenue growth and experienced strong performance across our product range. All of our key growth metrics were on track in the quarter. The cross-sell ratio – the average number of subscriptions per member institution – rose to 2.74 from 2.50 at this time last year. New institution growth was also healthy, with Benjamin Moore & Co., CANAL+, Fisher-Price, J. Walter Thompson, the National Football League, Princeton University and Sealy Corporation all joining their first CEB programs. Continued success with our four new programs launched in 2002 — for heads of Market Research, IT Infrastructure, Training and Benefits — as well as the HR Measurement Lab launched in Q1 of 2003, also contributed to our strong revenue and contract value growth. The operating margin increased to 25.3% as a result of the operating leverage inherent in our business model.
“Our network of over 1,900 large companies, our focus on senior executives across multiple functions, and our ability to help them with their most urgent challenges, decisions and research needs continue to underpin this success. CEB remains the most cost-effective alternative for senior executives seeking the information they need to make better, faster decisions and avoid ‘reinventing the wheel’.”
Share Repurchase
During the first quarter of 2003, the Company repurchased 405,052 shares of its common stock at a total cost of approximately $13,398,000. Repurchases will continue to be made in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. The Company is funding its share repurchases with cash on hand and cash generated from operations. At March 31, 2003 the Company had $245,787,000 in cash and marketable securities and no debt.
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EXBD Announces First-Quarter Results
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April 23, 2003
Outlook for 2003
The following statements summarize the Company’s guidance for 2003.
The Company reiterated comfort with its target for annual growth in revenues of a minimum of 25% and continued modest expansion in the operating margin within its target annual range of 25 - 30%. As in the past, the operating margin may fluctuate on a quarterly basis. The Company expects a quarterly revenue distribution of approximately $49.7 million for the second quarter, $51.4 million for the third quarter and $55.2 million for the fourth quarter of 2003.
For 2003, the Company expects other income of approximately $7.5 million to $7.9 million, an effective income tax rate of approximately 39.4% and diluted weighted shares outstanding of approximately 38.3 million to 38.8 million.
The Company remains comfortable with earnings per diluted share of $0.24 for the second quarter, $0.25 for the third quarter, and $0.28 for the fourth quarter which, combined with the earnings per diluted share of $0.22 for the first quarter, will bring full year earnings per diluted share guidance to $0.99.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth below and in CEB’s filings with the Securities and Exchange Commission, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. 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, our inability to know in advance if new products will be successful, difficulties we may experience in anticipating market trends, our need to attract and retain a significant number of highly skilled employees, restrictions on selling our products and services to the health care industry, continued consolidation in the financial institutions industry, which may limit our business with such companies, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to litigation related to our content, our potential exposure to loss of revenue resulting from our unconditional service guarantee, various factors that could affect our estimated income tax rate or our ability to use our existing deferred tax assets, and possible volatility of our stock price. These factors are discussed more fully in the 2002 annual report on Form 10-K that we filed with the Securities and Exchange Commission on February 28, 2003. The forward-looking statements in this press release are made as of April 23, 2003, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
The Corporate Executive Board Company is a leading provider of best practices research and analysis focusing on corporate strategy, operations and general management issues. CEB provides its integrated set of services currently to more than 1,900 of the world’s largest and most prestigious corporations, including over 70% of the Fortune 500. These services are provided primarily on an annual subscription basis and include best practices research studies, executive education seminars, customized research briefs and Web-based access to a library of over 225,000 corporate best practices.
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EXBD Announces First-Quarter Results
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April 23, 2003
THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights
(in thousands, except per share data)
(Unaudited)
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2003 | 2002 | ||||||||
| Revenues | $ | 47,283 | $ | 37,023 | |||||
| Net income | $ | 8,336 | $ | 5,931 | |||||
| Basic earnings per share | $ | 0.22 | $ | 0.17 | |||||
| Diluted earnings per share | $ | 0.22 | $ | 0.16 | |||||
| Weighted average shares outstanding: | |||||||||
| Basic | 37,223 | 35,538 | |||||||
| Diluted | 37,878 | 37,130 | |||||||
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EXBD Announces First-Quarter Results
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April 23, 2003
THE CORPORATE EXECUTIVE BOARD COMPANY
Operating Statistic and Financial Highlights
(in thousands, except per share data)
(Unaudited)
| Selected | Three Months Ended | |||||||||||||||
| Growth | March 31, | |||||||||||||||
| Rates | 2003 | 2002 | ||||||||||||||
Operating Statistic | ||||||||||||||||
Contract Value (1) (at period end) | 27.1 | % | $ | 182,264 | $ | 143,424 | ||||||||||
Financial Highlights | ||||||||||||||||
| Revenues | 27.7 | % | $ | 47,283 | $ | 37,023 | ||||||||||
| Cost of services | 16,118 | 13,517 | ||||||||||||||
| Gross profit | 31,165 | 23,506 | ||||||||||||||
| Member relations and marketing | 12,387 | 9,108 | ||||||||||||||
| General and administrative | 5,330 | 4,221 | ||||||||||||||
| Depreciation | 1,356 | 1,204 | ||||||||||||||
| Stock option and related expenses | 111 | 623 | ||||||||||||||
| Income from operations | 43.5 | % | 11,981 | 8,350 | ||||||||||||
| Other income, net | 1,775 | 1,217 | ||||||||||||||
| Income before provision for income taxes | 13,756 | 9,567 | ||||||||||||||
| Provision for income taxes | 5,420 | 3,636 | ||||||||||||||
| Net income | 40.5 | % | $ | 8,336 | $ | 5,931 | ||||||||||
| EPS-basic | $ | 0.22 | $ | 0.17 | ||||||||||||
| EPS–diluted | 37.5 | % | $ | 0.22 | $ | 0.16 | ||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic | 37,223 | 35,538 | ||||||||||||||
| Diluted | 37,878 | 37,130 | ||||||||||||||
Percentages of Revenues | ||||||||||||||||
| Gross profit | 65.9 | % | 63.5 | % | ||||||||||||
| Member relations and marketing | 26.2 | % | 24.6 | % | ||||||||||||
| General and administrative | 11.3 | % | 11.4 | % | ||||||||||||
| Income from operations | 25.3 | % | 22.6 | % | ||||||||||||
| Net income | 17.6 | % | 16.0 | % | ||||||||||||
| (1) | We define“Contract Value” as of the quarter-end as the aggregate annualized revenue attributed to all agreements in effect on such date, without regard to the remaining duration of any such agreement. |
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EXBD Announces First-Quarter Results
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April 23, 2003
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED BALANCE SHEETS
(in thousands)
| March 31, 2003 | Dec. 31, 2002 | ||||||||||
| (Unaudited) | |||||||||||
Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 96,232 | $ | 71,346 | |||||||
| Marketable securities | 10,816 | 17,030 | |||||||||
| Membership fees receivable, net | 21,247 | 50,356 | |||||||||
| Deferred income taxes, net | 28,250 | 28,806 | |||||||||
| Deferred incentive compensation | 4,458 | 4,974 | |||||||||
| Prepaid expenses and other current assets | 6,521 | 3,668 | |||||||||
| Total current assets | 167,524 | 176,180 | |||||||||
| Deferred income taxes, net | 30,548 | 30,920 | |||||||||
| Marketable securities | 138,739 | 137,565 | |||||||||
| Property and equipment, net | 15,042 | 14,916 | |||||||||
| Total assets | $ | 351,853 | $ | 359,581 | |||||||
Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 12,727 | $ | 12,549 | |||||||
| Accrued incentive compensation | 5,213 | 9,660 | |||||||||
| Deferred revenues | 111,538 | 121,415 | |||||||||
| Total current liabilities | 129,478 | 143,624 | |||||||||
| Other liabilities | 2,713 | 2,600 | |||||||||
| Total liabilities | 132,191 | 146,224 | |||||||||
| Stockholders’ equity | 219,662 | 213,357 | |||||||||
| Total liabilities and stockholders’ equity | $ | 351,853 | $ | 359,581 | |||||||
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EXBD Announces First-Quarter Results
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April 23, 2003
THE CORPORATE EXECUTIVE BOARD COMPANY
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2003 | 2002 | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income | $ | 8,336 | $ | 5,931 | ||||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
| Depreciation | 1,356 | 1,204 | ||||||||||
| Deferred income taxes | 5,420 | 3,636 | ||||||||||
| Amortization of marketable securities premiums, net | 422 | 251 | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Membership fees receivable, net | 29,109 | 22,914 | ||||||||||
| Deferred incentive compensation | 516 | 742 | ||||||||||
| Prepaid expenses and other current assets | (2,853 | ) | (601 | ) | ||||||||
| Accounts payable and accrued liabilities | 63 | (3,152 | ) | |||||||||
| Accrued incentive compensation | (4,447 | ) | (2,320 | ) | ||||||||
| Deferred revenues | (9,877 | ) | (7,864 | ) | ||||||||
| Other liabilities | 113 | 178 | ||||||||||
| Net cash flows provided by operating activities | 28,158 | 20,919 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchase of property and equipment, net | (1,482 | ) | (1,105 | ) | ||||||||
| Maturity (purchase) of marketable securities, net | 4,001 | (1,100 | ) | |||||||||
| Net cash flows provided by (used in) investing activities | 2,519 | (2,205 | ) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from the exercise of common stock options | 7,326 | 11,158 | ||||||||||
| Proceeds from the issuance of common stock under the employee stock purchase plan | 166 | 157 | ||||||||||
| Purchase of treasury shares | (13,398 | ) | — | |||||||||
| Reimbursement of common stock offering costs | 175 | 300 | ||||||||||
| Payment of common stock offering costs | (60 | ) | (98 | ) | ||||||||
| Net cash flows provided by (used in) financing activities | (5,791 | ) | 11,517 | |||||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 24,886 | 30,231 | ||||||||||
| Cash and cash equivalents, beginning of period | 71,346 | 48,271 | ||||||||||
| Cash and cash equivalents, end of period | $ | 96,232 | $ | 78,502 | ||||||||
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