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The Corporate Executive Board Company Reports Second Quarter Results and Raises 2012 Non-GAAP Diluted Earnings Per Share and Adjusted EBITDA Guidance

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ARLINGTON, Va.--(BUSINESS WIRE)--

The Corporate Executive Board Company (“CEB” or the “Company”) (NYSE: EXBD) today announces financial results for the second quarter and six months ended June 30, 2012. Revenues increased 15.5% to $135.7 million for the second quarter of 2012 from $117.5 million for the second quarter of 2011. Income from continuing operations for the second quarter of 2012 was $14.8 million, or $0.44 per diluted share, compared to $11.0 million, or $0.31 per diluted share, for the same period of 2011. Adjusted net income was $16.1 million and non-GAAP diluted earnings per share was $0.48 in the second quarter of 2012 compared to $11.0 million and $0.31 for the same period of 2011, respectively.

For the first six months of 2012, revenues were $264.2 million, a 14.3% increase from $231.1 million for the first six months of 2011. Income from continuing operations for the first six months of 2012 was $30.3 million, or $0.90 per diluted share, compared to $23.0 million, or $0.66 per diluted share, for the same period of 2011. Adjusted net income was $31.9 million and non-GAAP diluted earnings per share was $0.95 in the second quarter of 2012 compared to $23.0 million and $0.66 for the same period of 2011, respectively.

Contract Value at June 30, 2012 increased 12.2% to $512.7 million compared to $456.8 million at June 30, 2011. Wallet retention rate at June 30, 2012 was 100% compared to 103% at June 30, 2011. Contract Value per member institution increased 2.1% at June 30, 2012 to $86,756 from $84,942 at June 30, 2011.

“Our solid second quarter results reflect our focus on delivering value to members and put us on pace to exceed our prior earnings outlook for 2012,” said Thomas Monahan, Chairman and Chief Executive Officer. “This favorable momentum provides a helpful backdrop as we move towards closing and integrating the SHL acquisition. Looking forward, we continue to see tremendous opportunities as organizations around the world seek to manage human capital with the same rigor and analytic depth that they use to manage other vital corporate assets. By linking CEB's insight into the drivers of corporate, functional, and individual performance with SHL's deep resources on people and talent, we will be able to help the combined organization's more than 10,000 customers unlock the full potential of their organizations.”

“We are also pleased to announce the changing of our stock ticker symbol to CEB,” he said, “which supports our efforts to drive greater brand awareness in the market place.”

OUTLOOK FOR 2012

The Company reaffirms its 2012 annual guidance of Revenues of $535 to $555 million and capital expenditures of $12 to $15 million and raises its 2012 annual guidance as follows: Non-GAAP diluted earnings per share of $1.90 to $2.05; an Adjusted EBITDA margin of between 24.0% and 25.0%; and Depreciation and amortization expense of $21 to $23 million. The outlook does not include the impact of the SHL acquisition which is expected to close on August 2, 2012. The Company expects to update its outlook to reflect SHL post-acquisition operating results in connection with its third quarter 2012 earnings release.

NEW TICKER SYMBOL

The Company is scheduled to change its New York Stock Exchange (“NYSE”) ticker symbol and begin trading under the ticker symbol “CEB” effective August 13, 2012. The change is being made because “CEB” more closely aligns with the Company's brand recognition. The Company's common stock has traded on the NYSE under the ticker symbol “EXBD” since August 2010. Prior to that, the Company's common stock was traded on the NASDAQ under the ticker symbol “EXBD” since the Company's initial public offering in February 1999.

NON-GAAP FINANCIAL MEASURES

This press release and the accompanying tables, as well as earnings discussions, include 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; acquisition related costs; 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 acquisition related costs, 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 acquisition related costs, 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 each of these non-GAAP measures to the most directly comparable GAAP measure is provided below.

   
Three Months Ended

June 30,

Six Months Ended

June 30,

2012   2011   2012   2011
Net income $14,765   $10,344 $30,326   $21,698
Loss from discontinued operations, net of provision for income taxes

-

   

612

   

-

   

1,318

 
Income from continuing operations 14,765 10,956 30,326 23,016
Interest income, net (58 ) (149 ) (135 ) (463 )
Depreciation and amortization 5,935 4,383 10,964 8,437
Provision for income taxes 9,993 8,075 20,987 16,397
Acquisition related costs (1) 2,253     -     2,729     -  
Adjusted EBITDA $32,888     $23,265     $64,871     $47,387  
 
Three Months Ended

June 30,

Six Months Ended

June 30,

2012   2011   2012   2011
Net income $14,765 $10,344 $30,326 $21,698
Loss from discontinued operations, net of provision for income taxes

-

   

612

   

-

   

1,318

 
Income from continuing operations 14,765 10,956 30,326 23,016
Acquisition related costs (2) 1,343     -     1,622     -  
Adjusted net income $16,108     $10,956     $31,948     $23,016  
 
Three Months Ended

June 30,

Six Months Ended

June 30,

2012   2011   2012     2011
Earnings per diluted share $0.44 $0.30 $0.90 $0.62
Loss from discontinued operations, net of provision for income taxes -     0.02     -     0.04  
Earnings per diluted share from continuing operations 0.44 0.31 0.90 0.66
Acquisition related costs (2) 0.04     -     0.05     -  
Non-GAAP earnings per diluted share $0.48     $0.31     $0.95     $0.66  
 

(1)

Amounts represent costs incurred by the Company in connection with its acquisitions, substantially all of which relates to the pending acquisition of SHL.

(2)

Adjustment reflects the net amount of the estimated tax effects based on the effective tax rate for income from continuing operations for the applicable period.

 

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.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

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