Gartner Reports Third Quarter 2006 Results.Contract Value of $598 Million STAMFORD, Conn. -- Gartner, Inc. (NYSE NYSE See: New York Stock Exchange : IT), the leading provider of research and analysis on the global information technology industry, today reported results for the third quarter ending September 30, 2006 and raised its guidance for the full year 2006. Third Quarter 2006 Results Total revenue for the third quarter of 2006 was $241.4 million, representing a 7% increase from $225.3 million in the third quarter of 2005. Research contract value at the end of the quarter was $597.8 million, an increase of 5% over the same quarter last year. For the 2006 third quarter, Normalized EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was $30.0 million, fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. was $0.08 and normalized EPS was $0.13. Normalized EPS excludes a $4.7 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to stock-based compensation under FAS123(R) and a $3.4 million non-cash charge for the amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. acquired in the META acquisition. See "Non-GAAP Financial Measures" below for a further discussion of normalized EBITDA and normalized EPS. Excluding the effect of foreign currency, total revenue and research contract value for the 2006 third quarter increased approximately 6% and 8%, respectively, over the same quarter last year. During the third quarter in 2006, Gartner repurchased 1,067,400 shares of its common stock at a cost of $16.5 million. As of September 30, 2006, the Company has repurchased a total of 4,469,750 shares at an aggregate cost of $63.1 million under the $100 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: in October 2005. Results for the Nine Months Ending September 30, 2006 For the first nine months ending September 30, 2006, total revenue was $756.4 million, 8% increase from $699.7 million for the same period in 2005. For the nine months ending September 30, 2006, Normalized EBITDA was $103.2 million, fully diluted GAAP EPS was $0.31 and normalized EPS was $0.44. Normalized EPS for the first nine months excludes $11.7 million non-cash charge related to stock-based compensation under FAS123(R); $1.5 million charge related to the integration activities associated with our acquisition of META; and $10.2 million non-cash charge for the amortization of intangible assets acquired in the META acquisition. See "Non-GAAP Financial Measures" below for a further discussion of normalized EBITDA and normalized EPS. The effect of foreign currency on total revenue for the nine months ending September 30, 2006 was negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . . Business Segment Highlights Research. Research revenue was $144.1 million for the 2006 third quarter, an increase of 9% from the same period of 2005. At September 30, 2006, Research contract value was $597.8 million, up from $567.3 million at September 30, 2005. Client and wallet See digital wallet. retention rates for the third quarter were 81% and 93%, respectively. Consulting. Consulting revenue was $69.5 million for the 2006 third quarter compared to $72.7 million for the same period of 2005. Utilization averaged 61% during the 2006 third quarter compared with average utilization of 59% for the same period of 2005. The average annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue per billable headcount is about $350,000 for the quarter. Billable headcount for the third quarter was 517 versus 533 for the third quarter of 2005. Consulting backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was $107.7 million at September 30, 2006, as compared to $118.1 million at September 30, 2005. Events. Events revenue was $24.1 million for the 2006 third quarter, up 40% from the same period in 2006. The Company held 17 events in the third quarter of 2006, with 6,578 attendees, as compared to 13 events, with 5,155 attendees, during the same period in 2005. Gene Hall, Gartner's chief executive officer, said, "The results this quarter continue to reflect our focused execution on our strategy to grow the research business and improve margins. Contract value ended the quarter at $598 million, just below its high of $599 million in September of 2000. Our year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. normalized EBITDA is 63% higher than the same period in 2005. Our strong year-to-date results allow us to again revise upwards our guidance for 2006 and we remain confident that we will achieve the three year financial objectives we presented to investors in 2005." Guidance Gartner has updated its guidance for 2006 to reflect strength in the business and growth to the Company's operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . For the full year 2006, the Company is targeting total revenue of approximately $1,055 to $1,070 million. By segment, for the full year 2006, the Company is targeting Research revenue of approximately $563 million to $568 million, Consulting revenue of approximately $311 million to $316 million, Events revenue of approximately $168 million to $171 million, and other revenue of approximately $13 million to $15 million. Gartner is also increasing its guidance for EBITDA and EPS for the full year 2006. For the year, Gartner now expects normalized EBITDA of $153 million to $158 million, an increase of 46% to 50% percent over 2005. The Company is projecting GAAP EPS of $0.49 to $0.53 and normalized EPS of $0.65 to $0.69. The estimated fully diluted share count is 115 - 117 million shares. See "Non-GAAP Financial Measures" below for a further discussion of normalized EBITDA and normalized EPS. Conference Call Information Gartner has scheduled a conference call at 10 a.m. ET today, Tuesday, October 31, 2006, to discuss the Company's financial results. The conference call will be available via the Internet by accessing the Company's web site at http://investor.gartner.com. A replay of the webcast will be available for 30 days following the call. About Gartner Gartner, Inc. (NYSE: IT) delivers the technology-related insight necessary for our clients to make the right decisions, every day. Gartner serves 10,000 organizations, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company consists of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut Stamford is a city in Fairfield County, Connecticut, United States. According to 2006 Census Bureau estimates, the population of the city is 119,261, making it the fourth largest city in the state. , U.S.A., and has 3,700 associates, including 1,200 research analysts and consultants in 75 countries worldwide. For more information, visit gartner.com. Non-GAAP Financial Measures Investors are cautioned that normalized EBITDA and normalized EPS information contained in this press release are not financial measures under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP). In addition, they should not be construed as alternatives to any other measures of performance determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company's current financial performance and the Company's prospects for the future. We believe normalized EBITDA and normalized EPS are important measures of our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operations as they exclude items that may not be indicative of our core operating results and calculate earnings per share in a manner consistent with prior periods. Normalized EBITDA is based on operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , excluding impact of FAS 123(R), depreciation and amortization, goodwill impairments, and other charges. Normalized EPS is based on net income (loss) excluding other charges, impact of FAS 123(R), non-cash charges, goodwill impairments, amortization of acquired intangible assets, and gains and losses on investments. See "Supplemental Information" at the end of this release for reconciliation of GAAP EBITDA and EPS to normalized EBITDA and EPS. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Statements contained in this press release regarding the growth and prospects of the business, the Company's full year 2006 financial results, future restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , acquisition of META Group, Inc. and all other statements in this release other than recitation rec·i·ta·tion n. 1. a. The act of reciting memorized materials in a public performance. b. The material so presented. 2. a. Oral delivery of prepared lessons by a pupil. b. of historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to: the Company's ability to expand or even retain the Company's customer base; the Company's ability to grow or even sustain revenue from individual customers; the Company's ability to attract and retain professional staff of research analysts and consultants upon whom the Company is dependent; ability to achieve and effectively manage growth; the Company's ability to pay the Company's debt obligations; the Company's ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; the Company's ability to carry out the Company's strategic initiatives and manage associated costs; substantial competition from existing competitors and potential new competitors; additional risks associated with international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. including foreign currency fluctuations; the impact of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges on the Company's businesses and operations; and other risks listed from time to time in the Company's reports filed with the Securities and Exchange Commission. These filings can be found on Gartner's Web site at www.investor.gartner.com and the SEC's Web site at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
Footnotes
---------
(1) Normalized EBITDA is based on operating income (loss) before
interest, taxes, depreciation amortization, and certain
normalizing adjustments.
Normalized net income & EPS is based on net income (loss),
excluding normalizing adjustments which includes other charges,
non-cash charges, META integration and amortization charges,
goodwill impairments, gains and losses on investments, and charges
for stock-based compensation under SFAS No. 123R (see 4. below).
Normalized EBITDA, as well as normalized net income and EPS, are
not measurements of operating performance calculated in accordance
with generally accepted accounting principles (GAAP) and should
not be considered substitutes for operating income (loss) and net
income (loss) in accordance with GAAP. In addition, because these
measurements may not be defined consistently by other companies,
these measurements may not be comparable to similarly titled
measures of other companies.
However, we believe these indicators are relevant and useful to
investors because they provide alternative measures that take into
account certain adjustments that are viewed by our management as
being non-core items or charges.
(2) Other charges during 2005 included first quarter pre-tax charges
of $10.6 related to a reduction in workforce and $3.7 million
primarily for restructuring within the Company's international
operations, a second quarter pre-tax charge of $8.2 million,
primarily related to a reduction in facilities, and a third
quarter pre-tax charge of $6.0 related to an option buyback.
(3) The META integration charges are related to our acquisition of the
META Group, Inc. These costs were primarily for severance, and for
consulting, accounting, and tax services.
(4) The stock compensation charge represents the cost of stock-based
compensation awarded by the Company to its employees under
Statement of Financial Accounting Standards No. 123(R),
"Share-Based Payments" ("SFAS No. 123R"). The Company adopted
SFAS No. 123(R) on January 1, 2006 under the modified propective
method of adoption.
(5) The amortization of META intangibles represents the non-cash
amortization charges related to the other intangible assets
recorded as a result of the META acquisition.
(6) The loss on investments in 2005 related to the writedown of an
investment to its net realizable value. The charge is recorded in
"Loss from investments, net."
(7) The normalized effective tax rates were 23.7% and 31.2% for the
third quarters of 2006 and 2005 respectively, and 28.4% and 33.0%
for the first nine months of 2006 and 2005, respectively.
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion