First Half Revenues Totaled $65.8 Million, Down 32% from 2008;
Second Quarter Revenues of $31.5 Million, Down 38% First Half
EBITDA Down 46% to $8.2 Million; Second Quarter EBITDA of $3.8
Million, down 53% Diluted First Half and Second Quarter Cash EPS of
$0.19 and $0.09, Respectively, A Reduction of $0.12 and $0.08,
Respectively STAMFORD, Conn., Aug. 3 /PRNewswire-FirstCall/ --
Information Services Group, Inc. (ISG)
(NASDAQ:IIINASDAQ:IIIIUNASDAQ:IIIIW), an industry-leading,
information-based services company, today announced financial
results for the second quarter 2009 which ended on June 30, 2009.
Second Quarter 2009 Results ISG reported total revenues of $31.5
million during second quarter 2009, a decrease of $19.2 million (or
38%) from $50.7 million in the second quarter of 2008. Reported
revenues decreased 33% before the impact of currency translation.
Fee revenues (revenues before client reimbursable expenses)
aggregated $29.4 million during the second quarter of 2009, a
decrease of 37% year-over-year (down 32% before the impact of
currency translation). Revenues in the Americas decreased 33% for
the quarter as current and prospective clients deferred sourcing
decisions in the face of the continuing economic downturn. Revenues
from international operations decreased 32% on a constant currency
basis from a record performance in second quarter 2008 as clients,
particularly in Western Europe, adopted a more cautious approach to
implementing sourcing strategies in the face of the downturn.
International revenues in the second quarter of 2009 were down 44%
year-on-year including the impact of currency translation. Reported
operating income for the three months ended June 30, 2009 totaled
$1.4 million compared with $5.6 million during the same 2008
period. Excluding the impact of year-on-year currency translation
on reported revenues and expenses, operating income decreased $3.0
million or 70% from second quarter 2008 levels. Second quarter 2009
earnings before interest, taxes, depreciation and amortization
(EBITDA, a non-GAAP measure) totaled $3.8 million (12.8% of fee
revenues), compared with second quarter 2008 EBITDA of $8.1 million
(17.4% of fee revenues). Excluding the impact of currency
translation, EBITDA decreased $3.2 million or 46% from second
quarter 2008 levels. Second quarter 2009 operating income and
EBITDA include $1.6 million in severance charges offset partially
by a $0.6 million gain related to vacation accrual adjustments
which have no prior year counterpart. The declines in operating
income and EBITDA reported during the second quarter of 2009 were
primarily the result of lower revenue levels in all regions as well
as one time severance charges and unfavorable currency translation.
During the second quarter, direct costs as well as selling and
general and administrative expenses were reduced 38% and 29%,
respectively as ongoing cost productivity programs partially offset
the impact of lower revenues and one time severance related
charges. Reported fully diluted earnings per share (EPS) for the
second quarter 2009 totaled $0.00 versus $0.08 for the same 2008
period. Fully diluted cash EPS (a non-GAAP measure) for the second
quarter of 2009 was $0.09 compared with $0.17 for the second
quarter of 2008. The decrease in diluted cash EPS was principally
attributable to lower revenues and one time severance related
charges offset partially by decreased income taxes and lower net
interest expense. First Half 2009 Results ISG reported revenues of
$65.8 million during the first half of 2009, a decrease of $30.4
million or 32% compared with $96.2 million in the first half of
2008. Excluding the impact of currency translation on reported
results, first half 2009 revenues decreased $22.1 million or 26%.
Fee revenues (revenues before client reimbursable expenses)
aggregated $61.3 million during the first half of 2009, a decrease
of 31% year-over-year including the impact of currency translation
(down 25% before the impact of currency translation). Revenues in
the Americas decreased 29% for the first half as current and
prospective clients deferred sourcing decisions. Revenues from
international operations decreased 20% on a constant currency basis
from a record performance in the first half of 2008 as clients,
particularly in Western Europe, adopted a more cautious approach to
implementing sourcing strategies in the face of growing
macro-economic uncertainties. International revenues in the first
half of 2009 were down 35% year-over-year including the impact of
currency translation. Operating income for the first six months of
2009 was $3.4 million, a $6.0 million or 64% decrease from a first
half 2008 total of $9.5 million. Operating income decreased 57%
before the impact of currency translation. ISG's first half 2009
EBITDA totaled $8.2 million (13.3% of fee revenues), a decrease of
approximately 46% (38% before currency impacts) or $6.9 million
from first half 2008 EBITDA of $15.1 million (17.0% of fee
revenues). Decreases in both operating income and EBITDA for the
first half of 2009 resulted primarily from lower revenues in the
Americas and Western Europe and a one time foreign currency related
gain in 2008 which had no current year counterpart; partially
offset by a 28% reduction in operating costs attributable to the
Company's productivity programs implemented over the past 18
months. First half 2009 operating income and EBITDA include the
impact of $1.7 million in severance charges offset partially by a
$0.6 million gain related to vacation accrual adjustments which
have no prior year counterpart. Reported fully diluted EPS for the
first half of 2009 totaled $0.02 versus $0.13 for the same 2008
period. Fully diluted cash EPS for the first half of 2009 was $0.19
compared with $0.31 for the first half of 2008. The decrease in
diluted cash EPS was principally attributable to lower revenues and
severance costs offset partially by decreased income taxes and
lower net interest expense. Other Financial and Operating
Highlights Cash and cash equivalents aggregated $45.8 million at
June 30, 2009, a decrease of $15.3 million from year end 2008. The
decrease in cash balances from year-end 2008 was principally
attributable to the disbursement of 2008 variable incentive plan
payments during March 2009, term loan interest and principal
payments (including a $12.0 million voluntary principal prepayment
during June 2009) as well as capital expenditures and severance
payments which more than offset positive operating cash flow. Total
outstanding debt at June 30, 2009 was $81.8 million. "In the face
of the continued downturn in the global economy, ISG remains
focused on driving best-in-class cost productivity levels,
investing in our future with new product and service offerings,
expanding our global presence and pursuing acquisitions to expand
capabilities and scale. Growth in the overall sourcing market
remains sluggish in 2009 as clients continue to look for tactical
short term cost reductions. Over the medium to longer term, we feel
strongly that sourcing strategies remain a compelling business case
with a strong ROI for our clients. When corporate confidence and
decision-making return to historical norms, ISG will be well
positioned to support our clients' efforts to lower their costs and
drive business improvements in their key technology and business
operations," said Michael P. Connors, Chairman and CEO of ISG.
Conference Call ISG has scheduled a conference call at 2:00 p.m.
Eastern Daylight Time, Tuesday, August 4, 2009, to discuss the
Company's financial results. The call can be accessed by dialing 1
(888) 318-7452 or for international callers 001 (719) 867-0354. The
access code is 4364880. About Information Services Group, Inc.
Information Services Group, Inc. (ISG) was founded in 2006 to build
an industry-leading, high-growth, information-based services
company by acquiring and growing businesses in advisory, data,
business and media information services. In November 2007, ISG
acquired TPI, the largest sourcing advisory firm in the world.
Based in Stamford, Connecticut, ISG has a proven leadership team
with global experience in information-based services and a track
record of creating significant value for shareowners, clients and
employees. For more, visit http://www.informationsg.com/. About TPI
TPI, a unit of ISG, is the founder and innovator of the sourcing
advisory industry, and the largest sourcing data and advisory firm
in the world. TPI is expert at a broad range of business support
functions and related research methodologies. Utilizing deep
functional domain expertise and extensive practical experience,
TPI's accomplished industry experts collaborate with organizations
to help them advance their business operations through the best
combination of business process improvement, shared services,
outsourcing and offshoring. In addition, TPI Momentum, a business
unit of TPI, provides information and insights to outsourcing and
offshoring service providers to help them provide enhanced services
to their sourcing clients. For additional information, visit
http://www.tpi.net/. Non-GAAP Financial Measures ISG reports all
financial information required in accordance with U.S. generally
accepted accounting principles (GAAP). In this release, ISG has
presented both GAAP financial results as well as non-GAAP
information for the three months ended June 30, 2009 and June 30,
2008. ISG believes that evaluating its ongoing operating results
will be enhanced if it discloses certain non-GAAP information.
These non-GAAP financial measures exclude non-cash and certain
other special charges that many investors believe may obscure the
user's overall understanding of ISG's current financial performance
and the Company's prospects for the future. ISG believes that these
non-GAAP measures provide useful information to investors because
they improve the comparability of the financial results between
periods and provide for greater transparency of key measures used
to evaluate the Company's performance. ISG provides EBITDA (defined
as net income plus income taxes, net interest income/(expense),
depreciation, and amortization of intangible assets resulting from
acquisitions) and cash earnings (defined as net income plus
amortization of intangible assets and non-cash stock based
compensation) and selected financial data on a constant currency
basis (using foreign currency exchange rates as of November 30,
2008), which are non-GAAP measures that the Company believes
provide useful information to both management and investors by
excluding certain expenses and financial implications of foreign
currency translations, which management believes are not indicative
of ISG's core operations. These non-GAAP measures are used by ISG
to evaluate the Company's business strategies and management's
performance. Non-GAAP financial measures, when presented, are
reconciled to the most closely applicable GAAP measure. Non-GAAP
measures are provided as additional information and should not be
considered in isolation or as a substitute for results prepared in
accordance with GAAP. Forward-Looking Statements This communication
contains "forward-looking statements" which represent the current
expectations and beliefs of management of ISG concerning future
events and their potential effects. Statements contained herein
including words such as "anticipate," "believe," "contemplate,"
"plan," "estimate," "expect," "intend," "will," "continue,"
"should," "may," and other similar expressions, are
"forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
not guarantees of future results and are subject to certain risks
and uncertainties that could cause actual results to differ
materially from those anticipated. Those risks relate to inherent
business, economic and competitive uncertainties and contingencies
relating to the businesses of ISG and TPI including without
limitation: (1) failure to secure new engagements or loss of
important clients; (2) ability to hire and retain enough qualified
employees to support operations; (3) ability to maintain or
increase billing and utilization rates; (4) management of growth;
(5) success of expansion internationally; (6) competition; (7)
ability to move the product mix into higher margin businesses; (8)
general political and social conditions such as war, political
unrest and terrorism; (9) healthcare and benefit cost management;
(10) ability to protect ISG and TPI's intellectual property and the
intellectual property of others; (11) currency fluctuations and
exchange rate adjustments; (12) ability to successfully consummate
or integrate strategic acquisitions; (13) financial condition of
various clients in the financial, automotive and transportation
sectors which account for significant portions of the Company's
revenues and may maintain sizable accounts receivables with the
Company; and (14) ability to achieve the cost reduction and
productivity improvements contemplated in the previously announced
"Value Creation Plan" and in subsequent programs. Certain of these
and other applicable risks, cautionary statements and factors that
could cause actual results to differ from ISG's forward-looking
statements are included in ISG's filings with the U.S. Securities
and Exchange Commission ("SEC"). ISG undertakes no obligation to
update or revise any forward-looking statements to reflect
subsequent events or circumstances. Information Services Group,
Inc. Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts) Three Months Six Months
Ended June 30, Ended June 30, -------------- -------------- 2009
2008 2009 2008 ---- ---- ---- ---- Revenue $31,518 $50,693 $65,817
$96,247 Operating expenses Direct costs and expenses for advisors
17,614 28,242 32,479 54,056 Selling, general and administrative
10,106 14,308 25,115 27,548 Depreciation and amortization 2,422
2,591 4,794 5,179 ----- ----- ----- ----- Operating income 1,376
5,552 3,429 9,464 ----- ----- ----- ----- Interest income 52 289
215 656 Interest expense (1,226) (1,666) (2,529) (3,590) Foreign
currency transaction (loss) gain (32) (53) (44) 408 ----- -----
----- ----- Income before taxes 170 4,122 1,071 6,938 Income tax
provision (72) (1,698) (432) (2,851) ----- ----- ----- ----- Net
income 98 2,424 639 4,087 ===== ===== ===== ===== Weighted average
shares outstanding: Basic 31,471 31,307 31,445 31,333 Diluted
31,559 31,307 31,512 31,333 Earnings per share: Basic $0.00 $0.08
$0.02 $0.13 ===== ===== ===== ===== Diluted $0.00 $0.08 $0.02 $0.13
===== ===== ===== ===== EBITDA $3,766 $8,090 $8,179 $15,051 Less:
Income tax 72 1,698 432 2,851 Interest expense (net of interest
income) 1,174 1,377 2,314 2,934 Depreciation and amortization 2,422
2,591 4,794 5,179 ----- ----- ----- ----- Net income 98 2,424 639
4,087 Plus: Amortization 2,036 2,212 4,072 4,423 Non-cash stock
based compensation 617 635 1,310 1,353 ----- ----- ----- ----- Cash
earnings $2,751 $5,271 $6,021 $9,863 ===== ===== ===== ===== Cash
earnings per share: Basic $0.09 $0.17 $0.19 $0.31 ===== ===== =====
===== Diluted $0.09 $0.17 $0.19 $0.31 ===== ===== ===== =====
Information Services Group, Inc. Selected Financial Data Constant
Currency Comparison Three Months Three Months Constant Ended Ended
currency June 30, 2009 June 30, 2009 impact (1) Adjusted
------------------------------------------- Revenue $31,518
$(1,198) $30,320 Operating income $1,377 $(76) $1,301 EBITDA $3,767
$(44) $3,723 Three Months Three Months Constant Ended Ended
currency June 30, 2008 June 30, 2008 impact (1) Adjusted
------------------------------------------- Revenue $50,693
$(5,258) $45,435 Operating income $5,552 $(1,222) $4,330 EBITDA
$8,090 $(1,169) $6,921 Six Months Six Months Constant Ended Ended
currency June 30, 2009 June 30, 2009 impact (1) Adjusted
------------------------------------------- Revenue $65,817
$(1,427) $64,390 Operating income $3,430 $(65) $3,365 EBITDA $8,180
$3 $8,183 Six Months Six Months Constant Ended Ended currency June
30, 2008 June 30, 2008 impact (1) Adjusted
------------------------------------------- Revenue $96,247
$(9,733) $86,514 Operating income $9,464 $(1,696) $7,768 EBITDA
$15,051 $(1,800) $13,251 (1) Using foreign currency rates as of
11/30/2008 DATASOURCE: Information Services Group, Inc. CONTACT:
Media, Barry Holt, +1-203-517-3110, , or Investors, Frank Martell,
+1-203-517-3104, Web Site: http://www.informationsg.com/
Copyright