Gartner Reports Financial Results for Fourth Quarter and Full Year 2012

  Gartner Reports Financial Results for Fourth Quarter and Full Year 2012

             Contract Value $1,263 Million, up 14% YoY FX Neutral

                 Full Year 2012 Diluted EPS $1.73, Up 24% YOY

         Full Year 2012 Normalized EBITDA $315.2 Million, Up 13% YOY

Business Wire

STAMFORD, Conn. -- February 7, 2013

Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the
global information technology industry, today reported results for fourth
quarter and full year 2012 and provided its preliminary financial outlook for
2013.

For fourth quarter 2012, total revenue was $474.7 million, an increase of 11%
year-over-year, or 12% excluding the foreign exchange impact. Fourth quarter
2012 net income was $58.8 million, an increase of 31%, while Normalized EBITDA
was $97.0 million, an increase of 14%. Diluted income per share was $0.61
compared to $0.46 in fourth quarter 2011. Diluted Income Per Share Excluding
Acquisition Adjustments, which excludes the impact of acquisition-related
adjustments, was $0.63 per share for fourth quarter 2012 and $0.47 per share
for fourth quarter 2011 (See "Non-GAAP Financial Measures" below for a
discussion of Normalized EBITDA and Diluted Income Per Share Excluding
Acquisition Adjustments).

For full year 2012, total revenue was $1,615.8 million, an increase of 10%
over 2011, or 12% excluding the foreign exchange impact. Net income was $165.9
million in 2012, an increase of 21%. Normalized EBITDA was $315.2 million in
2012, an increase of 13% over 2011. Diluted income per share was $1.73 in 2012
compared to $1.39 in 2011, an increase of 24%. Diluted Income Per Share
Excluding Acquisition Adjustments was $1.78 in 2012 and $1.43 in 2011.

Gene Hall, Gartner's chief executive officer, commented, “Our 2012 results
continued our trend of consistent, outstanding performance.Contract value
growth has exceeded 14% for the last nine consecutive quarters and we continue
to deliver double-digit growth across all of our key metrics.This occurred in
a difficult global macro-economic environment.”

Business Segment Highlights

Research

Revenue for fourth quarter 2012 was $300.2 million, up 14% compared to fourth
quarter 2011 and 15% excluding foreign exchange impact. The quarterly gross
contribution margin was 68% in 2012 and 67% in 2011. Contract value at
December 31, 2012 increased 14% on an FX neutral basis compared to year end
2011, and 13% as reported. Client and wallet retention rates for fourth
quarter 2012 were 83% and 99%, respectively, compared to 82% and 99% in the
fourth quarter of 2011.

Consulting

Revenue for fourth quarter 2012 was $81.9 million, a decrease of 8% compared
to fourth quarter 2011 and a decrease of 7% when adjusted for the impact of
foreign exchange. Gross contribution margin for fourth quarter 2012 was 36%
compared to 41% in the prior year quarter. Both revenues and contribution
margin were adversely impacted by lower than expected revenues from our
Contract Optimization business.The balance of our Consulting businesses
contributed solid growth in the quarter and for the full year 2012. Fourth
quarter 2012 utilization was 67% compared to 68% in the fourth quarter of
2011. As of December 31, 2012, billable headcount was 503 and backlog was
$102.7 million.

Events

Revenue for fourth quarter 2012 was $92.6 million, an increase of 21% compared
to fourth quarter 2011. Excluding the foreign exchange impact, Events segment
revenues increased 24%. Gross contribution margin was 51% in fourth quarter
2012 compared to 49% in the prior year quarter. The Company held 14 events
with 22,548 attendees in the fourth quarter 2012, compared to 12 events and
20,500 attendees in fourth quarter 2011.

Cash Flow and Balance Sheet Highlights

The Company generated $280 million of operating cash flow in the full year
2012, an increase of 9% compared to 2011. Additions to property, equipment and
leasehold improvements (“Capital Expenditures”) totaled $44 million in 2012,
which included $17 million of Stamford headquarters renovation expenditures
that are reimbursable by the facility landlord. Free Cash Flow for the full
year 2012 was $237 million, an increase of 11% over 2011 (See “Non-GAAP
Financial Measures” below for a discussion of Free Cash Flow).

At December 31, 2012, the Company had almost $300 million of cash and $347
million of borrowing capacity on its revolving credit facility. During 2012,
the Company used $111 million of cash to repurchase shares and $10 million of
cash on a net basis to complete the Ideas International Limited acquisition.

Financial Outlook for 2013

The Company also provided its preliminary financial outlook for 2013:


Projected Revenue
($ in millions)    2013 Projected      % Change
Research           $  1,280 – 1,300    13% – 14%
Consulting               310 – 325           2% – 7%
Events                  185 – 195           6% – 12%
Total Revenue         $  1,775 – 1,820       10% – 13%
                                             

                                                           
Projected Earnings and Cash Flow
($ in millions, except per share data)    2013 Projected    % Change
Diluted Earnings Per Share                   $1.96 – $2.10        13% – 21%
Normalized EBITDA ^(1)                       $350 – $370          11% – 17%

Operating Cash Flow                          $296 – 316           6% – 13%
Capital Expenditures                         (37) – (38)
Free Cash Flow ^(1)                          $259 – 278           10% – 17%

(1) See “Non-GAAP Financial Measures” below for a discussion of Normalized
EBITDA and Free Cash Flow.


Conference Call Information

Gartner has scheduled a conference call at 8:30 a.m. eastern time on Thursday,
February 7, 2013 to discuss the Company's financial results. The conference
call will be available via the Internet by accessing the Company's website at
http://investor.gartner.com or by dial-in. The U.S. dial-in number is
888-713-4218 and the international dial-in number is 617-213-4870 and the
participant passcode is 65782692. The question and answer session of the
conference call will be open to investors and analysts only. A replay of the
webcast will be available for approximately 90 days following the call.

Annual Meeting of Stockholders

Gartner will hold its 2013 Annual Meeting of Stockholders at 10:00 a.m.
eastern time on Thursday, May 30, 2013 at the Company’s offices in Stamford,
Connecticut.

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading information technology
research and advisory company. Gartner delivers the technology-related insight
necessary for its clients to make the right decisions, every day. From CIOs
and senior IT leaders in corporations and government agencies, to business
leaders in high-tech and telecom enterprises and professional services firms,
to technology investors, Gartner is a valuable partner to clients in over
13,300 distinct organizations. Through the resources of Gartner Research,
Gartner Consulting and Gartner Events, Gartner works with every client to
research, analyze and interpret the business of IT within the context of their
individual role. Founded in 1979, Gartner is headquartered in Stamford,
Connecticut, U.S.A., and has 5,468 associates, including 1,405 research
analysts and consultants, and clients in 85 countries. For more information,
visit www.gartner.com.

Non-GAAP Financial Measures

Normalized EBITDA: Represents operating income excluding depreciation,
accretion on obligations related to excess facilities, amortization,
stock-based compensation expense, and acquisition related adjustments. We
believe Normalized EBITDA is an important measure of our recurring operations
as it excludes items that may not be indicative of our core operating results.
Investors are cautioned that Normalized EBITDA is not a financial measure
defined under generally accepted accounting principles and as a result is
considered a non-GAAP financial measure. We provide this measure to enhance
the user's overall understanding of the Company's current financial
performance and the Company's prospects for the future. It should not be
construed as an alternative to any other measure of performance determined in
accordance with generally accepted accounting principles.

Diluted Income Per Share Excluding Acquisition Adjustments:  Represents
diluted income per share excluding certain adjustments directly related to
acquisitions, which consists of amortization of identifiable intangibles,
non-recurring acquisition and integration charges such as legal, consulting,
severance and other costs, and non-cash fair value adjustments on
pre-acquisition deferred revenues. We believe Diluted Income Per Share
Excluding Acquisition Adjustments is an important measure of our recurring
operations as it excludes items that may not be indicative of our core
operating results.

Free Cash Flow: Represents cash provided by operating activities plus cash
acquisition and integration payments less additions to property, equipment and
leasehold improvements (“Capital Expenditures”). We believe that Free Cash
Flow is an important measure of the recurring cash generated by the Company’s
core operations that is available to be used to repurchase stock, repay debt
obligations and invest in future growth through new business development
activities or acquisitions.

Safe Harbor Statement

Statements contained in this press release regarding the Company’s growth and
prospects, projected 2012 financial results and all other statements in this
release other than recitation of historical facts are forward-looking
statements (as defined in the Private Securities Litigation Reform Act of
1995). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to be materially
different. Such factors include, but are not limited to, the following: our
ability to maintain and expand our products and services; our ability to
expand or retain our customer base; our ability to grow or sustain revenue
from individual customers; our ability to attract and retain a professional
staff of research analysts and consultants as well as experienced sales
personnel upon whom we are dependent; our ability to achieve and effectively
manage growth, including our ability to integrate acquisitions and consummate
future acquisitions; our ability to pay our debt; our ability to achieve
continued customer renewals and achieve new contract value, backlog and
deferred revenue growth in light of competitive pressures; our ability to
carry out our strategic initiatives and manage associated costs; our ability
to successfully compete with existing competitors and potential new
competitors; our ability to enforce or protect our intellectual property
rights; additional risks associated with international operations including
foreign currency fluctuations; the impact of restructuring and other charges
on our businesses and operations; general economic conditions; risks
associated with the creditworthiness and budget cuts of governments and
agencies; and other factors described under “Risk Factors” contained in our
Annual Report on Form10-K for the year ended December31, 2011 which can be
found on Gartner's website at www.investor.gartner.com and the SEC's website
at www.sec.gov. Forward-looking statements included herein speak only as of
the date hereof and Gartner disclaims any obligation to revise or update such
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events or circumstances.


GARTNER, INC.
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
                                                                                    
                                                                                                     
                     Three Months Ended                            Twelve Months Ended
                     December 31,                                  December 31,
                     2012              2011                        2012              2011
Revenues:
Research             $  300,177       $  262,633     14%         $ 1,137,147       $ 1,012,062     12%
Consulting               81,923            88,640      -8%           304,893           308,047       -1%
Events                 92,649          76,421      21%          173,768          148,479       17%
Total revenues           474,749           427,694     11%           1,615,808         1,468,588     10%
Costs and
expenses:
Cost of
services and             200,214           180,282     11%           659,067           608,755       8%
product
development
Selling,
general and              186,216           170,816     9%            678,843           613,707       11%
administrative
Depreciation             6,991             6,396       9%            25,369            25,539        -1%
Amortization             1,373             737         86%           4,402             6,525         -33%
of intangibles
Acquisition
and                    294             -           100%         2,420            -             100%
integration
charges
Total costs            395,088         358,231     10%          1,370,101        1,254,526     9%
and expenses
Operating                79,661            69,463      15%           245,707           214,062       15%
income
Interest                 (2,302)           (2,104)     9%            (8,859)           (9,967)       -11%
expense, net
Other income           550             (417)       >100%        (1,252)          (1,911)       -34%
(expense), net
Income before            77,909            66,942      16%           235,596           202,184       17%
income taxes
Provision for          19,086          21,918      -13%         69,693           65,282        7%
income taxes
Net income           $  58,823        $  45,024      31%         $ 165,903         $ 136,902       21%
                                                                                                     
Income per
common share:
Basic                $   0.63          $   0.48        31%         $ 1.78            $ 1.43          24%
Diluted              $   0.61          $   0.46        33%         $ 1.73            $ 1.39          24%
                                                                                                     
Weighted
average shares
outstanding:
Basic                    93,488            94,691      -1%           93,444            96,019        -3%
Diluted                  95,716            97,037      -1%           95,842            98,846        -3%
                                                                                                     

                                                         
BUSINESS
SEGMENT
DATA
(Unaudited;
in
thousands)
                                                                   
                                  Direct          Gross            Contribution
                  Revenue         Expense         Contribution     Margin
                                                                   
Three
Months
Ended
12/31/12
Research          $ 300,177       $  97,381      $   202,796      68%
Consulting          81,923            52,556          29,367       36%
Events             92,649          45,397         47,252       51%
TOTAL             $ 474,749       $  195,334     $   279,415      59%
                                                                   
Three
Months
Ended
12/31/11
Research          $ 262,633       $   86,917      $   175,716      67%
Consulting          88,640            52,623          36,017       41%
Events             76,421          38,689         37,732       49%
TOTAL             $ 427,694       $  178,229     $   249,465      58%
                                                                   
Twelve
Months
Ended
12/31/12
Research          $ 1,137,147     $   362,805     $   774,342      68%
Consulting          304,893           195,640         109,253      36%
Events             173,768         93,649         80,119       46%
TOTAL             $ 1,615,808     $  652,094     $   963,714      60%
                                                                   
Twelve
Months
Ended
12/31/11
Research          $ 1,012,062     $   329,926     $   682,136      67%
Consulting          308,047           193,209         114,838      37%
Events             148,479         82,214         66,265       45%
TOTAL             $ 1,468,588     $  605,349     $   863,239      59%
                                                                   

                                                          
SELECTED STATISTICAL DATA
                                                                           
                                                                           
                                         December 31,         December 31,
                                         2012                 2011
Research contract value                  $  1,262,865 (a)     $  1,115,801 (a)
Research client retention                   83%                  82%
Research wallet retention                   99%                  99%
Research client organizations               13,305               12,427
Consulting backlog                       $  102,718   (a)     $  100,564   (a)
Consulting--quarterly utilization           67%                  68%
Consulting billable headcount               503                  481
Consulting--average annualized revenue
per billable headcount                   $  445       (a)     $  454       (a)
Events--number of events for the            14                   12
quarter
Events--attendees for the quarter           22,548               20,500

(a) Dollars in thousands.
                                                                           


SUPPLEMENTAL INFORMATION (in thousands, except per share amounts)
                                                           
Reconciliation - Operating income to Normalized EBITDA (a):
                                                                     
                        Three Months Ended             Twelve Months Ended
                        December 31,                   December 31,
                        2012              2011         2012          2011
Net income              $  58,823         $ 45,024     $ 165,903     $ 136,902
Interest                   2,302            2,104        8,859         9,967
expense, net
Other (income)             (550)            417          1,252         1,911
expense, net
Tax provision             19,086          21,918      69,693       65,282
Operating               $  79,661         $ 69,463     $ 245,707     $ 214,062
income
                                                                     
Normalizing
adjustments:
Stock-based
compensation               8,357            8,114        36,378        32,864
expense (b)
Depreciation,
accretion, and             8,413            7,235        29,982        32,522
amortization
(c)
Acquisition
and
integration               584             -           3,167        -
adjustments
(d)
Normalized              $  97,015         $ 84,812     $ 315,234     $ 279,448
EBITDA
                                                                     
(a) Normalized EBITDA is based on GAAP operating income adjusted for certain
normalizing adjustments.
                                                                     
(b) Consists of charges for
stock-based compensation awards.
                                                                     
(c) Includes depreciation expense, accretion on excess facilities accruals,
and amortization of intangibles.
                                                                     
(d) Includes charges and adjustments related to the acquisition of Ideas
International. The charges consist of
directly-related expenses for legal, consulting, and severance. Also included
are non-cash fair value adjustments
on pre-acquisition deferred revenues, which are being amortized ratably over
the remaining life of the underlying
contracts.
                                                        
                                                                     
Reconciliation - Diluted income per share to Diluted income per share
excluding
acquisition adjustments (a):
                        Three Months Ended December 31,
                        2012                           2011
                        After-tax                      After-tax
                        Amount            EPS          Amount        EPS
Diluted income          $  58,823         $ 0.61       $ 45,024      $ 0.46
per share
Acquisition
adjustments,
net of tax
effect (b):
Amortization
of intangibles             877              0.01         472           0.01
(c)
Acquisition
and
integration               400             0.01        -            -
adjustments
(d)
Diluted income
per share
excluding               $  60,100         $ 0.63       $ 45,496      $ 0.47
acquisition
adjustments
(e)
                                                                     
                        Twelve Months Ended December 31,
                        2012                           2011
                        After-tax                      After-tax
                        Amount            EPS          Amount        EPS
Diluted income          $  165,903        $ 1.73       $ 136,902     $ 1.39
per share
Acquisition
adjustments,
net of tax
effect (b):
Amortization
of intangibles             2,775            0.03         4,049         0.04
(c)
Acquisition
and
integration               2,169           0.02        -            -
adjustments
(d)
Diluted income
per share
excluding               $  170,847        $ 1.78       $ 140,951     $ 1.43
acquisition
adjustments
(f)
                                                                     
(a) Diluted income per share excluding acquisition adjustments is based on
GAAP diluted income per share adjusted
for the per share impact of acquisition
adjustments, net of tax effect.
                                                                     
(b) The effective tax rates on the acquisition adjustments were 34.5% and
34.6% for the three and twelve months ended
December 31, 2012, respectively, and 39.5% for both the three and twelve
months ended December 31, 2011.
                                                                     
(c) Consists of non-cash amortization charges
related to acquired intangibles.
                                                                     
(d) Includes charges and adjustments related to the acquisition of Ideas
International. The charges consist
of directly-related expenses for legal, consulting, and severance. Also
included are non-cash fair value
adjustments on pre-acquisition deferred revenues, which are being amortized
ratably over the remaining
life of the
underlying
contracts.
                                                                     
(e) Based on fully diluted shares of 95.7 million and 97.0 million for the
three months ended December 31, 2012 and 2011, respectively.
                                                                     
(f) Based on fully diluted shares of 95.8 million and 98.8 million for the
twelve months ended December 31, 2012 and 2011, respectively.


                                                      
SUPPLEMENTAL INFORMATION continued (in thousands)
                                   
                                        Selected Balance Sheet Data
                                        (unaudited )
                                                                           
                                        December 31,
                                        2012                  2011
                                                                           
Cash and cash equivalents               $  299,852            $  142,739
Fees receivable, net                       463,968               421,033
Total assets                               1,621,277             1,379,872
Deferred revenues                          692,237               611,647
Total current and long-term                205,000               200,000
debt
Total liabilities                          1,314,604             1,198,088
Total stockholders' equity                 306,673               181,784
                                                                   
                                                                           
                                        Selected Cash Flow Data
                                        (unaudited)
                                                                           
                                        Twelve Months Ended
                                        December 31,
                                        2012                  2011
                                                                           
Cash provided by operating              $  279,814            $  255,566
activities
Cash paid for capital                      44,337        (a)     41,954    (a)
expenditures
Cash paid for treasury stock               111,306               211,986
Cash paid for acquisitions,                10,336                -
net
Cash receipts (payments) on                5,000                 (20,156)
debt, net
                                                                           
(a) Includes expenditures related to the renovation of our Stamford
headquarters facility.
These amounts are reimbursable by our landlord.
                                                                   
                                                                           
Reconciliation - Cash Provided by Operating Activities to Free Cash Flow
(a):
(unaudited)
                                        Twelve Months Ended
                                        December 31,
                                        2012                  2011
Cash provided by operating              $  279,814            $  255,566
activities
                                                                           
Adjustments:
Cash acquisition and                       1,437                 -
integration payments
Cash paid for capital                     (44,337)             (41,954)
expenditures
Free Cash Flow                          $  236,914            $  213,612
                                                                           
(a) Free cash flow is based on cash provided by operating activities
determined in accordance with
GAAP plus cash acquisition and integration payments less additions to capital
expenditures.


Contact:

Gartner, Inc.
Brian Shipman, +1-203-316-3659
Group Vice President, Investor Relations
brian.shipman@gartner.com
 
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