Information Services Group Announces Fourth Quarter And Full Year 2012 Financial Results

    Information Services Group Announces Fourth Quarter And Full Year 2012
                              Financial Results

Fourth Quarter Revenues of $49.5 million up 11% in constant currency; Adjusted
EBITDA of $4.5 million

Full Year Revenues of $192.7 million up 7% in constant currency; Adjusted
EBITDA of $18.2 million

Year End Cash Balance of $23.5 million up $8.5 million versus the third
quarter after debt repayment and share repurchases

Full year guidance for 2013 of Revenues between $200-$208 million and Adjusted
EBITDA between $19-$21 million

PR Newswire

STAMFORD, Conn., March 7, 2013

STAMFORD, Conn., March7, 2013 /PRNewswire/ --Information Services Group,
Inc. (ISG) (NASDAQ: III), a leading technology insights, market intelligence
and advisory services company today announced financial results for the fourth
quarter and year ended December 31, 2012.

"ISG delivered strong fourth quarter operating results as robust demand in the
Americas helped to drive double-digit revenue growth and offset macroeconomic
weakness in Europe," said Michael Connors, Chairman and Chief Executive
Officer, ISG. "The last calendar year witnessed several strategic investments
in our brand, in our services, and most importantly, in our people to position
us for sustained growth. Globally our clients now have access to a single
portfolio of products and services: from research and benchmarking to design
and transaction services; from transition and transformation services to
project management and managed governance services. We reduced our term loan
by 11% in 2012; and increased our cash position by $8.5 million in the fourth
quarter. We remain focused on delivering value to clients, investing to grow
our business and expanding our capabilities."

Fourth Quarter 2012 Results

ISG reported fourth quarter revenues of $49.5 million, up 11% versus the prior
year in constant currency, as well as on a reported basis. Revenues were
$27.0 million up 31% in the Americas offsetting a 6% decline in Europe to
$16.7 million and a 2% decline in Asia Pacific to $5.8 million; growth rates
are in constant currency.

ISG reported operating income of $1.7 million for the fourth quarter of 2012
compared to an operating loss of $59.9 million in the fourth quarter of 2011.
The operating loss for the fourth quarter of 2011 included a $61.7 million
noncash charge for the impairment of goodwill and indefinite life assets and
$0.9 million in acquisition-related and restructuring costs. Reported fully
diluted earnings per share (EPS) for the fourth quarter 2012 totaled $0.00
compared to fully diluted loss per share of $(1.44) for the same period in
2011. Diluted adjusted fourth quarter EPS in 2012 was $0.05compared with
$0.03 for the fourth quarter of 2011. Diluted adjusted EPS excluding
acquisition-related and restructuring costs for the fourth quarter of 2011 was
$0.05.

Fourth quarter adjusted EBITDA (a non-GAAP measure defined as earnings before
interest, taxes, depreciation, foreign currency translation gains/losses,
amortization and non-cash stock compensation and impairment charges) of $4.5
million compared with $5.1 million in the fourth quarter 2011. Currency
positively affected adjusted EBITDA by $0.1 million versus the prior year
period. Adjusted EBITDA for the fourth quarter of 2011 included $0.9 million
of acquisition-related and restructuring costs.

Full Year 2012 Results

ISG reported full year 2012 revenues of $192.7 million, an increase of 7% in
constant currency (up 5% on a reported basis) or up $8.3 million from $184.4
million in 2011. The strengthening dollar negatively impacted revenue by $4.2
million compared to the prior year. Revenues were $104.9 million in the
Americas up 21% and $25.1 million in Asia Pacific up 8% offsetting a 10%
decline in Europe to $62.7 million; growth rates are in constant currency.

ISG reported operating income of $6.6 million for the year ended December 31,
2012 compared to an operating loss of $60.8 million for the year ended
December 31, 2011. Operating income for 2012 included the third quarter
release of a performance based liability tied to the STA Consulting earn-out
that is not projected to materialize, totaling $1.9 million. The operating
loss for 2011 included the non-cash impairment charge of $61.7 million and
$4.0 million in acquisition-related and restructuring costs.Reported 2012
diluted EPS totaled $0.02 compared to a loss of $(1.54) in 2011. Diluted
adjusted EPS for 2012 was $0.18 compared to $0.09 in 2011. Diluted adjusted
EPS for 2011 excluding acquisition-related and restructuring costs was $0.16.

Adjusted EBITDA for 2012 was $18.2 million compared to $15.0 million of
adjusted EBITDA for 2011. Currency negatively affected adjusted EBITDA by
$0.5 million versus the prior year period. Adjusted EBITDA for 2012 included
the release of a performance based liability totaling $1.9 million tied to the
STA Consulting earn-out that is not projected to materialize. Adjusted EBITDA
for 2011 included $4.0 million in acquisition-related and restructuring
costs.

Other Financial and Operating Highlights

As of December 31, 2012, cash and cash equivalents totaled $23.5 million, a
net increase of $8.5 million from September 30, 2012. The increase in cash
balances from third quarter 2012 was principally attributable to an increase
in net cash flows generated from operating activities, including strong cash
collections. Non-operating use of cash included $1.75 million in debt
repayments and $0.3 million in repurchases of stock.

Total outstanding term loan at December 31, 2012 was $56.8 million a reduction
of 11% from a year ago.

"I was pleased with our strong cash generation in the fourth quarter driven by
operating activities and improved cash collections, strengthening our capital
position," said Michael Connors. "During 2012, we continued to de-leverage
ISG, repaying $7 million in our term loan while repurchasing $1.5 million in
ISG shares. We will continue to use our free cash flow to de-leverage our
balance sheet, repurchase shares and seek opportunistic, tuck-in
acquisitions."

2013 Full-Year Revenue and Adjusted EBITDA Guidance

"For 2013, we are targeting revenues between $200-$208 million and adjusted
EBITDA between $19-$21 million, excluding the impact of currency," said
Michael Connors. "With the increase in committed Managed Services multi-year
contracts and the growth trajectory in the Americas, we enter 2013 in a strong
position remaining cautious of the macro-environment in Europe and Australia."

Conference Call

ISG has scheduled a Fourth Quarter and Full Year 2012 results call at 9:00
a.m. Eastern Time, Friday, March 8, 2013, to discuss the Company's financial
results. The call can be accessed by dialing 1-888-510-1786 or for
international callers 001-719-457-2727. The access code is 5243099.

About Information Services Group, Inc.

Information Services Group (ISG) (NASDAQ: III) is a leading technology
insights, market intelligence and advisory services company, serving
approximately 500 clients around the world to help them achieve operational
excellence. ISG supports private and public sector organizations to transform
and optimize their operational environments through research, benchmarking,
consulting and managed services, with a focus on information technology,
business process transformation, program management services and enterprise
resource planning. Clients look to ISG for unique insights and innovative
solutions for leveraging technology, the deepest data source in the industry,
and more than five decades of experience of global leadership in information
and advisory services. Based in Stamford, Conn., the company has more than 800
employees and operates in 21 countries. For additional information, visit
www.isg-one.com.

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 its subsidiaries 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 its subsidiaries' 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 ISG's revenues and may maintain sizable accounts receivables with ISG; and
(14) ability to achieve cost reductions and productivity improvements in any
future value creation plans. 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. ISG undertakes no obligation to
update or revise any forward-looking statements to reflect subsequent events
or circumstances.

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 and twelve months ended December 31, 2012 and December 31, 2011. 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 adjusted EBITDA (defined as net income plus income taxes, net
interest income/(expense), depreciation, foreign currency transaction
gains/losses, amortization of intangible assets resulting from acquisitions
and non-cash stock compensation and impairment charges for goodwill and
intangible assets) and adjusted net income (defined as net income plus
amortization of intangible assets, non-cash stock compensation and non-cash
impairment charges for goodwill and intangible assets on a tax adjusted basis)
and selected financial data on a constant currency basis (using foreign
currency exchange rates as of July 31, 2011, 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.



Information Services Group, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)
                              Three Months Ended      Years Ended December
                              December 31,           31,
                              2012       2011         2012         2011
                              $      $       $       $     
Revenues                                44,614     192,745     184,426
                              49,520
Operating expenses
Direct costs and expenses     29,757     24,870       114,429      104,823
for advisors
Selling, general and          15,857     15,413       62,909       67,717
administrative
Depreciation and              2,220      2,582        8,857        11,034
amortization
Impairment of intangible      -          61,694       -            61,694
assets
   Operating income (loss)    1,686      (59,945)     6,550        (60,842)
Interest income               8          17           45           75
Interest expense              (645)      (971)        (3,146)      (3,458)
Foreign currency transaction  (140)      (47)         (209)        (38)
loss
   Income (loss) before       909        (60,946)     3,240        (64,263)
   taxes
Income tax provision          760        (8,960)      2,637        (8,326)
(benefit)
                              $      $       $       $     
   Net income (loss)                 (51,986)        603    (55,937)
                              149
Weighted average shares
outstanding:
   Basic                      36,191     36,213       36,205       36,258
   Diluted                    38,112     36,213       37,626       36,258
Earnings (loss) per share:
                              $      $       $       $     
   Basic                                (1.44)     0.02      (1.54)
                              0.00
                              $      $       $       $     
   Diluted                              (1.44)     0.02      (1.54)
                              0.00



Information Services Group, Inc.
Reconciliation from GAAP to Non-GAAP
(unaudited)
(in thousands, except per share amounts)
                                    Three Months Ended  Years Ended December
                                    December 31,       31,
                                    2012     2011       2012       2011
                                    $     $      $      $   
Net income (loss)                        (51,986)    603    (55,937)
                                    149
Plus:
    Interest expense (net of        637      954        3,101      3,383
    interest income)
    Income taxes                    760      (8,960)    2,637      (8,326)
    Depreciation and amortization   2,220    2,582      8,857      11,034
    Impairment of intangible        -        61,694     -          61,694
    assets
    Foreign currency transaction   140      47         209        38
    Non-cash stock compensation     606      747        2,797      3,143
                                    $     $      $      $    
Adjusted EBITDA ^(1)                        5,078   18,204     15,029
                                    4,512
                                    $     $      $      $   
Net income (loss)                        (51,986)    603    (55,937)
                                    149
Plus:
    Non-cash stock compensation     606      747        2,797      3,143
    Intangible amortization         1,788    2,214      7,150      9,552
    Impairment of intangible        -        61,694     -          61,694
    assets
    Foreign currency transaction   140      47         209        38
    Tax effect ^(2)                 (963)    (11,547)   (3,859)    (15,243)
                                    $     $      $      $    
Adjusted net income                         1,169    6,900     3,247
                                    1,720
Weighted average shares
outstanding:
    Basic                           36,191   36,213     36,205     36,258
    Diluted                         38,112   36,213     37,626     36,258
Adjusted earnings per share:
                                    $     $      $      $    
    Basic                                   0.03   0.19      0.09
                                    0.05
                                    $     $      $      $    
    Diluted ^(3)                            0.03   0.18      0.09
                                    0.05
         Adjusted EBITDA excluding $0.6 million of restructuring and $0.3
^(1)     million of deal costs for the fourth quarter 2011 totaled $5.9
         million.
         Adjusted EBITDA excluding $2.7 million of restructuring and $1.3
         million of deal costs for the full year 2011 totaled $19.0 million.
^(2)     Apply a marginal tax rate of 38.0%. The tax effect for
         the year ended December 31, 2011 excludes
         non-deductible item.
         Adjusted earnings per share excluding $0.6 million of restructuring
^(3)     and $0.3 million of deal costs for the fourth quarter 2011 totaled
         $0.05.
         Adjusted earnings per share excluding $2.7 million of restructuring
         and $1.3 million of deal costs for the full year 2011 totaled $0.16.



Information Services Group, Inc.
Selected Financial Data
Constant Currency Comparison
                                     Three                         Three
                                     Months                         Months
                                     Ended                         Ended
                  Three    Constant December   Three    Constant December
                  Months    currency 31, 2012   Months    currency 31, 2011
                  Ended                         Ended
                  December impact   Adjusted  December impact   Adjusted
                  31, 2012 ^(1)                 31, 2011 ^(1)
                  $     $     $       $     $     $    
Revenue                                           
                  49,520    1,740    51,260      44,614   1,591    46,205
Operating income  $     $     $       $     $     $    
(loss)                                           
                   1,686    114    1,800     (59,945)   302   (59,643)
                  $     $     $       $     $     $    
Adjusted EBITDA                                 
                   4,512    120    4,632     5,078     278    5,356
Adjusted EBITDA   $     $     $       $     $     $    
^(2)                                            
                   4,512    120    4,632     5,942     278    6,220
                                     Year                          Year
                                     Ended                         Ended
                  Year     Constant December   Year     Constant December
                  Ended    currency 31, 2012   Ended    currency 31, 2011
                  December impact   Adjusted  December impact   Adjusted
                  31, 2012 ^(1)                 31, 2011 ^(1)
                  $     $     $       $     $     $    
Revenue                                             
                  192,745   7,754    200,499     184,426  3,539    187,965
Operatingincome  $     $     $       $     $     $    
(loss)                                          
                   6,550    786    7,336     (60,842)   306   (60,536)
                  $     $     $       $     $     $    
Adjusted EBITDA                                  
                  18,204     809   19,013      15,029    289   15,318
Adjusted EBITDA   $     $     $       $     $     $    
^(3)                                             
                  18,204     809   19,013      19,010    289   19,299
^(1) Using foreign currency rates as of July 31, 2011.
^(2) Excluding $0.6 million of restructuring and $0.3 million of deal costs
for the fourth quarter 2011.
^(3) Excluding $2.7 million of restructuring and $1.3 million of deal costs
for the full year of 2011.

SOURCE Information Services Group, Inc.

Website: http://www.isg-one.com
Contact: Press, Barry Holt, +1-203-517-3110, Barry.Holt@isg-one.com, or
Investor, David Berger, +1-203-517-3104, David.Berger@isg-one.com
 
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