Information Services Group Announces First Quarter 2013 Financial Results

  Information Services Group Announces First Quarter 2013 Financial Results

Record first quarter revenues of $50.6 million, up 10% in constant currency
versus the prior year

Adjusted EBITDA of $5.0 million, up 62% in constant currency versus the prior
year and doubling Adjusted EPS to $0.06

Completed new debt agreement; offers more favorable terms and extends maturity
to mid-2018; retired $1.1 million of convertible loan notes at a discount

Announced large engagement with U.K. Government Agency

PR Newswire

STAMFORD, Conn., May 13, 2013

STAMFORD, Conn., May 13, 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 first
quarter ended March 31, 2013.

"Our record first quarter revenues reflect accelerating global demand for our
services, yielding double digit revenue growth behind continued strength in
the Americas and a return to growth in Europe," said Michael Connors, Chairman
and Chief Executive Officer, ISG. "The accelerating global demand can be
attributed to the broader set of products and services we offer, including
Managed Services and Project Management.Our recently announced engagement
with a U.K. Government agency is a significant win in the U.K. Public Sector
and positions ISG for continued strength in this sector." 

First Quarter 2013 Results

ISG reported record first quarter revenues of $50.6 million during the first
quarter of 2013, an increase of 10% in constant currency or $4.5 million (9%
or $4.3 million on a reported basis) from $46.3 million in the first quarter
of 2012. Revenues were $28.8 million in the Americas (up 21%), $16.5 million
in Europe (up 7%) and $5.3 million in Asia Pacific (down 22%); growth rates in
constant currency.

ISG reported operating income of $2.6 million for the first quarter of 2013.
This compares to operating income of $0.2 million in the first quarter of
2012. Adjusted net income was $2.2 million, or $0.06 per share, compared with
an adjusted net income of $1.0 million, or $0.03 in the prior year's first
quarter. Reported fully diluted earnings per share (EPS) was $0.03 per share
compared with a loss of ($0.02) per share for the same prior year period in
2012.

First quarter 2013 adjusted earnings before interest, taxes, depreciation,
foreign currency translation gains/losses, amortization and non-cash stock
compensation (adjusted EBITDA, a non-GAAP measure) of $5.0 million compared
with $3.0 million in the first quarter 2012, an increase of 62% on a constant
currency basis.

Other Financial and Operating Highlights

ISG cash and cash equivalents totaled $18.2 million at March 31, 2013, a net
decrease of $5.3 million from December 31, 2012. The decrease in cash
balances from December 2012 was principally attributable to a seasonal build
in working capital as well as the non-operating use of cash, including $2.5
million in debt repayments and $0.3 million in repurchases of stock. Total
outstanding debt at March 31, 2013 was $60.6 million compared with $63.1
million at December 31, 2012.

In addition, last month ISG retired 18% of its convertible loan notes ($1.1
million) for $650,000, further deleveraging its balance sheet.

New Credit Agreement

Effective this month, ISG entered into a new five year credit agreement. The
new senior secured credit facility, arranged by Bank of America, is comprised
of a $45 million term loan and a $25 million revolving credit facility.

"We are pleased to have announced that we have entered into a new credit
agreement that extends the maturity of our term loan to May 2018 with lower
principal and interest payments and provides us with greater financial
flexibility to meet our strategic objectives," said Mr. Connors.

Conference Call

ISG has scheduled a First Quarter results call at 9:00 a.m. Eastern Time,
Tuesday, May 14, 2013, to discuss the Company's financial results. The call
can be accessed by dialing 1-888-438-5519 or for international callers
+1-719-325-2281. The access code is 3094537.

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.

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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 months ended March 31, 2013 and March 31, 2012. 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 based on an average of daily spot rates from January
1, 2012 to August 31, 2012), 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 March 31,
                                          2013               2012
Revenues                                  $            $      
                                          50,588             46,282
Operating expenses
Direct costs and expenses for advisors    30,032             27,346
Selling, general and administrative       16,033             16,608
Depreciation and amortization             1,913              2,157
    Operating income                      2,610              171
Interest income                           5                  14
Interest expense                          (727)              (753)
Foreign currency transaction gain (loss)  48                 (80)
    Income (loss) before taxes            1,936              (648)
Income tax provision (benefit)            967                (76)
    Net income (loss)                     $          $       
                                          969                (572)
Weighted average shares outstanding:
    Basic                                 36,632             36,347
    Diluted                               38,794             36,347
Earnings (loss) per share:
    Basic                                 $           $       
                                          0.03              (0.02)
    Diluted                               $           $       
                                          0.03              (0.02)





Information Services Group, Inc.
Reconciliation from GAAP to Non-GAAP
(unaudited)
(in thousands, except per share amounts)
                                              Three Months Ended March 31,
                                              2013             2012
Net income (loss)                             $         $      
                                              969              (572)
Plus:
   Interest expense (net of interest income)  722              739
   Income taxes                               967              (76)
   Depreciation and amortization              1,913            2,157
   Foreign currency transaction              (48)             80
   Non-cash stock compensation                498              690
Adjusted EBITDA                               $           $     
                                              5,021           3,018
Net income (loss)                             $         $      
                                              969              (572)
Plus:
   Non-cash stock compensation                498              690
   Intangible amortization                    1,515            1,788
   Foreign currency transaction              (48)             80
   Tax effect ^(1)                            (747)            (972)
Adjusted net income                           $           $     
                                              2,187           1,014
Weighted average shares outstanding:
   Basic                                      36,632           36,347
   Diluted                                    38,794           36,347
Adjusted earnings per share:
   Basic                                      $          $      
                                              0.06            0.03
   Diluted                                    $          $      
                                              0.06            0.03
^(1)    Marginal tax rate of 38.0% applied.

Information Services Group, Inc.
Selected Financial Data
Constant Currency Comparison
                              Three                           Three Months
                              Months                           Ended
                              Ended
           Three   Constant  March 31,   Three    Constant  March 31,
           Months   currency  2013        Months    currency  2012
           Ended                          Ended
           March   impact                 March    impact
           31,      ^(1)      Adjusted   31, 2012 ^(1)      Adjusted
           2013
           $     $     $       $     $    
Revenue                                     $       
                  (235)    50,353       46,282   (438)       45,844
           50,588
Operating  $     $     $       $     $    
income                                 $       
(loss)           20       2,630          171   98           269
           2,610
           $     $     $       $     $    
Adjusted                               $       
EBITDA          20       5,041        3,018    98          3,116
           5,021
^(1) Foreign currency rates based on an average FX rate from
January 1, 2012 to August 31, 2012 used for constant currency
translation.





SOURCE Information Services Group, Inc.

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