ABCO Posts Solid 4Q and FY2013 Earnings

The Advisory Board Company ( ABCO - Snapshot Report ) reported fourth quarter fiscal 2013 operating earnings of 33 cents per share surpassing the Zacks Consensus Estimate of 21 cents per share. Results also were ahead of the year ago earnings of 31 cents by 6.5%.

Including equity in loss of unconsolidated entity of 6 cents, amortization of acquisition related intangibles of 3 cents and share based compensation expense of 6 cents, Advisory Board reported net income of 18 cents per share in the fourth quarter of fiscal 2013. Results lagged the year-ago net income of 23 cents by 21.7%.

Quarterly Operational Update

Revenues in the fourth quarter escalated 19.1% year over year to $119.7 million. Results also surpassed the Zacks Consensus Estimate of $118 million.

Contract value was $466.3 million at Mar 31, 2013, up 17.1% year over year.

Cost of services excluding depreciation and amortization in the quarter was $61.6 million, up 14.6% year over year. Higher expenses related to new and growing programs including acquisitions of ActiveStrategy and 360Fresh in the last quarter led to the increase.

Member relations and marketing expense increased 19.5% year over year to $22.8 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the reported quarter were $22.7 million, up 14.6% year over year.

Full Year Highlights

For full year fiscal 2013, operating earnings of Advisory Board were $1.23 per share, up 8.8% year over year. Results also exceeded the Zacks Consensus Estimate of 92 cents per share.

Including all non-recurring one-time items, Advisory Board reported net income of 61 cents per share, down 16.4% year over year.

Revenues for the quarter increased 21.7% year over year to $450.8 million in fiscal 2013.

Adjusted EBITDA for fiscal 2013 was $83 million, up 18.1% year over year.

Share Repurchase Update

During the fourth quarter of fiscal 2013, Advisory board repurchased approximately 0.98 million shares for $5 million. This amounted to a total repurchase of 15.6 million shares for $341 million since 2004.

The board also authorized an additional $100 million repurchase program bringing the total authorization to $450 million since the inception of the program. Advisory Board will finance the repurchases with cash on hand and cash generated from operations.

Financial Position

As of Mar 31, 2013, Advisory Board had cash and cash equivalents of $57.8 million, down 4.6% year over year.

Total assets of Advisory Board as of Mar 31, 2013 were $453.5 million, up 25.6% year over year.

Cash from operating activities as of Mar 31, 2013 was $81.1 million, down 12.6% year over year.

Guidance

For calendar year 2013, Advisory Board expects revenue in the range of $495–$505 million.

Adjusted EBITDA is expected to be between $90 million and $95 million.

Operating earnings for calendar year 2013 are expected between $1.18 and $1.28.

Management anticipates share based compensation expense to be around $17.5 million.

Performance of Other Stocks

Covance Inc. ( CVD - Snapshot Report ) reported adjusted earnings per share of 75 cents in the first quarter of 2013, beating the year-ago results by 25% and the Zacks Consensus Estimate by 4.2%. Earnings improvement was driven by top-line growth and margin expansion.

Provider of drugs to long-term care facilities and nursing homes, Omnicare Inc. ( OCR - Snapshot Report ) posted first quarter 2013 operating earnings per share of 90 cents surpassing the Zacks Consensus Estimate of 86 cents.

Charles River Laboratories ( CRL - Snapshot Report ) reported first quarter 2013 operating earnings (excluding special items) of 63 cents per share, missing the Zacks Consensus Estimate of 71 cents. Earnings were roughly flat year over year.

Zacks Rank

Advisory Board currently carries a Zacks Rank #3 (Hold).