Move sharpens ISG’s focus, strengthens
balance sheet and immediately enhances shareholder value
Information Services Group (ISG) (Nasdaq: III), a leading global
technology research and advisory firm, said today it has sold its
automation unit to UST, a leading digital transformation solutions
company, for $27 million in an all-cash transaction, with a portion
of the proceeds placed in escrow, to be released contingent upon
meeting certain conditions.
The unit offers robotic process automation (RPA) software
implementation and licensing services. It was established as a
startup business in 2017 to meet the emerging demand for RPA.
ISG Chairman and CEO Michael P. Connors said the sale is a
“win-win” for both ISG and UST.
“With this sale, ISG emerges as a stronger, more focused firm,
devoted to serving our clients by leveraging our towering strengths
in sourcing, powered by our AI-driven ISG Tango™ platform; digital
transformation, including enterprise change and
training-as-a-service; AI advisory, technology research and
supplier governance,” Connors said. “In addition, the cash proceeds
of the sale immediately strengthen our balance sheet and improve
shareholder value.
“At the same time, our former automation unit will benefit from
being part of a larger technology services organization in UST, one
that we have known and respected for years, with the resources and
scale to compete in the intelligent automation space,” Connors
said.
Commenting on UST’s acquisition, Sajesh Gopinath, general
manager and go-to-market leader, UST SmartOps, said: “This
strategic investment in the intelligent automation space solidifies
UST’s position as a market leader in a dynamic sector that has the
potential to transform industries, enhance productivity, improve
customer experiences, and generate new revenue streams. By
onboarding experienced intelligent automation consultants and
capabilities, UST is strengthening its standing in a competitive
market and broadening its partner ecosystem to position itself for
future growth and meet the emerging needs of our clients.”
Connors said ISG decided to exit the business because its
implementation and software licensing activities no longer were a
strategic fit with ISG’s position as an independent, third-party
advisory firm.
ISG received $20 million in cash at closing with the remaining
$7 million held in escrow. Of this amount, $4 million is to be
released from escrow over the next 90 days as certain contractual
conditions with clients are met, and the remaining $3 million is to
be released after the end of the first quarter of 2025, based on
the achievement of certain revenue targets. Net proceeds from the
transaction are expected to provide the opportunity to reduce debt
and return capital to shareholders.
To reflect the impact of the divestiture activity, ISG said it
is updating its third-quarter guidance, targeting revenues in the
range of $60 million to $61 million, and adjusted EBITDA (a
non-GAAP measure defined below under “Non-GAAP Financial Measures”)
in the range of $6.5 million to $7.0 million.
Sett & Lucas served as financial advisor to ISG, and Katten
Muchin Rosenman LLP served as legal advisor.
ISG will file a Form 8-K with the Securities and Exchange
Commission in connection with the sale.
Conference Call
ISG will hold a conference call today, Wednesday, October 2, at
4:30 p.m., US ET, to discuss the transaction. The call can be
accessed by dialing (800) 715-9871, or, for international
callers, by dialing +1 (646) 307-1963. The access code is
3455640. A recording of the call will be available on ISG’s
investor relations page for approximately four weeks following the
call.
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,” “target,” “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, many of which are beyond the control of ISG, its
directors and its management, that could cause actual results to
differ materially from those anticipated, including, without
limitation: (1) the occurrence of any event, change or other
circumstance that could affect ISG’s rights or obligations under
the Share Purchase Agreement governing the divestiture, (2) risks
related to the disruption of management’s attention from ISG’s
ongoing business operations due to the divestiture and ISG’s
obligations under the Share Purchase Agreement, (3) risks that the
divestiture may disrupt current plans and operations and any
potential difficulties in employee retention as a result and (4)
the effect of the announcement of the transaction on the ISG’s
relationships with its customers and suppliers and on its business
generally. 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 its
updated third-quarter guidance appearing in this release, ISG has
presented both GAAP financial results as well as non-GAAP
information. 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.
In this press release, ISG provides adjusted EBITDA (defined as
net income, plus interest, taxes, depreciation and amortization,
foreign currency transaction gains/losses, non-cash stock
compensation, interest accretion associated with contingent
consideration, acquisition-related costs, and severance,
integration and other expense), which is a non-GAAP measure that
the Company believes provide useful information to both management
and investors by excluding certain expenses, which management
believes are not indicative of ISG’s core operations. This non-GAAP
measure is used by ISG to evaluate the Company’s business
strategies and management’s performance.
Management believes this information facilitates comparison of
underlying results over time. 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. A reconciliation of the
forward-looking non-GAAP estimates contained herein to the
corresponding GAAP measures is not being provided, due to the
unreasonable efforts required to prepare it.
About UST
Since 1999, UST has worked side by side with the world's best
companies to make a powerful impact through transformation. Powered
by technology, inspired by people, and led by our purpose, we
partner with our clients from design to operation. Our digital
solutions, proprietary platforms, engineering expertise, and
innovation ecosystem turn core challenges into impactful,
disruptive solutions. With deep industry knowledge and a
future-ready mindset, we infuse innovation and agility into our
clients' organizations—delivering measurable value and positive
lasting change for them, their customers, and communities around
the world. Together, with 30,000+ employees in 30+ countries, we
build for boundless impact—touching billions of lives in the
process. Visit us at www.UST.com.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including AI, cloud and data analytics; sourcing advisory; managed
governance and risk services; network carrier services; strategy
and operations design; change management; market intelligence and
technology research and analysis. Founded in 2006, and based in
Stamford, Conn., ISG employs more than 1,600 digital-ready
professionals operating in more than 20 countries—a global team
known for its innovative thinking, market influence, deep industry
and technology expertise, and world-class research and analytical
capabilities based on the industry’s most comprehensive marketplace
data. For more information, visit www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20241002053674/en/
Press Contact: Will Thoretz, ISG +1 203 517 3119
will.thoretz@isg-one.com
Investor Contact: Michael Sherrick +1 203 517 3104
michael.sherrick@isg-one.com
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