Market Overview

ICG Announces Third Quarter Financial Results

Share:

RADNOR, Pa., Nov. 5, 2012 (GLOBE NEWSWIRE) -- ICG Group, Inc. (Nasdaq: ICGE) ("ICG") today reported its results for the quarter ended September 30, 2012.

Q3 Highlights

  • Achieved record revenue and attained customer signings that exceeded ICG's expectations
  • As previously announced, ICG increased its ownership in Channel Intelligence's parent to 52%, bringing it into ICG's group of consolidated companies. In tandem with this consolidation, ICG President Doug Alexander has assumed the role of CEO of Channel Intelligence
  • Completed Procurian's acquisition of Utilities Analyses, a company focusing on comprehensive energy supply-side services that help clients cut utility costs and achieve ongoing savings in both regulated and deregulated environments
  • Repurchased 462,000 shares during the quarter for $4.2 million

"We are very pleased with our third quarter results, reporting strong company performance and the achievement of important strategic milestones," said Walter Buckley, ICG's Chief Executive Officer. "With these accomplishments, we remain highly confident about our potential to drive shareholder value through the growth of our companies."

Financial Information

Revenue increased to $51.2 million ($53.6 million on a non-GAAP basis) for the third quarter of 2012, up from $35.1 million in the corresponding 2011 period.

Net income for the third quarter of 2012 was $21.3 million, or $0.59 per diluted share, compared to net loss of $(3.0) million, or $(0.08) per diluted share, in the corresponding 2011 period. Net income for the third quarter of 2012 included gains primarily related to a fair value gain recorded upon the consolidation of Channel Intelligence/myList.

Core consolidated EBITDA for the third quarter of 2012 was $4.3 million, compared to $4.4 million in the corresponding 2011 period. Core consolidated EBITDA for the third quarter of 2012 was lower due to the $1.5 million investment made in the quarter for the development of myList, the Facebook application for our eMarketing platform.

Non-GAAP net income (loss) for the third quarter of 2012 was $(0.8) million, compared to net income of $0.8 million in the prior year quarter.

A reconciliation of the most comparable GAAP financial measures to the non-GAAP measures used above is included with the financial tables at the end of this release.

Please see ICG's website at www.icg.com for more information on ICG, its companies and its third quarter 2012 results.

ICG will host a webcast at 10:00 a.m. ET today to discuss its financial results. As part of the live webcast for this call, ICG will post a slide presentation to accompany the prepared remarks. To access the webcast, go to www.icg.com and click on the investor relations tab. Then click the link for the third quarter conference call webcast. Please log on to the website approximately ten minutes prior to the call to register and download and install any necessary audio software. The conference call is also accessible through listen-only mode by dialing 866-203-2528 or 617-213-8847. The passcode is 66341339.

For those unable to participate in the conference call, a replay will be available from November 5, 2012 at 12:00 p.m. ET until November 12, 2012 at 11:59 p.m. ET. To access the replay, dial 888-286-8010 or 617-801-6888. The pass code is 79355251. The replay and slide presentation also can be accessed in the investor relations section of the ICG website at www.icg.com/investors/events-and-presentations/.

About ICG

ICG (Nasdaq: ICGE) identifies, capitalizes and grows companies in the cloud-based software and services sectors. These companies transform the way business is done by enabling enterprises to increase efficiencies and improve critical processes. ICG leverages its unique expertise to carefully identify companies based on their potential to become market changers and market leaders. ICG focuses on building profitable businesses in these sectors by providing them with access to management expertise and strategic and operational guidance, as well as growth capital.

The ICG logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7794

Safe Harbor Statement under Private Securities Litigation Reform Act of 1995

The statements contained in this press release that are not historical facts are forward-looking statements that involve certain risks and uncertainties, including, but not limited to, risks associated with the effect of economic conditions generally, capital spending by our companies' customers, our companies' collective ability to retain existing customer relationships and secure new ones, our companies' ability to compete successfully against their respective competitors, our companies' ability to timely and effectively respond to technological developments, our and our companies' collective ability to retain key personnel, our ability to have continued access to capital and to deploy capital effectively and on acceptable terms, our ability to maximize value in connection with divestitures, and other risks and uncertainties detailed in ICG's filings with the Securities and Exchange Commission. These and other factors may cause actual results to differ materially from those projected.

 
 
ICG Group, Inc. 
Consolidated Statements of Operations 
(In thousands, except per share data)
         
         
   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
  2012 2011 2012 2011
         
         
Revenue   $ 51,239  $ 35,142  $ 132,947  $ 104,424
         
Operating Expenses         
Cost of revenue   30,950  21,128  81,593  63,893
Selling, general and administrative   20,255  10,387  49,045  34,089
Research and development   5,572  3,091  12,924  9,545
Amortization of intangibles   2,525  338  4,385  1,013
Impairment related and other   739  484  1,026  603
Total operating expenses   60,041  35,428  148,973  109,143
         
Operating income (loss)   (8,802)  (286)  (16,026)  (4,719)
         
Other income (loss), net   31,570  (374)  33,021  26,184
Interest income   105  90  335  298
Interest expense   (202)  (145)  (398)  (477)
Income (loss) before income taxes and equity loss   22,671  (715)  16,932  21,286
         
Income tax benefit (expense)   (109)  1,338  (1,041)  (639)
Equity loss   (1,608)  (3,245)  (7,147)  (10,006)
Net income (loss)   20,954  (2,622)  8,744  10,641
Less: Net income (loss) attributable to the noncontrolling interest   (387)  335  417  941
Net income (loss) attributable to ICG   $ 21,341  $ (2,957)  $ 8,327  $ 9,700
         
         
Basic net income (loss) per share:         
Income (loss) attributable to ICG common shareholders   $ 0.60  $ (0.08)  $ 0.23  $ 0.26
         
Shares used in computation of basic net income (loss) per common share attributable to ICG common shareholders   35,650  36,556  35,907  36,819
         
Diluted net income (loss) per share:         
Income (loss) attributable to ICG common shareholders   $ 0.59  $ (0.08)  $ 0.23  $ 0.26
         
Shares used in computation of diluted net income (loss) per common share attributable to ICG common shareholders   36,273  36,556  36,435  37,738
 
 
ICG Group, Inc. 
Condensed Consolidated Balance Sheets 
(In thousands)
     
     
   September 30,   December 31, 
   2012   2011 
     
ASSETS     
Cash and cash equivalents   $ 65,759  $ 121,909
Restricted cash   195  133
Accounts receivable, net   50,999  32,762
Other receivables   --   22,679
Deferred tax asset   613  613
Prepaid expenses and other current assets   6,171  2,835
Total current assets   123,737  180,931
Marketable securities   835  -- 
Fixed assets, net   12,058  6,046
Ownership interests   25,365  39,052
Goodwill and Intangibles, net   180,214  36,969
Deferred tax asset   31,826  31,940
Cost method investments   11,345  10,820
Other assets, net   1,044  1,062
Total Assets   $ 386,424  $ 306,820
     
     
     
LIABILITIES AND EQUITY   
Current maturities of other long-term debt   $ 8,027  $ 4,759
Accounts payable   3,277  2,300
Accrued expenses   13,373  6,179
Accrued compensation and benefits   19,933  12,058
Deferred revenue   21,923  13,491
Total current liabilities   66,533  38,787
Long-term debt   19,984  10,761
Other non-current liabilities   5,616  2,397
Total Liabilities   92,133  51,945
Redeemable noncontrolling interest   3,133  1,378
Equity:     
Controlling (ICG) equity   247,510  245,884
Noncontrolling interest   43,648  7,613
Total Equity   291,158  253,497
Total Liabilities, Redeemable noncontrolling interest and Equity   $ 386,424  $ 306,820
 
 
ICG Group, Inc.
Reconciliation of GAAP Financial Measure to Non-GAAP Financial Measures
(In thousands)
(Unaudited)
               
  2011 2012
  Q1 Q2 Q3 Q4 Q1 Q2 Q3
GAAP Revenue: $33,954 $35,328 $35,142 $36,103 $36,630 $45,078 $51,239
Add back: Acquired businesses' deferred revenue  --   --   --   --   --   2,537  2,388
Non-GAAP revenue  $33,954 $35,328 $35,142 $36,103 $36,630 $47,615 $53,627
               
               
GAAP Net income (loss) attributable to ICG: $15,890 ($3,233) ($2,957) $17,866 ($7,020) ($5,994) $21,341
               
Add back:              
Share-based compensation  734  1,026  925  1,597  1,639  1,943  2,174
Amortization of intangibles  337  338  338  338  424  1,436  2,525
Impairment related and other  37  82  484  367  127  160  739
Other (income) loss, net  (24,946)  (1,612)  374  (16,440)  (397)  (1,054)  (31,570)
Acquired businesses' deferred revenue  --   --   --   --   --   2,537  2,388
Equity loss 3,576 3,185 3,245 1,958 2,303 3,236 1,608
Income tax expense (benefit) - deferred  2,620  (1,124)  (1,598)  (4,214)  279  71  5
Non-GAAP net income (loss) ($1,752) ($1,338) $811 $1,472 ($2,645) $2,335 ($790)
               
Net income (loss) attributable to non-controlling interests  352  254  335  1,294  152  652  (387)
Interest (income) expense, net  62  62  55  5  (29)  (5)  97
Depreciation  789  807  842  935  851  893  1,185
Corporate/other  4,114  3,882  2,089  2,581  4,442  3,403  4,096
Income tax expense (benefit) - current  320  161  260  (712)  261  321  104
Core Consolidated EBITDA (excluding share-based compensation and unusual items) $3,885 $3,828 $4,392 $5,575 $3,032 $7,599 $4,305

About ICG's Non-GAAP Financial Measures

This release contains non-GAAP financial measures. The tables above reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. ICG strongly urges investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release.

ICG's management believes that its non-GAAP financial measures provide useful information to investors because they allow investors to view the business through the eyes of management and provide meaningful supplemental information regarding ICG's operating results as they exclude amounts that ICG excludes as part of its monitoring of operating results and assessment of the performance of the business.  

ICG presents the following non-GAAP financial measures in this release:  non-GAAP revenues, non-GAAP net income (loss) and core consolidated EBITDA (excluding stock based compensation and unusual items). ICG includes or excludes items from these non-GAAP financial measures as described below.

Non-GAAP revenue includes the following item:

  • Acquired businesses' deferred revenue. ICG includes acquired businesses' previously deferred revenues that are not recognized under GAAP because ICG considers them a part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on its operations.

Non-GAAP net income (loss), in addition to deferred revenue adjustments inclusion above, excludes the additional following items:

  • Share-based compensation. ICG excludes share-based compensation expenses associated with equity granted to employees and non-employee directors primarily because they are non-cash expenses that ICG does not consider part of ongoing operating results when assessing the performance of its business, and the exclusion of these expenses facilitates the comparison of results over different time periods and the comparison of ICG's results with results of other companies.
     
  • Amortization of intangibles. ICG excludes amortization of acquired intangibles, primarily customer relationships and technology, because they are expenses that ICG does not consider part of ongoing operating results when assessing the performance of its business, and ICG believes that doing so facilitates comparisons to its historical operating results and to the results of other companies.
     
  • Impairment-related and other costs. ICG excludes the effect of impairment-related and other costs, which primarily include impairment charges, revaluation of contingent consideration, restructuring and severance fees, acquisition related costs, legal and settlement costs and other one-time costs, because ICG does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on ICG's operations.
     
  • Other income (loss), net. ICG excludes the effect of other income (loss), net, which primarily includes transaction-driven gains and losses as well as certain foreign currency impacts, because ICG does not consider them part of ongoing operating results when assessing the performance of its business and believes it is useful for investors to understand the effects of these items on ICG's operations.
     
  • Equity loss. In accordance with GAAP, ICG recognizes its share of the earnings or losses of each company accounted for under the equity method and adjusts the carrying amount for each such company for its share of the earnings or losses of the company.  ICG excludes GAAP equity income (loss) because it is significantly impacted by factors outside its direct control.
     
  • Income tax expense (benefit) - deferred. ICG excludes the effect of deferred income tax expense (benefit) primarily because it is a non-cash expense that ICG does not consider a meaningful component of its operating results when assessing the performance of its business, and the exclusion of this item facilitates the comparison of results over different time periods.

Core consolidated EBITDA, excluding share-based compensation and unusual items, is the sum of the earnings (losses) before interest, taxes, depreciation and amortization, share-based compensation and unusual items of ICG's core consolidated companies. ICG considers charges unusual when they are transactional-driven or non-recurring. Core consolidated EBITDA excludes the items described above, as well as the following:

  • Net income (loss) attributable to non-controlling interests. ICG excludes net income (loss) attributable to non-controlling interests primarily because non-controlling interest includes income or loss from operations due to non-controlling interests that are unrelated to ICG's ownership.
     
  • Corporate/other. ICG excludes corporate operating expenses and adjusts for other core consolidated non-operational items primarily because ICG considers this in assessing the performance of its core consolidated businesses.

ICG believes that the following considerations apply to the non-GAAP financial measures that it presents:

  • ICG's management uses non-GAAP revenue, non-GAAP net income (loss) and core consolidated EBITDA, excluding share-based compensation and unusual items, in internal reports used by management in monitoring and making decisions regarding ICG's business, including in monthly financial reports prepared for management and in periodic reports to ICG's Board of Directors.
     
  • An important limitation of ICG's non-GAAP financial measures is that they exclude expenses, some of which may be significant, that are required by GAAP to be recorded. In addition, non-GAAP financial measures are subject to inherent limitations because they reflect the exercise of judgments by management about which charges to exclude from the non-GAAP financial measures.
     
  • To mitigate the limitations associated with non-GAAP financial measures, ICG reconciles its non-GAAP financial measures to the nearest comparable GAAP financial measures and recommends that investors and potential investors do not give undue weight to its non-GAAP financial measures.
CONTACT: Investor inquiries: Karen Greene ICG Investor Relations 610-727-6900 IR@icg.com

ICG Logo

View Comments and Join the Discussion!