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ICG Group, Inc. (ICGE)

Q1 2013 Earnings Conference Call

May 02, 2013 10:00 am ET


Walter W. Buckley - Chairman and Chief Executive Officer

R. Kirk Morgan - Chief Financial Officer

Karen Greene - Investor Relations


Scott Berg - Northland Capital Markets

Jeff Van Rhee - Craig-Hallum

David Cowen - Midwood Capital



Good day, ladies and gentlemen, and welcome to the First Quarter 2013 Earnings Call. My name is Shawn and I’ll be your operator for today. At this time, all participants are in a listen-only mode. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Karen Greene, Managing Director, Investor Relations. Please proceed.

Karen Greene

Thank you and good morning. This is Karen Greene with Investor Relations and I'd like to welcome you to ICG’s first quarter conference call. Just as a reminder, we are going to use presentation slides to accompany our prepared remarks today. These slides can be found on our website at Go to the investor information tab and you will see an icon for our fourth quarter conference call. The slides can be accessed through that icon. For those of you without immediate access to our website, the conference call and slides will remain on our website and be there available for future reference.

On the call this morning, we will be discussing certain non-GAAP financial measures. For additional information on these non-GAAP financial measures, including a reconciliation of these measures to the most comparable GAAP measures, please refer to the press release we put out this morning, including the attachment to this press release. The press release is also available on our website which again is To access the press release on our website go to our home page and select the May 2, 2013 press release. The attachments to the release can be accessed by clicking on the PDF file contained within the release itself.

Before we begin, I would like to briefly review our Safe Harbor language. 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’ ability to compete successfully against their respective competitors, our companies’ ability to timely and effectively respond to technological developments, 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 divestures, our and our companies’ collective ability to retain key personnel, and other risks and uncertainties detailed in ICG’s filing with the Securities and Exchange Commission. These and other factors may cause actual results to differ materially from those projected.

With that, I will turn the call over to Walter Buckley, ICG’s Chairman and CEO.

Walter W. Buckley

Thanks, Karen, and welcome and thank you for joining us this morning. Today I will provide an overview of ICG’s performance for Q1 2013, and Kirk Morgan, our Chief Financial Officer, will follow with ICG’s financial results for the quarter.

Turning to Slide 5, in terms of financial highlights, we had solid revenue growth for the quarter and profitability was in line with our plan. We repurchased approximately 161,000 shares of ICG common stock for $2.1 million and expect to meet our $10 million annual share repurchase goal. Finally, we had a strong start to the year with the sales of Channel Intelligence to Google and InvestorForce to MSCI, realizing a total of approximately $81 million. On an operational perspective, we continue to aggressively pursue our key growth initiatives.

Turning to Slide 6, we doubled our investment in sales and marketing from Q1 2012 to Q1 2013, deploying $8 million across the business in the quarter, strongly positioning us to further capitalize on the large untapped markets we have in front of us. To elaborate on this further, we grew our aggregate sales and marketing force to approximately 160 people, with over 110 quota-carrying executives now. We rebranded SeaPass, our insurance platform, to Bolt Solutions, unifying its software platform and agency capabilities under one brand, and we actively drove demand generation at each of our businesses, resulting in increased visibility and brand awareness in key trade and business press, resulting in increased leads across the businesses. We continue to invest in research and development, deploying $3.2 million to support continuous improvements across our businesses.

Turning to Slide 7, during the first quarter, we launched the Bolt Platform for carriers, significantly expanding Bolt's addressable market with the extended focus to include large P&C insurance carriers. Ongoing product development at our government business resulted in greater diversification of product revenue. GovDelivery signed its largest contract to date into transactional messaging needs as opposed to mass communication needs that represents the bulk of our business.

In fact, as of the end of Q1, more than 10% of total recurring revenue comes from add-on communications solutions that we've developed over the past several years, which is CRM and (indiscernible) notification and transactional messaging, that should continue to grow. And finally, building on its regulatory compliance capabilities, MSDSonline recent product upgrade provided customers a seamless method to submit required reports of hazardous chemicals to state and local emergency responders.

Turning to Slide 8, our businesses achieved strong bookings in Q1. Procurian signed five new clients during the quarter, including one comprehensive procurement outsourcing solution with a global CPG company and four smaller contracts for energy management. The company also continued to make good progress with Zurich, rolling out implementation in stages across multiple countries globally. If you're interested in learning more about that relationship, Supply Management Magazine recently issued an article about Zürich and why it shows the outsourced procurement. You can find it on our website under press post links. Procurian now manages over $28 billion in spend for 45 companies.

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