ICGE

ICG Group, Inc. (ICGE)

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Internet Capital Group Inc. (ICGE)

Q2 2010 Earnings Call

July 29, 2010 10:00 am ET

Executives

Karen Greene - VP of IR

Walter Buckley - Co-founder and CEO

Kirk Morgan - CFO

Analysts

Scott Berg - Feltl & Company

Sasa Zorovic - Janney Montgomery Scott

Jeff Van Rhee - Craig-Hallum Capital

Neil Gagnon - Gagnon Securities

Presentation

Operator

Good day ladies and gentlemen and welcome to second quarter 2010 ICG earnings conference call. My name is Marissa and I will be the lead operator for this call. 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 conference over to your host for today's call, Mrs. Karen Greene, the Vice President of Investor Relations. You may proceed.

Karen Greene

Good morning. This is Karen Greene with Investor Relations and I want to welcome you to ICG’s second quarter conference call. I would like to remind everyone that we are going to use presentation slides to accompany our prepared remarks today. These slides can be found on our website at icg.com. Go to the homepage and you will see an icon for our second 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 presentation slides will remain on our website and be 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 for the press release itself.

To aid in the comparability of the aggregate core company information, ICG is presenting aggregate core company information assuming the company’s acquisition of GovDelivery occurred on January1st, 2009 by including GovDelivery’s historical results for all periods presented.

The press release is also available on our website, which again is icg.com. To access the press release on our website, please go to our homepage and select July 29th, 2010 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 the press release are not historical facts but 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 partner companies' customers, our partner companies' ability to compete successfully against their respective competitors, and our partner companies' ability to timely and effectively respond to technological developments, our ability to have continued access to capital and deploy capital effectively and on acceptable terms, our ability to maximize value in connection with divestures, our 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, let me turn the call over to Walter Buckley, ICG's Chairman and CEO.

Walter Buckley

Thanks Karen. Welcome and thank you for joining this morning. Today I will provide an overview ICG and its partner companies for second quarter 2010, and Kirk Morgan, our Chief Financial Officer will follow with ICG’s financial results and review our partner company performance for the quarter.

Overall, we were pleased with the continued strong revenue growth at our core consolidated companies, as well as a number of other key accomplishments that were achieved during the second quarter.

Turning to slide 5, I’ll list the second quarter highlights. Second quarter consolidated revenues were $28.1 million, an increase of 25% over the comparable 2009 period. Aggregate EBITDA for our core consolidated companies excluding stock based compensation and unusual items improved to $2 million. We are excited to have further increased our ownership in ICG Commerce to 81%, and we will be receiving a $25 million cash dividend from ICG Commerce. And finally, we continue to build out the management teams and advisory boards at a number of our companies, and I will elaborate on this in just a few minutes.

With that, I will move on to our partner company highlights which are listed on slide 6 through 10. Now I will begin with ICG Commerce.

ICG Commerce, a leading outsourced procurement provider grew revenues to $23.5 million in the second quarter, an increase from $19.5 million during the second quarter of 2009. ICG Commerce EBITDA, excluding the impact of stock-based compensation on unusual items was $2.6 million in the second quarter, slightly below the $3 million to the comparable 2009 period.

EBITDA during the quarter was impacted by investments the company made in relationship to sales activity, and Kirk will provide greater detail on this in his commentary. ICG Commerce's cash and cash equivalents were $24.1 million at June 30, 2010. During the quarter ICG Commerce had a number of significant contract expansions and extensions, including Hertz, Pinnacle Foods, Vought and a large pharmaceutical customer. In addition just this week, ICG Commerce signed a multi-year multi-million dollar contract with a Fortune 500 company, and is in final negotiations to our very large multi-year contract with a premier high-tech global company.

In order to meet the growing global demand of its client, the company has continued to expand its global delivery platform, with new capabilities located in the Czech Republic and Brazil this quarter. On the marketing front, in a focused effort to expand its presence in the consumer products industry, ICG Commerce hired Thomas Bornemann, a 25-year industry veteran, as a consumer products practice leader. Previously, Mr. Bornemann was a managing partner for the Consumer Products division of Clarkston Consulting, where he worked with numerous leading Fortune 100 CPG companies.

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