ICLDD: Expect Margin Expansion as Service Grows

Zacks Small Cap Research

By Ken Nagy, CFA

On August 14, 2013, InterCloud Systems Inc. (ICLDD), the Boca Raton, Florida based end-to-end solution provider of value added cloud and managed service based platforms, professional services, applications and infrastructure to both the telecommunications industry and corporate enterprises, filed its 10Q quarterly report for its second quarter and six months, ended June 30, 2013.

For the second quarter ended June 30, 2013, revenues jumped $12.952 million year over year to $14.356 million from $1.403 million for the comparable quarter of 2012. Sequentially, revenues improved by nearly 16 percent or $1.955 million from $12.401 million for the first quarter fiscal 2013.

The year over year increases in revenues resulted primarily from the company’s inclusion of revenues from its acquisitions of TNS, Inc., Environmental Remediation and Financial Services LLC, ADEX Corp in 2012 and AW Services in April 2013. The four acquisitions accounted for $13.0 million, or 91 percent of the revenues in the three months ended June 30, 2013,

Gross profit for the quarter was $4.249 million resulting in gross margin of 29.6 percent. This compares to gross profit of $3.635 million and gross margin of 29.3 percent for the first quarter fiscal 2013 and gross profit of $415,090 and gross margin of 29.6 percent during the quarter ended June 30, 2012.


The difference in gross margin was a result of the acquisitions completed in 2012 and April 2013. The gross margin on InterCloud’s telecommunications staffing services, which was the largest service sector, was 26 percent for the three-months ended June 30, 2013, which decreased overall gross margin.

Operating expenses increased to $3.712 million for the second quarter, up $3.042 million from the comparable three months of 2012.
Operating expenses were $3.030 million for the first quarter 2013.

Operating income for the three months ended June 30, 2013 was $537,251 compared to an operating loss of $284,291 million for the second quarter 2012.
Operating income for the three months ended March 31, 2013 was $605,485.

Still, net loss attributable to common shareholders increased year over year by $779,692 to a loss of $1.314 million for the second quarter. This compares to a net loss attributable to common shareholders of $534,413 for three months ended June 30, 2012.
During the three months ended May 31, 2013, net loss attributable to common shareholders was $1.050 million.

Based on a weighted average number of basic and diluted shares of 989,125, basic and diluted net loss per share resulted in a net loss of $1.33 per share for the second quarter of fiscal 2013. This compared to a basic and diluted net loss per share of $1.51 based on a weighted average number of basic and diluted shares of 256,606 during the three months ended June 30, 2012.


As of June 30, 2013, the Company had $2.277 million in cash and cash equivalents and total current assets of $16.033 million.  This compares to $1.267 million in cash and cash equivalents and $11.608 million in current assets as of March 31, 2013.

InterCloud now offers a full set of professional services focused on providing end-to-end network solutions for both carriers and enterprises.

As a result management believes that with the cross-selling opportunities arising from the combination of its companies, coupled with its existing longstanding customer relationships, that InterCloud is well positioned for growth in 2013 and beyond.


A copy of the full research report can be downloaded here >> 
  InterCloud Systems Report

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