InterCloud Systems Drives Top-Line

Zacks Small Cap Research

By Ken Nagy, CFA

On April 4, 2013, InterCloud Systems Inc. (OTC BB:ICLD), 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 reported financial results for its fiscal 2012 fourth quarter and full year, ended December 31, 2012.

For the fourth quarter ended December 31, 2012, revenues jumped $11.252 million year over year to $11.361 million from $108,380 for the comparable quarter of 2011.

The year over year upturn in revenues was driven the completion of three acquisitions in 2012.

InterCloud began the integration of the three acquired companies and have hired senior level executives with experience in telecommunications and infrastructure to lead its operations management team. The Company also entered into definitive agreements for two additional acquisitions that are expected to close during the second quarter of 2013.

Furthermore, as a result of the recent acquisitions, InterCloud Systems has become a multi-faceted company with an international platform that is expected to allow the Company to leverage its corporate and other fixed costs and capture gross margin benefits.

Gross profit for the quarter was $2.884 million resulting in gross margin of 25.4 percent. This compares to a gross loss of $229,580 during the quarter ended December 31, 2011.

Operating expenses increased to $4.412 million for the fourth quarter fiscal 2012, up $1.403 million from the comparable three months of 2011.

Operating loss improved year over year by $1.604 million to a loss of $1.633 million from a loss of $3.238 million for the three months ended December 31, 2011.

Net loss attributable to common shareholders improved year over year by $2.511 million to a loss of $356,937 for the fiscal 2012 fourth quarter. This compares to a net loss attributable to common shareholders of $2.867 million for three months ended December 30, 2011.

Based on a weighted average number of basic and diluted shares of 1.878 million, basic and diluted net loss per share resulted in a net loss of $0.19 per share for the fourth quarter of fiscal 2012. This compared to a basic and diluted net loss per share of $2.66 based on a weighted average number of basic and diluted shares of 1.078 million during the three months ended December31, 2011.

For the full year ended December 31, 2012, year over year revenues exploded $14.423 million to $17.235 million from $2.812 million for fiscal 2011.

Revenue from telecommunications staffing services accounted for 61% of total revenue for 2012 and revenue from specialty contracting services accounted for 39%, reflecting the acquisition of ADEX Corporation in September 2012. In comparison, substantially all revenue in 2011 was derived from specialty contracting services.

Here again, the year over year upturn in revenues was driven by the completion of three acquisitions in 2012.

Gross profit for fiscal 2012 improved year over year by $4.215 million to $5.176 million, resulting in gross margin of 30.0 percent.  This compares to gross profit of $961,192 and gross margin of 34.2 percent for the full year ended December 31, 2011.

Operating expenses were $7.938 million for the year up from $6.343 million in the comparable twelve months of 2011.

Operating loss for the year improved by $2.620 million to a loss of $2.761 million from a loss of $5.382 million for the full year ended December 31, 2011.

Net loss attributable to common shareholders improved to a loss of $2.072 million for fiscal 2012 compared to a net loss attributable to common shareholders of $6.404 million for full year ended December 31, 2011.

Based on a weighted average number of basic and diluted shares of 1.553 million, basic and diluted net loss per share resulted in a net loss of $1.33 per share for the full year ended December 31, 2012. This compared to a basic and diluted net loss per share of $6.38 based on a weighted average number of basic and diluted shares of 1.003 million during the fiscal 2011.

It should be noted that management is excited by the opportunities for growth in 2013 and beyond as the market for the Company’s solutions and services continues to expand.

Likewise, upon the completion of the two acquisitions that are expected to close during the second quarter of 2013, management believes that pro forma annualized revenue will exceed $85 million.

Additionally, given the worldwide popularity of telecommunications and wireless products and services, the Company anticipates selectively pursuing international expansion, which management believes represents a compelling opportunity for additional long-term growth.

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

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