InterCloud Systems Inc. (ICLD)

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Intercloud Systems CEO Mark Monroe on $ICLD's latest Quarterly earnings:

Our third quarter net income of $2.1 million versus $2.9 million net loss in Q3 2015, third quarter revenue grew 11% to $19.6 million. Third quarter gross profit increased 15% to $5.6 million, and overall nine month revenue in 2016 increased 8% year-over-year to $59.8 million in total revenue thus far.

Reported revenue and margin growth for Q3 2016 and year-to-date results are a significant accomplishment given some of the challenges we have faced during 2016. Our sales and operations organizations have performed well during the year, and I want to take this opportunity to thank our entire staff for the incredible hard work in 2016 and we look forward to a strong fourth quarter and even better 2017.

As we move into Q4 and into 2017, our team is focused on several very specific and major initiatives. One, continued organic growth and drive positive cash flow and eliminate any losses. Two,lower senior debt and ultimately extinguish it. Three, restructure our subordinated debt and lower our interest expense. Four, sell non-core business units to raise capital and accomplish the goals that I just mentioned, and reducing our senior and subordinated debt. Produce multiple quarters of positive cash flow and uplift to NASDAQ or NYSE.

One of the most important factors for our investors to understand is that InterCloud subsidiaries have been growing organically and producing earnings and this is what will ultimately allow us to accomplish these objectives that I have just outlined. Our management team has been working diligently on our immediate goals of driving positive cash flow by cutting operating costs during 2016, and we will continue to do so through the end of the year. Thus far we have got approximately $7.9 million in annualized expenses from payroll, professional fees, and other areas of the business units all since June of 2016.

If all these cuts were made prior to third quarter 2016, InterCloud would have experienced approximately $1 million of EBITDA in Q3, and this is a very important factor for people to understand just how deep these cuts have gone. Our firm commitment is to continue to drive down costs and achieve positive cash flow in the near term. Realize that this is a must and we are moving forward on several additional cost-cutting fronts to make this a reality.

This remained difficult over the past few years as we built out a team for our network software development and sales and service organization. This business unit has been transformed into a much leaner organization, and is now driving some of our highest margin revenue. This is a major shift from our previous years and is making InterCloud’s turnaround much more positive.

Our subsidiaries continue to run profitably and generate cash flow. We have embarked on a plan to sell certain assets as mentioned earlier to generate additional capital to assist us in paying down our remaining senior debt. Since June we have reduced our senior debt by over $17 million, and remain focused on continuing down this road. For that we reduce debt and lower interest expenses.

We believe that a slightly smaller company, which is profitable and drives cash flow is a far better result than building top line revenue and is [at a loss]. In addition, we have streamlined our software development efforts and have finished product that no longer needs large-scale capital investment. We realize that we have a very low market cap today and many investors are not happy. Our management team understands the difficulties this has brought to some that we are very confident that if we simply stick to our plan as I just outlined, to streamline operations as we have been all summer, focus on paying – continue to pay down our senior debt, and generating positive cash flow that this company is in a great position to make a major turnaround.



Read more: http://www.nasdaq.com/aspx/call-transcript.aspx?StoryId=4022426&Title=intercloud-systems-icld-ceo-mark-munro-on-q3-2016-results-earnings-call-transcript#ixzz4XlZuQHaI