Income Margins Thin In InfoGroup’s Second Quarter

InfoGroup was profitable by the skin of its teeth during its second quarter. The company’s net income fell from $4.3 million during second-quarter 2008 to $205,000 for the quarter ended June 30 of this year.

Its operating income didn’t do much better: The $8.1 million it racked up a year ago dropped to $850,000 for the quarter just ended. The data firm’s net sales dropped from $148.5 million to $121.6 million.

There were some bright spots for the Omaha, NE-based firm. It shrunk it long-term debt from $237.6 million a year ago to $190.6 million, largely by using proceeds of its $155 million sale of Macro International to ICF International. Macro had been part of the company’s Marketing Research group. InfoGroup sold Macro International during first-quarter 2009.

Within its three operating units, its Data Group, which provides its database marketing systems and lead generation offerings for small- and medium-sized businesses, saw is sales drop from $79.6 million to $62.1 million, and its operating income fell from $19.2 million to $7 million.

The Services Group, which encompasses customer data management, list brokerage and management services, e-mail marketing services and catalog marketing services recorded a revenue slip from $39.4 million to $34.8 million, and an operating income drop from $6.4 million to $5.3 million.

InfoGroup’s Marketing Research Group generated second-quarter 2009 sales of $24.7 million, down from $29.4 million a year ago. But the unit recorded $101,000 in operating income during the most recent quarter, compared with a $268,000 operating loss a year ago.

The most recent quarter’s results include a $4.5 million restructuring charge stemming from a workforce reduction of 146 employees, as well as $2.4 million in facility-closing costs. The company has let 282 employees go since the beginning of the year.

During an earnings conference call, CEO Bill Fairfield said the company’s litmus test for whether there will be a rebound this year will come in September, when the company’s clients start gearing up for the holiday season.

During the call, Fairfield also noted that InfoGroup’s revenue decline was not due to clients leaving the company, but rather “customers backing off of the extent of their marketing spend or delaying certain programs,” according to a transcript from Seeking Alpha.

The Historian’s Take: Buried within InfoGroup’s quarterly filings are numbers which may be of interest to those buying and selling marketing lists. InfoGroup’s list brokerage trade accounts receivable stood at $66.5 million as of June 30 of this year, down from $86.8 million as of Dec. 31, 2008 and $79.1 million on June 30, 2008. Here’s the interesting part: InfoGroup’s acquired Direct Media Inc. in January 2008 for $17.6 million, and had attributed the accounts receivable bump up to $79.1 million to that acquisition. Before the acquisition list brokerage trade accounts receivable stood at $68.4 million as of Dec. 31, 2007. As for list brokerage accounts payable: These stood at $59.4 million as of June 30 of this year, down from $79.8 million as of Dec. 31, 2008; $70.1 million as of June 30, 2008 and $63.8 million as of Dec. 31, 2007.