RMG CEO Says Company Sticking With Duelling Businesses

August 8, 2014 by Dave Haynes

logo_rmgn_fullblkHere’s what Bob Michelson, the Interim President and CEO of RMG Networks, had to say on the company’s earnings call with analysts yesterday, following a second rough and red quarter:

As I discussed in the beginning of this call, I see tremendous opportunity to RMG. The goal of the management team is to drive profitable growth and we are fine tuning our execution to achieve this objective. While we are just at the beginning of this refining exercise, our approach is clear in four areas.

First, we are refocusing our efforts on a limited number of strategic initiatives in key industries, products and solutions, where our greatest opportunities lie, especially in key high-margin business data visualization solutions and our existing core Media Networks.

So we don’t spread ourselves too thin and dilute our ability to achieve results. Second, we continue to support the investments that have been successful for us and are no longer pursuing those investments that have underperformed. Any new investments will be made in a measured manner with ROI requirements being paramount.

Third, in order to effectively manage the business, we will be adjusting the metric set we use internally and executing against the new benchmark metrics. The new metrics set will clearly communicate goals and create alignment and accountability throughout the organization ultimately within our effort to better achieve our potential and drive profitability in the business.

And fourth, finally, I’m a big believer in establishing relationships with employees, with customers, with vendors and with investors. So far I have met with or talked to about 90% of our RMG’s employees. And these interactions have been open and candid and everyone appears to be energized about achieving our shared goals.

Going forward, we will provide clarity in our communications to all of our audiences through consistency and transparency. We want to ensure our results match our words. With respect to our financial outlook, we expect to continue the momentum we created during the second quarter. We expect to achieve revenue increases on a sequential basis in each of the third and fourth quarters. In addition, as we have previously discussed in this call, we will continue to strictly manage quarterly cash operating expenses resulting in sequential quarterly adjusted EBITDA increases. Both of these efforts will continue to drive revenue growth and put us on a path to profitability.

We improved our liquidity with the addition of $3.4 million in net cash proceeds from the amendment of our senior credit facility in July. And our objective remains to manage our cash flows, to maintain sufficient liquidities so we can move towards self-funding our growth. Again, as we are at the outset of this, we can’t guarantee that our potential will be realized in an entirely linear manner. But, we can promise that we will move diligently to bring RMG to profitable growth and that we will keep you informed as we proceed along that path.

So, despite the results and baggage, RMG is going to continue running a business that has executives on one side focused on selling advertising, and on the other promoting visualized data and corporate communications solutions. It’s hardly the first company to have diverse business units, but …

RMG’s share prices didn’t fall off a cliff like they after the May earnings report, but were off more than 12% Thursday and down another 4% this morning.

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