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Csg Systems International Reports Results

The following excerpt is from the company's SEC filing.

for Third quarter 2015

increases EPS and Adjusted ebitda Guidance

— CSG Systems International, Inc. (Nasdaq: CSGS), a leading global provider of interactive transaction-driven solutions and services, today reported results for the quarter ended September 30, 2015.

Key Highlights:

Third quarter 2015 results:

Total revenues

were

$187.0 million

Non-GAAP

operating income

$40.3 million

of total revenues and GAAP operating income was

$31.0 million

16.6%

of total revenues .

Non-GAAP

earnings per diluted share (EPS)

. GAAP EPS was

Cash flows from operations for the quarter were

$25.8 million

CSG paid its quarterly cash dividend of

$0.175

per share of common stock, or a total of approximately

$6 million

to shareholders.

Through November 2, 2015, CSG converted an additional

1.6 million

Comcast customer accounts onto its cloud-based Advanced Convergent Platform.

CSG divested of its cyber-security business, Invotas, in early September 2015.

“We have delivered year-over-year double digit percent non-GAAP earnings growth for the first nine months of 2015,” said Peter Kalan, chief executive officer of CSG International. “We have accomplished these strong results through a combination of improvements in the cost structure of both our domestic and international operations, the migration of new customers onto our processing solution in North America, critically evaluating where we place our investment dollars, and the scale benefits and continued maturation of our international managed services and content monetization offerings. We are starting to see the benefits of many of our business improvement initiatives which have aided in our ability to achieve our operating margin goals and drive solid cash flows.”

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Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

Quarter Ended September 30,

Nine Months Ended September 30,

Percent

Change

Revenues

186,960

185,003

555,232

557,589

Non-GAAP Results:

Operating Income

40,303

29,941

106,031

89,640

Operating Income Margin

31,021

13,831

79,070

56,565

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at

www.csgi.com

Results of Operations

Revenues:

Total revenues for the third quarter of 2015 were $187.0 million, a 1% increase when compared to revenues of $185.0 million for the third quarter of 2014, and a 2% increase when compared to $182.6 million for the second quarter of 2015. These increases can be attributed to continued strong processing revenues and increased professional services revenues during the third quarter of 2015. Year-over-year, these increases more than offset unfavorable foreign currency movements, which had a negative impact to total revenues of approximately $4 million.

Non-GAAP operating income for the third quarter of 2015 was $40.3 million, or 21.6% of total revenues, compared to $29.9 million, or 16.2%, for the third quarter of 2014. Non-GAAP operating income for the second quarter of 2015 was $34.9 million, or 19.1% of total revenues. Non-GAAP EPS for the third quarter of 2015 was $0.72, compared to non-GAAP EPS of $0.49 for the third quarter of 2014 and $0.61 for the second quarter of 2015. The year-over-year increases in non-GAAP operating income and non-GAAP EPS are due primarily to lower operating expenses (driven primarily by foreign currency movements and focus on cost management), while the sequential quarterly increases can be mainly attributed to higher revenues coupled with the expense benefits from cost savings initiatives.

GAAP operating income for the third quarter of 2015 was $31.0 million, or 16.6% of total revenues, compared to $13.8 million, or 7.5%, for the same period in 2014. GAAP EPS for the third quarter of 2015 was $0.50 compared to $0.15 for the third quarter of 2014. GAAP operating income and GAAP EPS for the third quarter of 2014 were negatively impacted by an $8.0 million charge, or $0.12 per diluted share, associated

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with CSG’s reorganization of its Content Direct management programs and incentives to align its investment across CSG’s offerings.

Balance Sheet and Cash Flows

Balance Sheet:

Cash, cash equivalents and short term investments at September 30, 2015 was $199.8 million, compared to $194.0 million at June 30, 2015 and $201.8 million at December 31, 2014.

For the quarter and nine months ended September 30, 2015, CSG generated $25.8 million and $84.3 million, respectively, of net cash flows from operations and had non-GAAP free cash flow of $20.5 million and $67.6 million, respectively.

2015 Financial Guidance

CSG is revising its financial guidance for the full year 2015 as follows:

As of November 4, 2015

Previous

$745 - $755 million

$755 - $770 million

$2.50 - $2.60

$2.33 - $2.40

$1.51 - $1.60

$1.43 - $1.49

Non-GAAP Adjusted EBITDA

$174 - $179 million

$165 - $169 million

Cash flows from operating activities

$105 - $120 million

Conference Call

CSG will host a conference call on November 4, 2015, at 5:00 p.m. ET, to discuss CSG’s third quarter results for 2015. The call will be carried live and archived on the Internet. A link to the conference call is available at

http://ir.csgi.com.

In addition, to reach the conference by phone, dial 1-800-723-6751 and ask the operator for the CSG International conference call and Liz Bauer, chairperson. A replay of the conference call will also be available until 8:00 p.m. ET on December 4, 2015, and can be accessed by calling 1-888-203-1112 and access code of 312266.

Additional Information

For information about CSG, please visit CSG’s web site at

. Additional information can be found in the Investor Relations section of the web site.

About CSG International

CSG Systems International, Inc. (NASDAQ: CSGS

) is a market-leading business support solutions and services company serving the majority of the top 100 global communications service providers, including leaders in fixed, mobile and next-generation networks such as AT&T, Charter Communications, Comcast, DISH, Orange, Reliance, SingTel Optus, Telecom New Zealand, Telefonica, Time Warner Cable, T-Mobile, Verizon, Vivo and Vodafone. With over 30 years of experience and expertise in voice, video, data and content services, CSG

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International offers a broad portfolio of licensed and Software-as-a-Service (SaaS)-based products and solutions that help clients compete more effectively, improve business operations and deliver a more impactful customer experience across a variety of touch points. For more information, visit our website at

Forward-Looking Statements

This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. Some of these key factors include, but are not limited to the following items:

CSG derives over forty percent of its revenues from its three largest clients;

Continued market acceptance of CSG’s products and services;

Timing and success of previously announced client customer account migrations to CSG’s billing platform;

CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically-advanced and competitive manner;

CSG’s ability to deliver its solutions in a timely fashion within budget, particularly large and complex software implementations;

CSG’s dependency on the global telecommunications industry, and in particular, the North American telecommunications industry;

CSG’s ability to meet its financial expectations as a result of increased dependency on software sales, which are subject to greater volatility;

Increasing competition in CSG’s market from companies of greater size and with broader presence in the communications sector;

CSG’s ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating and financial goals;

CSG’s ability to protect its intellectual property rights;

CSG’s ability to maintain a reliable, secure computing environment;

CSG’s ability to conduct business in the international marketplace;

CSG’s ability to comply with applicable U.S. and International laws and regulations; and

Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates.

This list is not exhaustive and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the SEC.

For more information, contact:

Liz Bauer, Senior Vice President of Investor Relations & Strategic Communications

(303) 804-4065

E-mail:

liz.bauer@csgi.com

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE...


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