CSG Systems International, Inc. Reports First Quarter 2008 Results

Business Wire,  April 22, 2008  

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Revenues of $113.6 million;

Income From Continuing Operations of $0.45 per share

ENGLEWOOD, Colo. -- CSG Systems International, Inc. (Nasdaq: CSGS), a leading provider of customer care and billing solutions, today reported results for the quarter ended March 31, 2008.

First Quarter 2008 Highlights:

* Results from continuing operations were as follows: total revenues were $113.6 million; operating income was $23.3 million; and income from continuing operations was $14.8 million, or $0.45 per diluted share.

* Cash flows from operations for the quarter were approximately $21 million, which were negatively impacted by a client's delayed payment of approximately $10 million until after quarter-end. This amount was received during the first week of April 2008.

* On April 17, 2008, CSG announced that it reached an agreement to acquire DataProse, Inc., a privately-held provider of statement presentment and direct mail services headquartered in Oxnard, California.

* During the quarter, Mediacom extended its contract with CSG through July 2014 for continued use of CSG's Advanced Convergent Platform (ACP) to provide critical customer care and billing services to its 1.4 million customers nationwide. Mediacom also agreed to implement CSG's voice services functionality, CSG Statement Express, and CSG Order Workflow.

"CSG is off to a strong start in 2008, which is reflected in our financial results, in our continued execution on our organic growth and acquisition strategies, and in the sales results that we achieved," said Peter Kalan, Chief Executive Officer and President of CSG Systems International, Inc. "We are excited to enhance our industry-leading statement presentment business with the acquisition of DataProse, which will broaden our relationships in new industry verticals, add technological expertise and round out our national output solutions footprint."

Summary GAAP Results of Operations Information (unaudited)

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

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First Quarter 2008 Results From Continuing Operations

Revenues. Total revenues for the first quarter of 2008 were $113.6 million, which represents an increase of 15 percent when compared to $98.7 million for the same period in 2007, and are relatively consistent with the $113.5 million in revenues reported for the fourth quarter of 2007.

* The increase in year-over-year revenues relates primarily to additional revenue from CSG's recently acquired businesses, with the remaining portion of the increase related to organic growth factors.

Results of Operations. Income from continuing operations presented in accordance with generally accepted accounting principles ("GAAP") for the first quarter of 2008 was $14.8 million ($0.45 per diluted share), compared to $15.8 million ($0.35 per diluted share) for the same period last year, and $13.6 million ($0.40 per diluted share) for the fourth quarter of 2007. The increase in year-over-year earnings per diluted share is primarily the result of a lower number of outstanding shares in the first quarter of 2008, due to the completion of our stock repurchase program in late 2007.

Supplemental Data

The following information is provided to assist readers in further evaluating CSG's performance (in thousands, except per share amounts):

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(1) These items (on a pretax basis) are calculated in accordance with GAAP, and are reflected as part of continuing operations in the accompanying Unaudited Condensed Consolidated Statements of Income.

(2) This represents the after tax impact to income from continuing operations on a per diluted share basis using CSG's effective income tax rates from continuing operations of approximately 36% and 35% for the quarters ended March 31, 2008 and 2007, respectively.

Total customer accounts processed on CSG's systems as of March 31, 2008, were 45.6 million, compared to 45.1 million as of December 31, 2007.

DataProse Acquisition

On April 17, 2008, CSG announced an agreement to acquire DataProse, Inc. for approximately $39 million. DataProse is a privately-held provider of statement presentment and direct mail services with over 130 employees and production facilities in Oxnard, California and Dallas, Texas.

The acquisition of DataProse furthers CSG's objective of helping its clients maximize every customer interaction by both strengthening and broadening CSG's portfolio of output solutions capabilities. DataProse enhances CSG's suite of advanced personalized statement presentment, and adds extensive expertise in direct mail marketing services, including database management and market segmentation. Furthermore, with this acquisition, CSG continues to diversify its customer base into the utilities, financial services and telecommunications markets.

Financial Condition and Cash Flows

Certain key balance sheet items as of the end of the indicated periods are as follows (in thousands):

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Certain key operating cash flow items for the indicated quarters then ended are as follows (in thousands):