Quantcast
Last updated on April 17, 2014 at 1:21 EDT

CSI Reports Record Second Quarter Revenues And Net Income

October 4, 2013

Revenues Increase for 37th Consecutive Quarter

PADUCAH, Ky., Oct. 4, 2013 /PRNewswire/ — Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and net income for the fiscal second quarter and six months ended August 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20080418/CSILOGO )

Second quarter revenues rose 11.1% to $54.0 million in fiscal 2014 compared with $48.6 million in the second quarter of fiscal 2013. Second quarter net income increased 6.8% to $6.5 million, or $0.45 per diluted share, compared with $6.1 million, or $0.41 per diluted share, in the second quarter of fiscal 2013.

“CSI’s record results for the second quarter benefited from higher processing revenues generated from our core processing customers and record transaction volume from our regulatory compliance services,” stated Chief Executive Officer Steven A. Powless. “This quarter marked our 37(th) consecutive quarter of revenue growth, and our outlook for the second half of fiscal 2014 remains positive based on our pipeline of new business, high contract renewal rates and solid growth in transaction volume.”

“Our focus remains on driving revenue growth through our expanded sales and marketing programs,” Powless continued. “We increased our sales force as part of our Strategic Growth Initiative (SGI), and it has been successful in expanding our geographic reach to a national presence as well as increasing cross-sales of products and services to existing customers.”

During the second quarter, CSI’s Board of Directors approved a 14.3% increase in the quarterly cash dividend to $0.16 per share and authorized a $5.0 million increase in the Company’s share repurchase program. The increased dividend marked the 25(th) consecutive year of increasing CSI’s cash dividend. The dividend was paid on September 25, 2013, to shareholders of record as of the close of business on September 3, 2013. The increase in the share repurchase program brought the total authorized for share repurchase to $70 million since CSI’s share repurchase program was initially announced in March 2004.

Second Quarter Results

Second quarter consolidated revenues rose 11.1% to $54.0 million compared with $48.6 million for the second quarter ended August 31, 2012. Processing revenues increased 10.5% to $34.0 million compared with $30.8 million in the second quarter of fiscal 2013. The growth in processing revenues reflects sales to new customers, cross-sales to existing customers and increases in transaction volumes from existing customers, partially offset by lost business. Second quarter fiscal 2014 processing revenue included $1.2 million in early contract termination fees compared with $51,000 in the second quarter of fiscal 2013. The early termination fees were due primarily to former customers being acquired by other non-customer financial institutions.

Other revenues rose 12.1% to $20.0 million in the second quarter of fiscal 2014 and accounted for 37.1% of total revenues compared with $17.9 million, or 36.7% of total revenues, in the second quarter of fiscal 2013. Other revenue growth benefited from higher sales of Internet and mobile banking services, growth in homeland security and fraud prevention services, higher eBusiness group revenues, and higher forms and envelope revenue within our Document Services Division.

Second quarter operating income rose 9.0% to $10.7 million compared with $9.8 million in the second quarter of fiscal 2013. Operating margin for the second quarter was 19.8% compared with 20.2% in the second quarter of fiscal 2013. The decrease in operating margin was due primarily to the ramp up of expenses related to the SGI launched in fiscal 2012, most of which have been incurred. In addition, expenses increased for equipment and travel related to the build out of our national sales team, increased fees related to growth in our ATM and debit card business, and higher network communications compared with the second quarter of last year.

Net income increased 6.8% to $6.5 million in the second quarter compared with $6.1 million in fiscal 2013. Net income per fully diluted share rose 9.8% to $0.45 in the second quarter of fiscal 2014 compared with $0.41 in fiscal 2013. Weighted average diluted shares outstanding were down 1.6% to 14.5 million for the second quarter of fiscal 2014 compared to the same period of fiscal 2013 due primarily to CSI shares repurchased under the Company’s share repurchase program. CSI repurchased 213,676 shares during the first half of fiscal 2014, including 129,606 in the second quarter. CSI had approximately $2.7 million available under existing stock purchase authorizations outstanding as of August 31, 2013.

“CSI’s balance sheet remained strong with $3.3 million in cash and no long-term debt at August 31, 2013,” Powless said. “We used our strong cash flow to reduce debt, increase CSI’s cash dividend, repurchase CSI shares and invest in new hardware and software to support our continued growth. During the second quarter, we invested about $2.2 million in new equipment and software, and we returned $6.0 million to shareholders in cash dividends and stock repurchases.”

Six Month Results

Consolidated revenues for the first six months of fiscal 2014 rose 9.5% to a record $105.8 million compared with $96.6 million for the same period in fiscal 2013. CSI’s growth in revenues benefited from growth in processing and other revenues.

Operating income rose 7.1% to $20.7 million for the first six months of fiscal 2014 compared with $19.3 million for the same period in fiscal 2013. Operating margin was 19.6% in the first six months of fiscal 2014 compared with 20.0% in the same period of fiscal 2013.

Net income for the first six months of fiscal 2014 rose 4.9% to $12.5 million compared with $11.9 million in the first six months of fiscal 2013. Net income per diluted share increased 6.2% to $0.86 for the first six months of fiscal 2014 compared with $0.81 for the same period of fiscal 2013.

About Computer Services, Inc.

Computer Services, Inc. (CSI) delivers core processing, managed services, mobile and Internet solutions, payments processing, print and electronic distribution, and regulatory compliance solutions to financial institutions and corporate customers across the nation. Exceptional service, dynamic solutions and superior results are the foundation of CSI’s reputation, and have resulted in the company’s inclusion in such top industry-wide rankings as the FinTech 100, Talkin’ Cloud 100 and MSPmentor Top 501 Global Managed Service Providers List. CSI’s stock is traded on OTCQX under the symbol CSVI. For more information about CSI, visit www.csiweb.com.

Forward-Looking Statements

This news release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. All statements except historical statements contained herein constitute “forward-looking statements.” Forward-looking statements are inherently uncertain and are based only on current expectations and assumptions that are subject to future developments that may cause results to differ materially. Readers should carefully consider: (i) economic, competitive, technological and governmental factors affecting CSI’s operations, customers, markets, services, products and prices; and (ii) other factors discussed in CSI’s Annual Report, Quarterly Reports, Information and Disclosure Statements and other documents posted from time to time on the OTCQX website (www.otcqx.com), including without limitation, the description of the nature of CSI’s business and its management discussion and analysis of financial condition and results of operations for reported periods. Unless required by law, CSI undertakes no obligation to update, and is not responsible for updating, the information contained in this report beyond the publication date, whether as a result of new information or future events, or to conform the statement to actual results or changes in CSI’s expectations, or otherwise or for changes made to this document by wire services or Internet services.

                                                                                                     COMPUTER SERVICES, INC. AND SUBSIDIARIES

                                                                                                   Condensed Consolidated Statements of Income

                                                                                                                   (Unaudited)

                                                                                                 (in thousands, except share and per share data)

                                                                                       Three Months Ended August 31,              Six Months Ended August 31,
                                                                                       -----------------------------              ---------------------------

                                                                                                                    2013                                      2012                                  2013                                  2012
                                                                                                                    ----                                      ----                                  ----                                  ----

    Processing revenues                                                                                          $34,004                                   $30,777                               $67,627                               $61,855

    Other revenues                                                                                                20,026                                    17,863                                38,123                                34,748
    --------------                                                                                                ------                                    ------                                ------                                ------

      Total revenues                                                                                              54,030                                    48,640                               105,750                                96,603

    Operating expenses                                                                                            43,311                                    38,807                                85,040                                77,264
    ------------------                                                                                            ------                                    ------                                ------                                ------

      Operating income                                                                                            10,719                                     9,833                                20,710                                19,339

    Interest income (expense)                                                                                        (11)                                       (8)                                  (23)                                  (10)
    ------------------------                                                                                         ---                                       ---                                   ---                                   ---

      Income before income taxes                                                                                  10,708                                     9,825                                20,687                                19,329

    Provision for income taxes                                                                                     4,229                                     3,759                                 8,171                                 7,394
    --------------------------                                                                                     -----                                     -----                                 -----                                 -----

      Net income                                                                                                  $6,479                                    $6,066                               $12,516                               $11,935
      ----------                                                                                                  ------                                    ------                               -------                               -------

    Earnings per share

      Basic                                                                                                        $0.45                                     $0.41                                 $0.86                                 $0.81

      Diluted                                                                                                      $0.45                                     $0.41                                 $0.86                                 $0.81

    Shares used in computing earnings per

      common and common equivalent
       share

        Basic                                                                                                 14,511,898                                14,718,145                            14,563,509                            14,721,665

        Diluted                                                                                               14,511,898                                14,750,121                            14,563,509                            14,755,580

                                                 COMPUTER SERVICES, INC. AND SUBSIDIARIES

                                                   Condensed Consolidated Balance Sheets

                                                     (in thousands, except share data)

                                                               08/31/2013                       02/28/2013                       08/31/2012

                                                     (Unaudited)                        (Audited)                       (Unaudited)
                                                      ----------                                                        ----------

    ASSETS

      Current
       assets

        Cash and cash
         equivalents                                               $3,275                             $499                          $10,424

        Accounts
         receivable                                                22,657                           21,953                           20,575

        Income tax
         receivable                                                   452                              797                                -

        Prepaid
         expenses and
         other
         current
         assets                                                     8,034                            6,625                            6,545
        -------------                                               -----                            -----                            -----

          Total current assets                                     34,418                           29,874                           37,544

      Property and
       equipment,
       net                                                         35,340                           34,996                           36,414

      Software and
       software
       licenses,
       net                                                         18,240                           18,952                           18,293

      Goodwill                                                     60,115                           60,115                           60,115

      Intangible
       assets                                                       8,920                            9,374                           10,009

      Other assets                                                  9,858                            8,703                            8,540
      ------------                                                  -----                            -----                            -----

    Total assets                                                 $166,891                         $162,014                         $170,915
    ------------                                                 --------                         --------                         --------

    LIABILITIES AND SHAREHOLDERS'
     EQUITY

      Current
       liabilities

        Accounts
         payable and
         accrued
         expenses                                                 $17,646                          $12,979                          $14,249

        Deferred
         revenue                                                    8,762                            9,337                            9,923

        Income taxes
         payable                                                        -                                -                               37

        Notes payable                                                  27                               60                               84
        -------------                                                 ---                                                               ---

          Total current liabilities                                26,435                           22,376                           24,293

      Long-term
       liabilities

        Notes payable                                                   -                                7                               34

        Deferred
         income taxes                                              13,193                           13,193                           11,902

        Other long-
         term
         liabilities                                                1,174                            1,071                            1,128
        ------------                                                -----                            -----                            -----

          Total long-term liabilities                              14,367                           14,271                           13,064
          ---------------------------                              ------                           ------                           ------

          Total liabilities                                        40,802                           36,647                           37,357

      Shareholders'
       equity

        Preferred
         stock;
         shares
         authorized,
         5,000,000;
         none issued                                                    -                                -                                -

        Common stock,
         no par;
         shares
         authorized,
         20,000,000
         in fiscal
         2014 and

          2013; shares issued and
           outstanding, 14,430,952 at
           August 31, 2013,

          14,620,743 at February 28, 2013,
           and 14,700,284 at August 31,
           2012                                                    20,513                           19,522                           19,564

        Retained
         earnings                                                 105,576                          105,845                          113,994

          Total shareholders' equity                              126,089                          125,367                          133,558
          --------------------------                              -------                          -------                          -------

    Total liabilities and
     shareholders' equity                                        $166,891                         $162,014                         $170,915
    ---------------------                                        --------                         --------                         --------

SOURCE Computer Services, Inc.


Source: PR Newswire