ENGLEWOOD, Colo.--(BUSINESS WIRE)--
CSG Systems International, Inc. (Nasdaq: CSGS), the trusted global
partner to launch and monetize digital services, today reported results
for the quarter ended September 30, 2016.
Key Highlights:
-
Third quarter 2016 financial results:
-
Total revenues were $189.3 million.
-
GAAP operating income was $36.6 million, or 19.3% of
total revenues and non-GAAP operating income was $43.9
million, or 23.2% of total revenues.
-
GAAP earnings per diluted share (EPS) was $0.55. Non-GAAP
EPS was $0.75.
-
Cash flows from operations were $8.7 million.
-
CSG declared its quarterly cash dividend of $0.185 per share of
common stock, or a total of approximately $6 million, to
shareholders.
-
During the third quarter, CSG converted approximately one million
customer accounts onto its cloud-based Advanced Convergent Platform
(ACP) for a total of approximately 1.6 million conversions
year-to-date. Additionally, CSG converted approximately 500,000
more customer accounts in October 2016.
"I am really pleased with how we are executing in a challenging
environment," said Bret Griess, president and chief executive officer
for CSG International. "We continue to move market share off of
competitors' solutions and onto our cloud-based platforms. We are
expanding our reach into the broadband and cable space internationally
with our recent win at Cablevision Argentina, and we are strengthening
and expanding our relationships with carriers around the globe with our
managed services offerings. Our successful execution on our strategy
drives profitable revenue growth and long-term shareholder value."
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
|
|
|
Quarters Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
Changed
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
Changed
|
|
Revenues
|
|
|
$
|
189,311
|
|
|
|
$
|
186,960
|
|
|
|
|
1
|
%
|
|
|
$
|
565,789
|
|
|
|
$
|
555,232
|
|
|
|
|
2
|
%
|
GAAP Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
$
|
36,598
|
|
|
|
$
|
31,021
|
|
|
|
|
18
|
%
|
|
|
$
|
107,263
|
|
|
|
$
|
79,070
|
|
|
|
|
36
|
%
|
Operating Income Margin
|
|
|
|
19.3
|
%
|
|
|
|
16.6
|
%
|
|
|
—
|
|
|
|
|
19.0
|
%
|
|
|
|
14.2
|
%
|
|
|
—
|
|
EPS
|
|
|
$
|
0.55
|
|
|
|
$
|
0.50
|
|
|
|
|
10
|
%
|
|
|
$
|
1.52
|
|
|
|
$
|
1.17
|
|
|
|
|
30
|
%
|
Non-GAAP Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
$
|
43,893
|
|
|
|
$
|
40,303
|
|
|
|
|
9
|
%
|
|
|
$
|
130,540
|
|
|
|
$
|
106,031
|
|
|
|
|
23
|
%
|
Operating Income Margin
|
|
|
|
23.2
|
%
|
|
|
|
21.6
|
%
|
|
|
—
|
|
|
|
|
23.1
|
%
|
|
|
|
19.1
|
%
|
|
|
—
|
|
EPS
|
|
|
$
|
0.75
|
|
|
|
$
|
0.72
|
|
|
|
|
4
|
%
|
|
|
$
|
2.22
|
|
|
|
$
|
1.84
|
|
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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 2016 were $189.3 million, a 1% increase when compared
to revenues of $187.0 million for the third quarter of 2015, and a
slight decrease when compared to revenues of $190.3 million for the
second quarter of 2016. The year-over-year increase in revenues is
attributed to the growth of CSG's cloud and related solutions revenues,
resulting primarily from the conversion of customer accounts onto ACP
over the past year. The sequential quarterly decrease is primarily due
to lower software and services revenues generated during the third
quarter, which was offset to a certain degree by the continued growth in
CSG's cloud and related solutions revenues.
GAAP Results: GAAP operating income
for the third quarter of 2016 was $36.6 million, or 19.3% of total
revenues, compared to $31.0 million, or 16.6%, for the third quarter of
2015 and $29.4 million, or 15.4% of total revenues, for the second
quarter of 2016. GAAP EPS for the third quarter of 2016 was $0.55, as
compared to $0.50 for the third quarter of 2015, and $0.33 for the
second quarter of 2016.
The year-over-year increases in GAAP operating margin and GAAP EPS is
mainly due to the scale benefits from adding more customer accounts to
CSG's cloud solutions, and operational cost improvements. The sequential
quarterly increase in GAAP operating margin and GAAP EPS is due mainly
to the negative impact of the restructuring and reorganization changes
incurred during the second quarter of 2016. In addition, in the second
quarter of 2016, GAAP EPS was also negatively impacted by the loss on
the repurchase of the 2010 Convertible Notes. The repurchases were done
in conjunction with the refinancing of this instrument earlier this year.
Non-GAAP Results: Non-GAAP operating
income for the third quarter of 2016 was $43.9 million, or 23.2% of
total revenues, compared to $40.3 million, or 21.6%, for the third
quarter of 2015, and $42.4 million, or 22.3% of total revenues for the
second quarter of 2016. Non-GAAP EPS for the third quarter of 2016 was
$0.75, compared to $0.72 for the third quarter of 2015, and $0.70 for
the second quarter of 2016. The year-over-year increases in both
non-GAAP operating margin and non-GAAP EPS is mainly attributed to the
scale benefits from adding more customer accounts to CSG's cloud
solutions, and operational cost improvements.
Balance Sheet and Cash Flows
Cash, cash equivalents and short-term investments at September 30, 2016
were $266.1 million, compared to $286.7 million at June 30, 2016 and
$240.9 million at December 31, 2015. The quarterly decrease can be
mainly attributed to the repurchase of $9 million aggregate principal
amount of the 2010 Convertible Notes for approximately $17 million in
September, leaving $34 million aggregate principal amount of the 2010
Convertible Notes outstanding as of September 30, 2016.
CSG generated net cash flows from operations for the third quarters
ended September 30, 2016 and 2015 of $8.7 million and $25.8 million,
respectively, and had non-GAAP free cash flow of $6.1 million and $20.5
million, respectively. Cash flows from operations for the third quarter
of 2016 were negatively impacted by an increase in accounts receivable,
primarily related to the timing around certain recurring client payments
that were delayed at quarter-end. CSG generated net cash flows from
operations for the nine months ended September 30, 2016 and 2015 of
$59.5 million and $84.3 million, respectively, and had non-GAAP free
cash flow of $48.0 million and $67.6 million, respectively.
2016 Financial Guidance
CSG is adjusting its financial guidance for the full year 2016 as
follows:
|
|
|
As of November 2, 2016
|
|
|
Previous
|
Revenues
|
|
|
$755 - $760 million
|
|
|
$745 - $760 million
|
GAAP EPS
|
|
|
$1.92 - $2.03
|
|
|
$1.76 - $1.86
|
Non-GAAP EPS
|
|
|
$2.79 - $2.89
|
|
|
$2.59 - $2.69
|
GAAP Net Income
|
|
|
$63 - $67 million
|
|
|
$58 - $62 million
|
Non-GAAP Adjusted EBITDA
|
|
|
$194 - $200 million
|
|
|
$184 - $188 million
|
Cash Flows From Operating Activities
|
|
|
$110 - $120 million
|
|
|
$110 - $130 million
|
|
|
|
|
|
|
|
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.
Conference Call
CSG will host a conference call on Wednesday, November 2, 2016, at 5:00
p.m. Eastern Time, to discuss CSG's third quarter results for 2016. 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 1-800-768-6570 and
ask the operator for the CSG conference call and Liz Bauer, chairperson.
Additional Information
For information about CSG, please visit CSG's web site at www.csgi.com.
Additional information can be found in the Investor Relations section of
the web site.
About CSG International
CSG
International (NASDAQ: CSGS) is the trusted global partner to
help clients launch and monetize communications and entertainment
services in the digital age. Leveraging 30 years of experience and
expertise in voice, video, data and content services, CSG delivers
market-leading revenue management and customer interaction solutions in
licensed and managed service models. The company drives business
transformation initiatives for the majority of the top 100 global
communications service providers, including AT&T, Charter
Communications, Comcast, DISH, ESPN, Media-Saturn, Orange, Reliance,
SingTel Optus, Telstra, Telefonica, Vodafone, Vivo and Verizon. For more
information, visit our website at www.csgi.com.
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 approximately sixty 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.
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|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
|
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
140,221
|
|
|
|
$
|
132,631
|
|
Short-term investments
|
|
|
|
125,917
|
|
|
|
|
108,305
|
|
Total cash, cash equivalents and short-term investments
|
|
|
|
266,138
|
|
|
|
|
240,936
|
|
Trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
Billed, net of allowance of $2,906 and $3,600
|
|
|
|
201,610
|
|
|
|
|
178,854
|
|
Unbilled
|
|
|
|
33,934
|
|
|
|
|
41,110
|
|
Income taxes receivable
|
|
|
|
4,012
|
|
|
|
|
4,038
|
|
Other current assets
|
|
|
|
33,320
|
|
|
|
|
35,153
|
|
Total current assets
|
|
|
|
539,014
|
|
|
|
|
500,091
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of depreciation of $120,813 and $112,282
|
|
|
|
30,618
|
|
|
|
|
35,992
|
|
Software, net of amortization of $101,176 and $95,094
|
|
|
|
30,365
|
|
|
|
|
35,095
|
|
Goodwill
|
|
|
|
206,887
|
|
|
|
|
219,724
|
|
Client contracts, net of amortization of $94,297 and $87,890
|
|
|
|
35,695
|
|
|
|
|
39,738
|
|
Deferred income taxes
|
|
|
|
14,239
|
|
|
|
|
17,462
|
|
Other assets
|
|
|
|
11,300
|
|
|
|
|
14,629
|
|
Total non-current assets
|
|
|
|
329,104
|
|
|
|
|
362,640
|
|
Total assets
|
|
|
$
|
868,118
|
|
|
|
$
|
862,731
|
|
LIABILITIES, CURRENT PORTION OF LONG-TERM
DEBT CONVERSION OBLIGATION AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt, net of unamortized discounts of
$734 and $8,632
|
|
|
$
|
47,123
|
|
|
|
$
|
148,868
|
|
Client deposits
|
|
|
|
32,746
|
|
|
|
|
33,694
|
|
Trade accounts payable
|
|
|
|
25,348
|
|
|
|
|
43,392
|
|
Accrued employee compensation
|
|
|
|
58,941
|
|
|
|
|
59,607
|
|
Deferred revenue
|
|
|
|
48,959
|
|
|
|
|
41,907
|
|
Income taxes payable
|
|
|
|
2,234
|
|
|
|
|
8,962
|
|
Other current liabilities
|
|
|
|
17,260
|
|
|
|
|
22,980
|
|
Total current liabilities
|
|
|
|
232,611
|
|
|
|
|
359,410
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of unamortized discounts of $24,169 and $4,738
|
|
|
|
329,581
|
|
|
|
|
130,262
|
|
Deferred revenue
|
|
|
|
7,726
|
|
|
|
|
9,828
|
|
Income taxes payable
|
|
|
|
4,392
|
|
|
|
|
4,413
|
|
Deferred income taxes
|
|
|
|
19
|
|
|
|
|
182
|
|
Other non-current liabilities
|
|
|
|
12,828
|
|
|
|
|
12,791
|
|
Total non-current liabilities
|
|
|
|
354,546
|
|
|
|
|
157,476
|
|
Total liabilities
|
|
|
|
587,157
|
|
|
|
|
516,886
|
|
Current portion of long-term debt conversion obligation
|
|
|
|
28,690
|
|
|
|
|
-
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $.01 per share; 10,000 shares
authorized; zero shares issued and outstanding
|
|
|
|
-
|
|
|
|
|
-
|
|
Common stock, par value $.01 per share; 100,000 shares authorized;
32,317 and 32,555 shares outstanding
|
|
|
|
672
|
|
|
|
|
672
|
|
Common stock warrants; 2,851 and 2,851 warrants issued and
outstanding
|
|
|
|
7,310
|
|
|
|
|
7,310
|
|
Additional paid-in capital
|
|
|
|
397,029
|
|
|
|
|
503,254
|
|
Treasury stock, at cost, 34,865 and 34,601 shares
|
|
|
|
(823,963
|
)
|
|
|
|
(814,437
|
)
|
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on short-term investments, net of tax
|
|
|
|
(6
|
)
|
|
|
|
(97
|
)
|
Cumulative foreign currency translation adjustments
|
|
|
|
(36,721
|
)
|
|
|
|
(26,288
|
)
|
Accumulated earnings
|
|
|
|
707,950
|
|
|
|
|
675,431
|
|
Total stockholders' equity
|
|
|
|
252,271
|
|
|
|
|
345,845
|
|
Total liabilities, current portion of long-term debt conversion
obligation and stockholders' equity
|
|
|
$
|
868,118
|
|
|
|
$
|
862,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30, 2016
|
|
|
|
September 30, 2015
|
|
|
|
September 30, 2016
|
|
|
|
September 30, 2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud and related solutions
|
|
|
$
|
151,217
|
|
|
|
$
|
143,887
|
|
|
|
$
|
451,023
|
|
|
|
$
|
429,009
|
|
Software and services
|
|
|
|
18,634
|
|
|
|
|
23,231
|
|
|
|
|
58,964
|
|
|
|
|
68,301
|
|
Maintenance
|
|
|
|
19,460
|
|
|
|
|
19,842
|
|
|
|
|
55,802
|
|
|
|
|
57,922
|
|
Total revenues
|
|
|
|
189,311
|
|
|
|
|
186,960
|
|
|
|
|
565,789
|
|
|
|
|
555,232
|
|
Cost of revenues (exclusive of depreciation, shown separately below):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud and related solutions
|
|
|
|
70,150
|
|
|
|
|
67,428
|
|
|
|
|
206,578
|
|
|
|
|
201,455
|
|
Software and services
|
|
|
|
12,230
|
|
|
|
|
15,244
|
|
|
|
|
37,057
|
|
|
|
|
52,912
|
|
Maintenance
|
|
|
|
11,040
|
|
|
|
|
9,510
|
|
|
|
|
32,051
|
|
|
|
|
29,877
|
|
Total cost of revenues
|
|
|
|
93,420
|
|
|
|
|
92,182
|
|
|
|
|
275,686
|
|
|
|
|
284,244
|
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
23,572
|
|
|
|
|
24,941
|
|
|
|
|
71,479
|
|
|
|
|
76,567
|
|
Selling, general and administrative
|
|
|
|
32,508
|
|
|
|
|
34,247
|
|
|
|
|
101,539
|
|
|
|
|
102,261
|
|
Depreciation
|
|
|
|
3,398
|
|
|
|
|
3,723
|
|
|
|
|
10,423
|
|
|
|
|
11,268
|
|
Restructuring and reorganization charges
|
|
|
|
(185
|
)
|
|
|
|
846
|
|
|
|
|
(601
|
)
|
|
|
|
1,822
|
|
Total operating expenses
|
|
|
|
152,713
|
|
|
|
|
155,939
|
|
|
|
|
458,526
|
|
|
|
|
476,162
|
|
Operating income
|
|
|
|
36,598
|
|
|
|
|
31,021
|
|
|
|
|
107,263
|
|
|
|
|
79,070
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(4,398
|
)
|
|
|
|
(2,526
|
)
|
|
|
|
(11,876
|
)
|
|
|
|
(8,431
|
)
|
Amortization of original issue discount
|
|
|
|
(1,062
|
)
|
|
|
|
(1,576
|
)
|
|
|
|
(3,856
|
)
|
|
|
|
(4,639
|
)
|
Interest and investment income, net
|
|
|
|
707
|
|
|
|
|
278
|
|
|
|
|
1,698
|
|
|
|
|
674
|
|
Loss on repurchase of convertible notes
|
|
|
|
(332
|
)
|
|
|
|
-
|
|
|
|
|
(8,651
|
)
|
|
|
|
-
|
|
Other, net
|
|
|
|
(1,354
|
)
|
|
|
|
746
|
|
|
|
|
(4,040
|
)
|
|
|
|
426
|
|
Total other
|
|
|
|
(6,439
|
)
|
|
|
|
(3,078
|
)
|
|
|
|
(26,725
|
)
|
|
|
|
(11,970
|
)
|
Income before income taxes
|
|
|
|
30,159
|
|
|
|
|
27,943
|
|
|
|
|
80,538
|
|
|
|
|
67,100
|
|
Income tax provision
|
|
|
|
(12,265
|
)
|
|
|
|
(11,196
|
)
|
|
|
|
(30,303
|
)
|
|
|
|
(28,201
|
)
|
Net income
|
|
|
$
|
17,894
|
|
|
|
$
|
16,747
|
|
|
|
$
|
50,235
|
|
|
|
$
|
38,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
31,063
|
|
|
|
|
30,920
|
|
|
|
|
30,922
|
|
|
|
|
31,087
|
|
Diluted
|
|
|
|
32,639
|
|
|
|
|
33,287
|
|
|
|
|
33,041
|
|
|
|
|
33,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.58
|
|
|
|
$
|
0.54
|
|
|
|
$
|
1.62
|
|
|
|
$
|
1.25
|
|
Diluted
|
|
|
|
0.55
|
|
|
|
|
0.50
|
|
|
|
|
1.52
|
|
|
|
|
1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
|
$
|
0.19
|
|
|
|
$
|
0.18
|
|
|
|
$
|
0.56
|
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2016
|
|
|
September 30, 2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
50,235
|
|
|
$
|
38,899
|
|
Adjustments to reconcile net income to net cash provided by
operating activities-
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
10,423
|
|
|
|
11,268
|
|
Amortization
|
|
|
19,921
|
|
|
|
22,353
|
|
Amortization of original issue discount
|
|
|
3,856
|
|
|
|
4,639
|
|
(Gain) loss on short-term investments and other
|
|
|
(23
|
)
|
|
|
179
|
|
Loss on repurchase of convertible notes
|
|
|
8,651
|
|
|
|
-
|
|
(Gain) loss on disposition of business operations
|
|
|
(6,611
|
)
|
|
|
767
|
|
Deferred income taxes
|
|
|
(2,159
|
)
|
|
|
(5,556
|
)
|
Excess tax benefit of stock-based compensation awards
|
|
|
(4,622
|
)
|
|
|
(2,174
|
)
|
Stock-based compensation
|
|
|
17,273
|
|
|
|
15,775
|
|
Changes in operating assets and liabilities, net of acquired amounts:
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
(16,275
|
)
|
|
|
(1,869
|
)
|
Other current and non-current assets
|
|
|
199
|
|
|
|
(6,092
|
)
|
Income taxes payable/receivable
|
|
|
(2,750
|
)
|
|
|
3,588
|
|
Trade accounts payable and accrued liabilities
|
|
|
(23,628
|
)
|
|
|
(3,703
|
)
|
Deferred revenue
|
|
|
5,016
|
|
|
|
6,272
|
|
Net cash provided by operating activities
|
|
|
59,506
|
|
|
|
84,346
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(11,542
|
)
|
|
|
(16,776
|
)
|
Purchases of short-term investments
|
|
|
(122,736
|
)
|
|
|
(107,462
|
)
|
Proceeds from sale/maturity of short-term investments
|
|
|
107,816
|
|
|
|
127,766
|
|
Acquisition of and investments in business, net of cash acquired
|
|
|
-
|
|
|
|
(962
|
)
|
Acquisition of and investments in client contracts
|
|
|
(6,038
|
)
|
|
|
(6,374
|
)
|
Proceeds from the disposition of business operations
|
|
|
8,850
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(23,650
|
)
|
|
|
(3,808
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
1,120
|
|
|
|
1,148
|
|
Payment of cash dividends
|
|
|
(18,325
|
)
|
|
|
(16,811
|
)
|
Repurchase of common stock
|
|
|
(22,455
|
)
|
|
|
(64,995
|
)
|
Payments on acquired asset financing
|
|
|
-
|
|
|
|
(829
|
)
|
Proceeds from long-term debt
|
|
|
230,000
|
|
|
|
150,000
|
|
Payments on long-term debt
|
|
|
(5,625
|
)
|
|
|
(125,625
|
)
|
Repurchase of convertible notes
|
|
|
(215,657
|
)
|
|
|
-
|
|
Payments of deferred financing costs
|
|
|
(6,744
|
)
|
|
|
(2,742
|
)
|
Excess tax benefit of stock-based compensation awards
|
|
|
4,622
|
|
|
|
2,174
|
|
Net cash used in financing activities
|
|
|
(33,064
|
)
|
|
|
(57,680
|
)
|
Effect of exchange rate fluctuations on cash
|
|
|
4,798
|
|
|
|
(4,405
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
7,590
|
|
|
|
18,453
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
132,631
|
|
|
|
81,712
|
|
Cash and cash equivalents, end of period
|
|
$
|
140,221
|
|
|
$
|
100,165
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for-
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
11,165
|
|
|
$
|
7,484
|
|
Income taxes
|
|
|
35,260
|
|
|
|
30,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL, INC.
SUPPLEMENTAL REVENUE ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
|
September 30,
|
|
|
|
June 30,
|
|
|
|
September 30,
|
|
|
|
|
2016
|
|
|
|
2016
|
|
|
|
2015
|
|
Americas
|
|
|
|
86
|
%
|
|
|
|
85
|
%
|
|
|
|
84
|
%
|
Europe, Middle East and Africa
|
|
|
|
9
|
%
|
|
|
|
9
|
%
|
|
|
|
11
|
%
|
Asia Pacific
|
|
|
|
5
|
%
|
|
|
|
6
|
%
|
|
|
|
5
|
%
|
Total Revenues
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by Significant Customers: 10% or more
of Revenues
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
|
September 30,
|
|
|
|
June 30,
|
|
|
|
September 30,
|
|
|
|
|
2016
|
|
|
|
2016
|
|
|
|
2015
|
|
Comcast
|
|
|
|
27
|
%
|
|
|
|
25
|
%
|
|
|
|
24
|
%
|
Charter/Time Warner (combined for all periods)
|
|
|
|
21
|
%
|
|
|
|
22
|
%
|
|
|
|
21
|
%
|
DISH
|
|
|
|
13
|
%
|
|
|
|
14
|
%
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT 2
CSG SYSTEMS INTERNATIONAL, INC.
DISCLOSURES
FOR NON-GAAP FINANCIAL MEASURES
Use of Non-GAAP Financial Measures and
Limitations
To supplement its condensed consolidated financial statements presented
in accordance with generally accepted accounting principles (GAAP), CSG
uses non-GAAP operating income, non-GAAP EPS, non-GAAP adjusted EBITDA,
and non-GAAP free cash flow. CSG believes that these non-GAAP financial
measures, when reviewed in conjunction with its GAAP financial measures,
provide investors with greater transparency to the information used by
CSG's management in its financial and operational decision making. CSG
uses these non-GAAP financial measures for the following purposes:
-
Certain internal financial planning, reporting, and analysis;
-
Forecasting and budgeting;
-
Certain management compensation incentives; and
-
Communications with CSG's Board of Directors, stockholders, financial
analysts, and investors.
These non-GAAP financial measures are provided with the intent of
providing investors with the following information:
-
A more complete understanding of CSG's underlying operational results,
trends, and cash generating capabilities;
-
Consistency and comparability with CSG's historical financial results;
and
-
Comparability to similar companies, many of which present similar
non-GAAP financial measures to investors.
Non-GAAP financial measures are not measures of performance under GAAP,
and therefore should not be considered in isolation or as a substitute
for GAAP financial information. Limitations with the use of non-GAAP
financial measures include the following items:
-
Non-GAAP financial measures are not based on any comprehensive set of
accounting rules or principles;
-
The way in which CSG calculates non-GAAP financial measures may differ
from the way in which other companies calculate similar non-GAAP
financial measures;
-
Non-GAAP financial measures do not include all items of income and
expense that affect CSG's operations and that are required by GAAP to
be included in financial statements;
-
Certain adjustments to CSG's non-GAAP financial measures result in the
exclusion of items that are recurring and will be reflected in CSG's
financial statements in future periods; and
-
Certain charges excluded from CSG's non-GAAP financial measures are
cash expenses, and therefore do impact CSG's cash position.
CSG compensates for these limitations by relying primarily on its GAAP
results and using non-GAAP financial measures as a supplement only.
Additionally, CSG provides specific information regarding the treatment
of GAAP amounts considered in preparing the non-GAAP financial measures
and reconciles each non-GAAP financial measure to the most directly
comparable GAAP measure.
Non-GAAP Financial Measures: Basis of
Presentation
The table below outlines the exclusions from CSG's non-GAAP financial
measures:
Non-GAAP Exclusions
|
|
|
Operating Income
|
|
|
EPS
|
Restructuring and reorganization charges
|
|
|
|
X
|
|
|
|
X
|
Acquisition-related charges
|
|
|
|
X
|
|
|
|
X
|
Stock-based compensation
|
|
|
|
X
|
|
|
|
X
|
Amortization of acquired intangible assets
|
|
|
|
X
|
|
|
|
X
|
Amortization of original issue discount ("OID")
|
|
|
|
—
|
|
|
|
X
|
Gain (loss) on repurchase of convertible notes
|
|
|
|
—
|
|
|
|
X
|
Unusual income tax matters
|
|
|
|
—
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
CSG believes that excluding certain items in calculating its non-GAAP
financial measures provides meaningful supplemental information
regarding CSG's performance and these items are excluded for the
following reasons:
-
Restructuring and reorganization charges are infrequent expenses that
result from cost reduction initiatives and/or significant changes to
CSG's business, to include such things as involuntary employee
terminations, changes in management structure, divestitures of
businesses, facility consolidations and abandonments, and fundamental
reorganizations impacting operational focus and direction. These
charges are not considered reflective of CSG's recurring core business
operating results. The exclusion of these items in calculating CSG's
non-GAAP financial measures allows management and investors an
additional means to compare CSG's current financial results with
historical and future periods.
-
Acquisition-related charges relate to direct and incremental expenses
related to business acquisitions, and thus, are not considered
reflective of CSG's recurring core business operating results. These
charges typically include expenses related to legal, accounting, and
other professional services. The exclusion of these charges in
calculating CSG's non-GAAP financial measures allows management and
investors an additional means to compare CSG's current financial
results with historical and future periods.
-
Stock-based compensation results from CSG's issuance of equity awards
to its employees under incentive compensation programs. The amount of
this incentive compensation in any period is not generally linked to
the level of performance by employees or CSG, but instead is more
dependent on CSG's stock price at the date the equity award is
granted, and the employee service period over which the equity awards
vest. The exclusion of these expenses in calculating CSG's non-GAAP
financial measures allows management and investors an additional means
to evaluate the non-cash expense related to compensation included in
CSG's results of operations, and therefore, the exclusion of this item
allows investors to further evaluate the cash generating capabilities
of CSG's business.
-
Amortization of acquired intangible assets is the result of business
acquisitions. A portion of the purchase price in an acquisition is
allocated to acquired intangible assets (e.g., software, client
relationships, etc.), which are then amortized to expense over their
estimated useful lives. This annual amortization expense is generally
unchanged from the initial estimates, regardless of performance of the
acquired business in any one period. Also, the value assigned to
acquired intangible assets in a business combination is based on
various estimates and valuation techniques, and does not necessarily
represent the costs CSG would incur to develop such capabilities
internally. Additionally, amortization of acquired intangible assets
can be inconsistent in amount and frequency, and can be significantly
affected by the timing and size of an acquisition. The exclusion of
these expenses in calculating CSG's non-GAAP financial measures allows
management and investors an additional means to evaluate the non-cash
expense related to acquisitions included in CSG's results of
operations, and therefore, the exclusion of this item allows investors
to further evaluate the cash generating capabilities of CSG's business.
-
The convertible notes OID is the result of allocating a portion of the
principal balance of the debt at issuance to the equity component of
the instrument, as required under current accounting rules. This OID
is then amortized to interest expense over the life of the respective
convertible debt instrument. The interest expense related to the
amortization of the OID is a non-cash expense, and therefore, the
exclusion of this item allows investors to further evaluate the cash
interest costs of CSG's convertible notes for cash flow, liquidity,
and debt service purposes.
-
Gains and losses related to the repurchase of CSG's convertible notes
are not considered reflective of CSG's recurring core business
operating results. Any resulting gain or loss on the repurchase of
CSG's convertible notes is non-cash income or expense, and therefore,
the exclusion of this item allows investors to further evaluate the
cash impact of these repurchases for cash flow and liquidity purposes.
In addition, the exclusion of these gains and losses in calculating
CSG's non-GAAP EPS allows management and investors an additional means
to compare CSG's current operating results with historical and future
periods.
-
Unusual items within CSG's quarterly and/or annual income tax expense
can occur from such things as income tax accounting timing matters,
income taxes related to unusual events, or as a result of different
treatment of certain items for book accounting and income tax
purposes. Consideration of such items in calculating CSG's non-GAAP
financial measures allows management and investors an additional means
to compare CSG's current financial results with historical and future
periods.
CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow.
Management believes non-GAAP adjusted EBITDA is a useful measure to
investors in evaluating CSG's operating performance, debt servicing
capabilities, and enterprise valuation. CSG defines non-GAAP adjusted
EBITDA as income before interest, income taxes, depreciation,
amortization, stock-based compensation, foreign currency transaction
adjustments, and unusual items, such as restructuring and reorganization
charges, and gains and losses related to the repurchase of CSG's
convertible notes, as discussed above. Additionally, management uses
non-GAAP free cash flow, among other measures, to assess its financial
performance and cash generating capabilities, and believes that it is
useful to investors because it shows CSG's cash available to service
debt, make strategic acquisitions and investments, repurchase its common
stock, pay cash dividends, and fund ongoing operations. CSG defines
non-GAAP free cash flow as net cash flows from operating activities less
the purchases of property and equipment.
Non-GAAP Financial Measures
Non-GAAP Operating Income:
The reconciliations of GAAP operating income to non-GAAP operating
income for the indicated periods are as follows (in thousands, except
percentages):
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
|
September 30, 2016
|
|
|
|
September 30, 2015
|
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
Amounts
|
|
|
|
Revenues
|
|
|
|
Amounts
|
|
|
|
Revenues
|
|
GAAP operating income
|
|
|
$
|
36,598
|
|
|
|
|
19.3
|
%
|
|
|
$
|
31,021
|
|
|
|
|
16.6
|
%
|
Restructuring and reorganization charges (1)
|
|
|
|
(185
|
)
|
|
|
|
(0.1
|
%)
|
|
|
|
846
|
|
|
|
|
0.5
|
%
|
Stock-based compensation (1)
|
|
|
|
5,364
|
|
|
|
|
2.9
|
%
|
|
|
|
5,387
|
|
|
|
|
2.9
|
%
|
Amortization of acquired intangible assets
|
|
|
|
2,116
|
|
|
|
|
1.1
|
%
|
|
|
|
3,049
|
|
|
|
|
1.6
|
%
|
Non-GAAP operating income
|
|
|
$
|
43,893
|
|
|
|
|
23.2
|
%
|
|
|
$
|
40,303
|
|
|
|
|
21.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30, 2016
|
|
|
|
September 30, 2015
|
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
Amounts
|
|
|
|
Revenues
|
|
|
|
Amounts
|
|
|
|
Revenues
|
|
GAAP operating income
|
|
|
$
|
107,263
|
|
|
|
|
19.0
|
%
|
|
|
$
|
79,070
|
|
|
|
|
14.2
|
%
|
Restructuring and reorganization charges (1)
|
|
|
|
(601
|
)
|
|
|
|
(0.1
|
%)
|
|
|
|
1,822
|
|
|
|
|
0.3
|
%
|
Stock-based compensation (1)
|
|
|
|
17,352
|
|
|
|
|
3.1
|
%
|
|
|
|
15,860
|
|
|
|
|
2.9
|
%
|
Amortization of acquired intangible assets
|
|
|
|
6,526
|
|
|
|
|
1.1
|
%
|
|
|
|
9,279
|
|
|
|
|
1.7
|
%
|
Non-GAAP operating income
|
|
|
$
|
130,540
|
|
|
|
|
23.1
|
%
|
|
|
$
|
106,031
|
|
|
|
|
19.1
|
%
|
(1)
|
|
Stock-based compensation included in the tables above and following
excludes amounts that have been recorded in restructuring and
reorganization charges. In addition, restructuring and
reorganization charges include the impact of the gain on disposition
of business operations for the nine months ended September 30, 2016.
|
|
|
|
Non-GAAP EPS:
The reconciliations of GAAP EPS to non-GAAP EPS for the indicated
periods are as follows (in thousands, except per share amounts):
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
September 30, 2016
|
|
|
|
September 30, 2015
|
|
|
|
Amounts
|
|
|
|
EPS (3)
|
|
|
|
Amounts
|
|
|
|
EPS (3)
|
GAAP net income
|
|
|
$
|
17,894
|
|
|
|
$
|
0.55
|
|
|
|
$
|
16,747
|
|
|
|
$
|
0.50
|
GAAP income tax provision (2)
|
|
|
|
12,265
|
|
|
|
|
|
|
|
|
|
11,196
|
|
|
|
|
|
GAAP income before income taxes
|
|
|
|
30,159
|
|
|
|
|
|
|
|
|
|
27,943
|
|
|
|
|
|
Restructuring and reorganization charges (1)
|
|
|
|
(185
|
)
|
|
|
|
|
|
|
|
|
846
|
|
|
|
|
|
Stock-based compensation (1)
|
|
|
|
5,364
|
|
|
|
|
|
|
|
|
|
5,387
|
|
|
|
|
|
Amortization of acquired intangible assets
|
|
|
|
2,116
|
|
|
|
|
|
|
|
|
|
3,049
|
|
|
|
|
|
Loss on repurchase of convertible notes
|
|
|
|
332
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Amortization of OID
|
|
|
|
1,062
|
|
|
|
|
|
|
|
|
|
1,576
|
|
|
|
|
|
Non-GAAP income before income taxes
|
|
|
|
38,848
|
|
|
|
|
|
|
|
|
|
38,801
|
|
|
|
|
|
Non-GAAP income tax provision (2)
|
|
|
|
(14,374
|
)
|
|
|
|
|
|
|
|
|
(14,744
|
)
|
|
|
|
|
Non-GAAP net income
|
|
|
$
|
24,474
|
|
|
|
$
|
0.75
|
|
|
|
$
|
24,057
|
|
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2016
|
|
|
|
September 30, 2015
|
|
|
|
Amounts
|
|
|
|
EPS (3)
|
|
|
|
Amounts
|
|
|
|
EPS (3)
|
GAAP net income
|
|
|
$
|
50,235
|
|
|
|
$
|
1.52
|
|
|
|
$
|
38,899
|
|
|
|
$
|
1.17
|
GAAP income tax provision (2)
|
|
|
|
30,303
|
|
|
|
|
|
|
|
|
|
28,201
|
|
|
|
|
|
GAAP income before income taxes
|
|
|
|
80,538
|
|
|
|
|
|
|
|
|
|
67,100
|
|
|
|
|
|
Restructuring and reorganization charges (1)
|
|
|
|
(601
|
)
|
|
|
|
|
|
|
|
|
1,822
|
|
|
|
|
|
Stock-based compensation (1)
|
|
|
|
17,352
|
|
|
|
|
|
|
|
|
|
15,860
|
|
|
|
|
|
Amortization of acquired intangible assets
|
|
|
|
6,526
|
|
|
|
|
|
|
|
|
|
9,279
|
|
|
|
|
|
Loss on repurchase of convertible notes
|
|
|
|
8,651
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Amortization of OID
|
|
|
|
3,856
|
|
|
|
|
|
|
|
|
|
4,639
|
|
|
|
|
|
Non-GAAP income before income taxes
|
|
|
|
116,322
|
|
|
|
|
|
|
|
|
|
98,700
|
|
|
|
|
|
Non-GAAP income tax provision (2)
|
|
|
|
(43,039
|
)
|
|
|
|
|
|
|
|
|
(37,506
|
)
|
|
|
|
|
Non-GAAP net income
|
|
|
$
|
73,283
|
|
|
|
$
|
2.22
|
|
|
|
$
|
61,194
|
|
|
|
$
|
1.84
|
(2)
|
|
For the third quarter and nine months ended September 30, 2016 the
GAAP effective income tax rates were approximately 41% and 38%,
respectively, and the non-GAAP effective income tax rate was
approximately 37% for both periods.
|
|
|
|
|
|
|
|
For the third quarter and nine months ended September 30, 2015, the
GAAP effective income tax rates were approximately 40% and 42%,
respectively, and the non-GAAP effective income tax rate was
approximately 38%. The difference between the GAAP and the non-GAAP
effective income tax rates relates primarily to the timing of the
2015 R&D tax credit legislation. The anticipated quarterly benefit
of the credits was included for non-GAAP purposes, but could not be
reflected for GAAP purposes until the legislation was actually pas
|
sed.
|
|
|
|
|
(3)
|
|
The outstanding diluted shares for the third quarter and nine months
ended September 30, 2016 were 32.6 million and 33.0 million,
respectively, and for the third quarter and nine months ended
September 30, 2015 were 33.3 million and 33.2 million, respectively.
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA:
CSG's calculation of non-GAAP adjusted EBITDA and the reconciliation of
CSG's non-GAAP adjusted EBITDA measure to GAAP net income is provided
below for the indicated periods (in thousands, except percentages):
|
|
Quarter Ended
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
GAAP net income
|
|
|
|
$
|
17,894
|
|
|
|
$
|
16,747
|
|
|
|
|
$
|
50,235
|
|
|
|
$
|
38,899
|
|
GAAP income tax provision
|
|
|
|
|
12,265
|
|
|
|
|
11,196
|
|
|
|
|
|
30,303
|
|
|
|
|
28,201
|
|
Interest expense (4)
|
|
|
|
|
4,398
|
|
|
|
|
2,526
|
|
|
|
|
|
11,876
|
|
|
|
|
8,431
|
|
Amortization of OID
|
|
|
|
|
1,062
|
|
|
|
|
1,576
|
|
|
|
|
|
3,856
|
|
|
|
|
4,639
|
|
Loss on repurchase of convertible notes
|
|
|
|
|
332
|
|
|
|
|
-
|
|
|
|
|
|
8,651
|
|
|
|
|
-
|
|
Interest and investment income and other, net
|
|
|
|
|
647
|
|
|
|
|
(1,024
|
)
|
|
|
|
|
2,342
|
|
|
|
|
(1,100
|
)
|
GAAP operating income
|
|
|
|
|
36,598
|
|
|
|
|
31,021
|
|
|
|
|
|
107,263
|
|
|
|
|
79,070
|
|
Restructuring and reorganization charges (1)
|
|
|
|
|
(185
|
)
|
|
|
|
846
|
|
|
|
|
|
(601
|
)
|
|
|
|
1,822
|
|
Stock-based compensation (1)
|
|
|
|
|
5,364
|
|
|
|
|
5,387
|
|
|
|
|
|
17,352
|
|
|
|
|
15,860
|
|
Amortization of acquired intangible assets (5)
|
|
|
|
|
2,116
|
|
|
|
|
3,049
|
|
|
|
|
|
6,526
|
|
|
|
|
9,279
|
|
Amortization of other intangible assets (5)
|
|
|
|
|
4,171
|
|
|
|
|
3,668
|
|
|
|
|
|
11,706
|
|
|
|
|
10,785
|
|
Depreciation
|
|
|
|
|
3,398
|
|
|
|
|
3,723
|
|
|
|
|
|
10,423
|
|
|
|
|
11,268
|
|
Adjusted EBITDA
|
|
|
|
$
|
51,462
|
|
|
|
$
|
47,694
|
|
|
|
|
$
|
152,669
|
|
|
|
$
|
128,084
|
|
Adjusted EBITDA as a percentage of revenues
|
|
|
|
|
27
|
%
|
|
|
|
26
|
%
|
|
|
|
|
27
|
%
|
|
|
|
23
|
%
|
(4)
|
|
Interest expense includes amortization of deferred financing costs
as provided in Note 5 below.
|
|
|
|
(5)
|
|
Amortization on the statement of cash flows is made up of the
following items for the indicated periods (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Amortization of acquired intangible assets
|
|
|
$
|
2,116
|
|
|
$
|
3,049
|
|
|
$
|
6,526
|
|
|
$
|
9,279
|
Amortization of other intangible assets
|
|
|
|
4,171
|
|
|
|
3,668
|
|
|
|
11,706
|
|
|
|
10,785
|
Amortization of deferred financing costs
|
|
|
|
594
|
|
|
|
461
|
|
|
|
1,689
|
|
|
|
2,289
|
Total amortization
|
|
|
$
|
6,881
|
|
|
$
|
7,178
|
|
|
$
|
19,921
|
|
|
$
|
22,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Free Cash Flow:
CSG's calculation of non-GAAP free cash flow and the reconciliation of
CSG's non-GAAP free cash flow measure to cash flows from operating
activities are provided below for the indicated periods (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
Cash flows from operating activities
|
|
|
$
|
8,740
|
|
|
|
$
|
25,834
|
|
|
|
$
|
59,506
|
|
|
|
$
|
84,346
|
|
Purchases of property and equipment
|
|
|
|
(2,679
|
)
|
|
|
|
(5,351
|
)
|
|
|
|
(11,542
|
)
|
|
|
|
(16,776
|
)
|
Non-GAAP free cash flow
|
|
|
$
|
6,061
|
|
|
|
$
|
20,483
|
|
|
|
$
|
47,964
|
|
|
|
$
|
67,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures - 2016 Financial
Guidance
Non-GAAP Operating Income Margin:
The reconciliation of GAAP operating income margin to non-GAAP operating
income margin, as included in CSG's 2016 full year financial guidance,
is as follows:
|
|
|
|
2016
|
|
|
|
|
|
Guidance
|
|
GAAP operating income margin
|
|
|
|
|
18.0
|
%
|
Restructuring and reorganization charges (6)
|
|
|
|
|
(0.1
|
%)
|
Stock-based compensation (7)
|
|
|
|
|
3.0
|
%
|
Amortization of acquired intangible assets (8)
|
|
|
|
|
1.1
|
%
|
Non-GAAP operating income ("approximately 22%")
|
|
|
|
|
22.0
|
%
|
(6)
|
|
This represents the pretax impact of restructuring and
reorganization charges of an estimated ($0.5) million on CSG's
operating income margin as a percentage of the midpoint of 2016
revenue guidance.
|
|
|
|
(7)
|
|
This represents the pretax impact of stock-based compensation
expense of an estimated $23 million on CSG's operating income margin
as a percentage of the midpoint of 2016 revenue guidance.
|
|
|
|
(8)
|
|
This represents the pretax impact of amortization of acquired
intangible assets expense of an estimated $8.5 million on CSG's
operating income margin as a percentage of the midpoint of 2016
revenue guidance.
|
|
|
|
Non-GAAP EPS:
The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG's 2016
full year financial guidance is as follows (in thousands, except per
share amounts):
|
|
|
2016 Guidance Range
|
|
|
|
Low Range
|
|
|
|
High Range
|
|
|
|
Amounts
|
|
|
|
EPS (10)
|
|
|
|
Amounts
|
|
|
|
EPS (10)
|
GAAP net income
|
|
|
$
|
63,500
|
|
|
|
$
|
1.92
|
|
|
|
$
|
67,200
|
|
|
|
$
|
2.03
|
GAAP income tax provision (9)
|
|
|
|
37,900
|
|
|
|
|
|
|
|
|
|
39,600
|
|
|
|
|
|
GAAP income before income taxes
|
|
|
|
101,400
|
|
|
|
|
|
|
|
|
|
106,800
|
|
|
|
|
|
Restructuring and reorganization charges
|
|
|
|
(500
|
)
|
|
|
|
|
|
|
|
|
(500
|
)
|
|
|
|
|
Stock-based compensation
|
|
|
|
23,000
|
|
|
|
|
|
|
|
|
|
23,000
|
|
|
|
|
|
Amortization of acquired intangible assets
|
|
|
|
8,500
|
|
|
|
|
|
|
|
|
|
8,500
|
|
|
|
|
|
Loss on repurchase of convertible notes
|
|
|
|
8,700
|
|
|
|
|
|
|
|
|
|
8,700
|
|
|
|
|
|
Amortization of OID
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
Non-GAAP income before income taxes
|
|
|
|
146,100
|
|
|
|
|
|
|
|
|
|
151,500
|
|
|
|
|
|
Non-GAAP income tax provision (9)
|
|
|
|
(54,000
|
)
|
|
|
|
|
|
|
|
|
(56,000
|
)
|
|
|
|
|
Non-GAAP net income
|
|
|
$
|
92,100
|
|
|
|
$
|
2.79
|
|
|
|
$
|
95,500
|
|
|
|
$
|
2.89
|
(9)
|
|
For 2016, the estimated effective income tax rate for GAAP and
non-GAAP purposes are expected to be approximately 37%.
|
|
|
|
(10)
|
|
The weighted-average diluted shares outstanding are expected to be
33.1 million.
|
|
|
|
Non-GAAP Adjusted EBITDA:
CSG's calculation of non-GAAP adjusted EBITDA and the reconciliation of
CSG's non-GAAP adjusted EBITDA measure to GAAP net income is provided
below for CSG's 2016 full year financial guidance at the mid-point (in
thousands, except percentages):
|
|
|
|
2016
|
|
GAAP net income
|
|
|
|
$
|
65,000
|
|
GAAP income tax provision
|
|
|
|
|
39,000
|
|
Interest expense
|
|
|
|
|
16,000
|
|
Amortization of OID
|
|
|
|
|
5,000
|
|
Loss on repurchase of convertible notes
|
|
|
|
|
8,700
|
|
Interest and investment income and other, net
|
|
|
|
|
2,000
|
|
GAAP operating income
|
|
|
|
|
135,700
|
|
Restructuring and reorganization charges
|
|
|
|
|
(500
|
)
|
Stock-based compensation
|
|
|
|
|
23,000
|
|
Amortization of acquired intangible assets
|
|
|
|
|
8,500
|
|
Amortization of other intangible assets
|
|
|
|
|
16,000
|
|
Depreciation
|
|
|
|
|
14,000
|
|
Adjusted EBITDA
|
|
|
|
$
|
196,700
|
|
Adjusted EBITDA as a percentage of revenues
|
|
|
|
|
26
|
%
|
|
|
|
|
|
|
|
Non-GAAP Free Cash Flow:
CSG's calculation of non-GAAP free cash flow and the reconciliation of
CSG's non-GAAP free cash flow measure to cash flows from operating
activities is provided below for the indicated period (in thousands):
|
|
|
|
2016
|
|
Cash flows from operating activities
|
|
|
|
$
|
115,000
|
|
Purchases of property and equipment
|
|
|
|
|
(17,500
|
)
|
Non-GAAP free cash flow
|
|
|
|
$
|
97,500
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161102006343/en/
CSG Systems International, Inc.
Liz Bauer, 303-804-4065
Chief
Communications and Investor Relations Officer
liz.bauer@csgi.com
Source: CSG Systems International, Inc.
News Provided by Acquire Media