(NewsDirect)
Reconfirming All 2021 FinancialGuidance Targets; Preliminary 2022 Targets Announced
Robust Q3 2021Revenue & Adjusted Revenue Growth Up 7.8% and 8.5%Year-Over-Year
Signed Landmark Charter Communications Contract Extensionand Expansion through 2027
Successful Conversion of ~800,000 CharterCommunications Customers in Midwest
Signed DISH Network Contract Extension Through Mid-2026
CSG (NASDAQ: CSGS) today reportedresults for the quarter ended September 30, 2021.
Financial Results:
Third quarter 2021 financialresults:
- Total revenue was $263.2 million and total non-GAAPadjusted revenue was $247.0 million .
- GAAP operatingincome was $32.8 million , or 12.4% of total revenue, andnon-GAAP operating income was $41.6 million , or 16.8% of non-GAAP adjusted revenue.
- GAAP earnings perdiluted share (EPS) was $0.50 and non-GAAP EPS was $0.88 .
- Cash flows used in operations were $46.1million , with a non-GAAP free cash flow of $38.7million .
ShareholderReturns:
- In August 2021, CSG declared its quarterly cash dividend of $0.25 per share of common stock, or a total of approximately $8 million , to shareholders.
- During the third quarterof 2021, CSG repurchased under its stock repurchase program,approximately 143,000 shares of its common stock forapproximately $7 million .
Business Activities:
- In September 2021, CSG refinanced its existingcredit agreement, extending the term of the agreement throughSeptember 2026, and increasing the revolving credit facility from $200million to $450 million.
- In October 2021, CSG extended itscontract with Charter, its largest client, through December 31, 2027.
- In October 2021, CSG extended its contract with DISH throughJune 30, 2026.
“Our third quarter results and the landmark Charter contractexpansion highlight the excellent momentum we currently have acrossour global business,” said Brian Shepherd, President and ChiefExecutive Officer of CSG. “With regards to the six-year Chartercontract, which represents the largest deal ever signed in CSG’shistory, we are extremely proud to become the revenue managementprovider of choice for all 32 million Charter subscribers across theirresidential and small-and-medium-sized business footprints.Additionally, we reported a robust set of financial resultshighlighted by our best quarterly organic revenue and adjusted revenuegrowth results since Q3 2010. And on the back of our strongyear-to-date 2021 results, our continued sales success in the market,and the exciting renewals at both Charter and DISH Network, we arepleased to issue growth-oriented 2022 preliminary financial guidancetargets. Looking ahead, CSG remains well positioned to createmeaningful value for our customers, our employees and our shareholdersas we lengthen and strengthen our relationships with existingcustomers, accelerate our organic revenue growth, close good newstrategic acquisitions, and diversify into higher growth industryverticals.”
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
|
| QuarterEnded September 30, |
|
| Nine MonthsEnded September 30, |
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| Percent |
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| Percent |
| ||
|
| 2021 |
|
| 2020 |
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| Changed |
|
| 2021 |
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| 2020 |
|
| Changed |
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GAAP Results: |
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Revenue........................... |
| $ 263,209 |
|
| $ 244,108 |
|
|
| % 7.8 |
| $ 771,462 |
|
| $ 730,046 |
|
|
| % 5.7 | ||||||
Operating Income.............. |
|
| 32,763 |
|
|
| 28,947 |
|
|
| % 13.2 |
|
| 96,306 |
|
|
| 81,881 |
|
|
| % 17.6 | ||
Operating MarginPercentage....................... |
|
| % 12.4 |
|
| % 11.9 |
|
|
|
|
|
| % 12.5 |
|
| % 11.2 |
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| ||||
EPS.................................. |
| $ 0.50 |
|
| $ 0.42 |
|
|
| % 19.0 |
| $ 1.72 |
|
| $ 1.41 |
|
|
| % 22.0 | ||||||
Non-GAAPResults: |
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AdjustedRevenue............. |
| $ 246,969 |
|
| $ 227,695 |
|
|
| % 8.5 |
| $ 722,117 |
|
| $ 679,614 |
|
|
| % 6.3 | ||||||
Operating Income.............. |
|
| 41,565 |
|
|
| 39,113 |
|
|
| % 6.3 |
|
| 121,561 |
|
|
| 111,900 |
|
|
| % 8.6 | ||
Adjusted Operating Margin Percentage.................... |
|
| % 16.8 |
|
| % 17.2 |
|
|
|
|
|
| % 16.8 |
|
| % 16.5 |
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| ||||
EPS.................................. |
| $ 0.88 |
|
| $ 0.76 |
|
|
| % 15.8 |
| $ 2.52 |
|
| $ 2.22 |
|
|
| % 13.5 |
For additional information and reconciliationsregarding CSG’s use of non-GAAP financial measures, please refer tothe attached Exhibit 2 and the Investor Relations section of CSG’swebsite at csgi.com .
Results of Operations
GAAPResults: Total revenue for the third quarter of 2021 was $263.2million, a 7.8% increase when compared to revenue of $244.1 millionfor the third quarter of 2020, and a 3.2% increase when compared torevenue of $255.1 million for the second quarter of 2021. Theseincreases in revenue can be primarily attributed to the continuedgrowth of CSG’s revenue management solutions, as substantially allwas attributed to organic growth year-over-year.
GAAP operating incomefor the third quarter of 2021 was $32.8 million, or 12.4% of totalrevenue, compared to $28.9 million, or 11.9% of total revenue, for thethird quarter of 2020, and $32.2 million, or 12.6% of total revenue,for the second quarter of 2021. The increase in year-over-yearoperating income can be primarily attributed to the revenue growth in2021.
GAAP EPS forthe third quarter of 2021 was $0.50, as compared to $0.42 for thethird quarter of 2020, and $0.60 for the second quarter of 2021. GAAPEPS for the third quarter of 2021 was impacted by a $6.2 million loss,or $0.14 per share, recorded on obtaining a controlling interest in apre-existing equity investment.
Non-GAAP Results: Non-GAAP adjustedrevenue for the third quarter of 2021 was $247.0 million, an 8.5%increase when compared to non-GAAP adjusted revenue of $227.7 millionfor the third quarter of 2020, and a 3.6% increase when compared to$238.5 million for the second quarter of 2021.
Non-GAAP operatingincome for the third quarter of 2021 was $41.6 million, or 16.8% oftotal non-GAAP adjusted revenue, compared to $39.1 million, or 17.2%of total non-GAAP adjusted revenue for the third quarter of 2020, and$39.8 million, or 16.7% of total non-GAAP adjusted revenue for thesecond quarter of 2021.
Non-GAAP EPS for the third quarter of 2021 was$0.88 compared to $0.76 for the third quarter of 2020, and $0.82 forthe second quarter of 2021.
The changes in non-GAAP adjusted revenue andnon-GAAP operating income between quarters are primarily due to thefactors discussed above.
Balance Sheet and Cash Flows
Cash, cash equivalentsand short-term investments as of September 30, 2021 were $224.5million compared to $212.1 million as of June 30, 2021 and $240.3million as of December 31, 2020. CSG had net cash flows fromoperations for the third quarters ended September 30, 2021 and 2020 of$46.1 million and $65.3 million, respectively, and had non-GAAP freecash flow of $38.7 million and $55.4 million, respectively.
Summary of FinancialGuidance
CSG is reaffirming itsfinancial guidance for the full year 2021 and providing a preliminaryfinancial outlook for certain full year 2022 financial measures, asfollows:
|
|
| 2021 |
| Preliminary 2022 |
GAAPMeasures: |
|
|
|
|
|
Revenue................................................................. |
|
| $ 1,015 - $1,045 million |
| $ 1,060 - $1,100 million |
Operating MarginPercentage.................................. |
|
| 12.3% - 12.7% |
|
|
EPS....................................................................... |
|
| $ 2.35 - $2.53 |
|
|
Cash Flowsfrom Operating Activities....................... |
|
| $ 140 - $160 million |
|
|
Non-GAAP Measures: |
|
|
|
|
|
AdjustedRevenue................................................... |
|
| $ 946 - $964 million |
| $ 990 - $1,020 million |
Adjusted Operating MarginPercentage.................... |
|
| 16.5% -17.0% |
| Consistent with2021 |
EPS....................................................................... |
|
| $ 3.16 - $3.34 |
|
|
AdjustedEBITDA.................................................... |
|
| $ 217 - $225 million |
|
|
Free CashFlow...................................................... |
|
| $ 115 - $125 million |
|
|
For additionalinformation and reconciliations regarding CSG’s use of non-GAAPfinancial measures, please refer to the attached Exhibit 2 and theInvestor Relations section of CSG’s website at csgi.com .
Conference Call
CSG will host aconference call on Wednesday, November 3, 2021 at 5:00 p.m. ET, todiscuss CSG’s third quarter 2021 earnings results. The call will becarried live and archived on the Internet. A link to the conferencecall is available at http://ir.csgi.com . In addition, toreach the conference by phone, call 1-888-440-4531 and use thepasscode 6134021.
Additional Information
For information about CSG, please visit CSG’s website at csgi.com . Additionalinformation can be found in the Investor Relations section of thewebsite.
AboutCSG
CSG is aleader in innovative customer engagement, revenue management andpayments solutions that make ordinary customer experiencesextraordinary. Our cloud-first architecture and customer-obsessedmindset help companies around the world launch new digital services,expand into new markets, and create dynamic experiences that capturenew customers and build brand loyalty. For nearly 40 years, CSG’stechnologies and people have helped some of the world’s mostrecognizable brands solve their toughest business challenges andevolve to meet the demands of today’s digital economy withfuture-ready solutions that drive exceptional customer experiences.With 5,000 employees in over 20 countries, CSG is the trustedtechnology provider for leading global brands in telecommunications,retail, financial services and healthcare. Our solutions deliver realworld outcomes to more than 900 customers in over 120 countries. Tolearn more, visit us at csgi.com andconnect with us on and .
Forward-LookingStatements
This news release contains forward-looking statements asdefined under the Securities Act of 1933, as amended, that are basedon assumptions about a number of important factors and involve risksand uncertainties that could cause actual results to differ materiallyfrom what appears in this news release. Some of these key factorsinclude, but are not limited to the following items:
•CSG’s business may be disrupted, and its results of operations andcash flows adversely affected by the COVID-19 pandemic;
•CSG derives over forty percent of its revenue from its two largestcustomers;
• Continued market acceptance of CSG’sproducts and services;
• CSG’s ability to continuously developand enhance products in a timely, cost-effective, technically advancedand competitive manner;
• CSG’s ability to deliver itssolutions in a timely fashion within budget, particularly large andcomplex software implementations;
• CSG’s dependency on theglobal telecommunications industry, and in particular, the NorthAmerican telecommunications industry;
• CSG’s ability tomeet its financial expectations;
• Increasing competition inCSG’s market from companies of greater size and with broaderpresence;
• CSG’s ability to successfully integrate andmanage acquired businesses or assets to achieve expected strategic,operating and financial goals;
• CSG’s ability to protectits intellectual property rights;
• CSG’s ability to maintaina reliable, secure computing environment;
• CSG’s ability toconduct business in the international marketplace;
• CSG’s ability to comply with applicable U.S. and International lawsand regulations; and
• Fluctuations in credit marketconditions, general global economic and political conditions, andforeign currency exchange rates.
This list is not exhaustive, and readers areencouraged to review the additional risks and important factorsdescribed in CSG’s reports on Forms 10-K and 10-Q and other filingsmade with the SEC.
For more information, contact:
John Rea, Investor Relations
(210) 687-4409
E-mail: john.rea@csgi.com
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSEDCONSOLIDATED BALANCE SHEETS-UNAUDITED
(in thousands)
|
| September 30, |
|
| December31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
ASSETS |
|
|
|
|
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|
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Current assets: |
|
|
|
|
|
|
|
|
Cash and cashequivalents..................................................................................................................... |
| $ 195,365 |
|
| $ 188,699 |
| ||
Short-terminvestments............................................................................................................................ |
|
| 29,175 |
|
|
| 51,598 |
|
Total cash, cashequivalents and short-terminvestments.......................................................... |
|
| 224,540 |
|
|
| 240,297 |
|
Settlement andmerchant reserveassets............................................................................................. |
|
| 158,925 |
|
|
| 166,031 |
|
Trade accountsreceivable: |
|
|
|
|
|
|
|
|
Billed, net of allowance of $3,157 and$3,628.............................................................................. |
|
| 243,160 |
|
|
| 226,623 |
|
Unbilled................................................................................................................................................ |
|
| 38,099 |
|
|
| 37,785 |
|
Income taxesreceivable.......................................................................................................................... |
|
| 3,889 |
|
|
| 2,167 |
|
Other currentassets................................................................................................................................. |
|
| 53,104 |
|
|
| 41,688 |
|
Total currentassets........................................................................................................................... |
|
| 721,717 |
|
|
| 714,591 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Property andequipment, net of depreciation of $110,862 and$105,073........................................ |
|
| 76,725 |
|
|
| 81,759 |
|
Operating leaseright-of-useassets....................................................................................................... |
|
| 96,101 |
|
|
| 110,756 |
|
Software, net ofamortization of $148,667 and$139,836................................................................... |
|
| 28,696 |
|
|
| 26,453 |
|
Goodwill...................................................................................................................................................... |
|
| 313,246 |
|
|
| 272,322 |
|
Acquiredcustomer contracts, net of amortization of $111,602 and$105,778................................ |
|
| 55,032 |
|
|
| 48,012 |
|
Customercontract costs, net of amortization of $50,700 and$39,893............................................ |
|
| 47,249 |
|
|
| 47,238 |
|
Deferred incometaxes............................................................................................................................. |
|
| 9,156 |
|
|
| 10,205 |
|
Otherassets............................................................................................................................................... |
|
| 16,834 |
|
|
| 20,664 |
|
Totalnon-currentassets................................................................................................................... |
|
| 643,039 |
|
|
| 617,409 |
|
Totalassets..................................................................................................................................... |
| $ 1,364,756 |
|
| $ 1,332,000 |
| ||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portionof long-term debt, net of unamortized discounts of $930 andzero....................... |
| $ 236,570 |
|
| $ 14,063 |
| ||
Operating leaseliabilities......................................................................................................................... |
|
| 23,609 |
|
|
| 22,651 |
|
Customerdeposits.................................................................................................................................... |
|
| 32,232 |
|
|
| 39,992 |
|
Trade accountspayable.......................................................................................................................... |
|
| 32,080 |
|
|
| 29,834 |
|
Accrued employeecompensation.......................................................................................................... |
|
| 93,125 |
|
|
| 86,289 |
|
Settlement andmerchant reserveliabilities.......................................................................................... |
|
| 157,308 |
|
|
| 165,064 |
|
Deferredrevenue...................................................................................................................................... |
|
| 64,252 |
|
|
| 52,357 |
|
Income taxespayable.............................................................................................................................. |
|
| 2,192 |
|
|
| 6,627 |
|
Other currentliabilities............................................................................................................................. |
|
| 21,873 |
|
|
| 19,383 |
|
Total currentliabilities....................................................................................................................... |
|
| 663,241 |
|
|
| 436,260 |
|
Non-currentliabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net of unamortized discounts of $3,595 and$5,346.............................................. |
|
| 138,905 |
|
|
| 337,154 |
|
Operating leaseliabilities......................................................................................................................... |
|
| 80,373 |
|
|
| 95,926 |
|
Deferredrevenue...................................................................................................................................... |
|
| 14,006 |
|
|
| 17,275 |
|
Income taxespayable.............................................................................................................................. |
|
| 2,445 |
|
|
| 2,436 |
|
Deferred incometaxes............................................................................................................................. |
|
| 6,700 |
|
|
| 5,109 |
|
Othernon-currentliabilities..................................................................................................................... |
|
| 15,462 |
|
|
| 15,445 |
|
Totalnon-currentliabilities............................................................................................................... |
|
| 257,891 |
|
|
| 473,345 |
|
Totalliabilities..................................................................................................................................... |
|
| 921,132 |
|
|
| 909,605 |
|
Stockholders'equity: |
|
|
|
|
|
|
|
|
Preferred stock, par value $.01 per share; 10,000 sharesauthorized; zero shares issued andoutstanding....................................................................................................................................... |
|
| - |
|
|
| - |
|
Common stock,par value $.01 per share; 100,000 shares authorized; 32,687 and 32,713sharesoutstanding.......................................................................................................................... |
|
| 704 |
|
|
| 700 |
|
Additionalpaid-incapital.......................................................................................................................... |
|
| 482,387 |
|
|
| 470,557 |
|
Treasury stock,at cost; 36,418 and 35,980shares............................................................................ |
|
| (914,274 | ) |
|
| (894,126 | ) |
Accumulated other comprehensive income(loss): |
|
|
|
|
|
|
|
|
Unrealized gains on short-term investments, net oftax.............................................................. |
|
| 3 |
|
|
| 13 |
|
Cumulativeforeign currency translationadjustments.................................................................. |
|
| (35,786 | ) |
|
| (31,151 | ) |
Accumulatedearnings.............................................................................................................................. |
|
| 906,955 |
|
|
| 876,402 |
|
Total CSGstockholders'equity....................................................................................................... |
|
| 439,989 |
|
|
| 422,395 |
|
Noncontrollinginterest............................................................................................................................. |
|
| 3,635 |
|
|
| - |
|
Totalstockholders'equity................................................................................................................. |
|
| 443,624 |
|
|
| 422,395 |
|
Totalliabilities and stockholders'equity...................................................................................... |
| $ 1,364,756 |
|
| $ 1,332,000 |
|
CSG SYSTEMSINTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(inthousands, except per share amounts)
| QuarterEnded |
|
| Nine MonthsEnded |
|
| ||||||||||
| September30, 2021 |
|
| September 30, 2020 |
|
| September 30, 2021 |
|
| September 30,2020 |
|
| ||||
Revenue............................................................................. | $ 263,209 |
|
| $ 244,108 |
|
| $ 771,462 |
|
| $ 730,046 |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost ofrevenue (exclusive of depreciation, shown separatelybelow)............................................................... |
| 134,705 |
|
|
| 131,073 |
|
|
| 401,185 |
|
|
| 400,432 |
|
|
Other operatingexpenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research anddevelopment.......................................... |
| 34,384 |
|
|
| 30,425 |
|
|
| 99,350 |
|
|
| 90,025 |
|
|
Selling, generaland administrative............................... |
| 54,923 |
|
|
| 47,032 |
|
|
| 152,988 |
|
|
| 136,415 |
|
|
Depreciation................................................................. |
| 6,225 |
|
|
| 5,817 |
|
|
| 18,604 |
|
|
| 17,016 |
|
|
Restructuringand reorganization charges.................... |
| 209 |
|
|
| 814 |
|
|
| 3,029 |
|
|
| 4,277 |
|
|
Total operatingexpenses........................................ |
| 230,446 |
|
|
| 215,161 |
|
|
| 675,156 |
|
|
| 648,165 |
|
|
Operatingincome............................................................... |
| 32,763 |
|
|
| 28,947 |
|
|
| 96,306 |
|
|
| 81,881 |
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interestexpense........................................................... |
| (3,636 | ) |
|
| (3,641 | ) |
|
| (10,861 | ) |
|
| (11,894 | ) |
|
Amortization oforiginal issue discount......................... |
| (794 | ) |
|
| (751 | ) |
|
| (2,350 | ) |
|
| (2,221 | ) |
|
Interest andinvestment income, net............................. |
| 78 |
|
|
| 254 |
|
|
| 286 |
|
|
| 1,086 |
|
|
Other,net...................................................................... |
| (5,875 | ) |
|
| (2,067 | ) |
|
| (6,530 | ) |
|
| (3,184 | ) |
|
Totalother............................................................... |
| (10,227 | ) |
|
| (6,205 | ) |
|
| (19,455 | ) |
|
| (16,213 | ) |
|
Income before incometaxes.............................................. |
| 22,536 |
|
|
| 22,742 |
|
|
| 76,851 |
|
|
| 65,668 |
|
|
Income taxprovision..................................................... |
| (6,406 | ) |
|
| (9,176 | ) |
|
| (21,769 | ) |
|
| (20,222 | ) |
|
Netincome......................................................................... | $ 16,130 |
|
| $ 13,566 |
|
| $ 55,082 |
|
| $ 45,446 |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic............................................................................. |
| 31,756 |
|
|
| 32,115 |
|
|
| 31,825 |
|
|
| 32,070 |
|
|
Diluted.......................................................................... |
| 31,960 |
|
|
| 32,273 |
|
|
| 32,033 |
|
|
| 32,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings percommon share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic............................................................................. | $ 0.51 |
|
| $ 0.42 |
|
| $ 1.73 |
|
| $ 1.42 |
|
| ||||
Diluted.......................................................................... |
| 0.50 |
|
|
| 0.42 |
|
|
| 1.72 |
|
|
| 1.41 |
|
|
CSG SYSTEMSINTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
| Nine MonthsEnded |
|
| |||||
| September30, 2021 |
|
| September 30, 2020 |
|
| ||
Cash flows from operatingactivities: |
|
|
|
|
|
|
|
|
Netincome............................................................................................................. | $ 55,082 |
|
| $ 45,446 |
|
| ||
Adjustments to reconcile net income to net cash provided byoperating activities- |
|
|
|
|
|
|
|
|
Depreciation..................................................................................................... |
| 18,604 |
|
|
| 17,016 |
|
|
Amortization...................................................................................................... |
| 34,314 |
|
|
| 32,998 |
|
|
Amortization oforiginal issuediscount............................................................... |
| 2,350 |
|
|
| 2,221 |
|
|
Assetimpairment.............................................................................................. |
| 415 |
|
|
| 10,438 |
|
|
(Gain)/loss onshort-terminvestments................................................................ |
| 51 |
|
|
| (120 | ) |
|
Loss onextinguishment ofdebt......................................................................... |
| 132 |
|
|
| - |
|
|
Loss onacquisition of controllinginterest........................................................... |
| 6,180 |
|
|
| - |
|
|
Deferred incometaxes...................................................................................... |
| 2,188 |
|
|
| 3,844 |
|
|
Stock-basedcompensation............................................................................... |
| 15,304 |
|
|
| 14,088 |
|
|
Subtotal................................................................................................. |
| 134,620 |
|
|
| 125,931 |
|
|
Changes inoperating assets and liabilities, net of acquired amounts: |
|
|
|
|
|
|
|
|
Trade accountsreceivable,net..................................................................... |
| (11,960 | ) |
|
| 13,322 |
|
|
Other currentand non-current assets andliabilities....................................... |
| (13,912 | ) |
|
| (8,784 | ) |
|
Income taxespayable/receivable.................................................................. |
| (6,111 | ) |
|
| 1,542 |
|
|
Trade accountspayable and accruedliabilities............................................. |
| (18,329 | ) |
|
| (24,618 | ) |
|
Deferredrevenue......................................................................................... |
| 4,001 |
|
|
| 8,736 |
|
|
Net cashprovided by operatingactivities................................................. |
| 88,309 |
|
|
| 116,129 |
|
|
|
|
|
|
|
|
|
|
|
Cash flowsfrom investing activities: |
|
|
|
|
|
|
|
|
Purchases of software, property andequipment....................................................... |
| (22,531 | ) |
|
| (24,201 | ) |
|
Purchases ofshort-terminvestments....................................................................... |
| (57,734 | ) |
|
| (49,100 | ) |
|
Proceeds fromsale/maturity of short-terminvestments............................................ |
| 80,092 |
|
|
| 37,743 |
|
|
Acquisition ofand investments in business, net of cashacquired.............................. |
| (51,111 | ) |
|
| (11,491 | ) |
|
Net cash used ininvestingactivities........................................................ |
| (51,284 | ) |
|
| (47,049 | ) |
|
|
|
|
|
|
|
|
|
|
Cash flowsfrom financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of commonstock............................................................... |
| 1,926 |
|
|
| 1,838 |
|
|
Payment of cashdividends..................................................................................... |
| (24,653 | ) |
|
| (23,441 | ) |
|
Repurchase ofcommonstock................................................................................. |
| (25,568 | ) |
|
| (19,926 | ) |
|
Proceeds fromlong-termdebt................................................................................. |
| 150,000 |
|
|
| - |
|
|
Payments onlong-termdebt................................................................................... |
| (126,563 | ) |
|
| (7,500 | ) |
|
Payments ofdeferred financingcosts...................................................................... |
| (3,000 | ) |
|
| - |
|
|
Settlement andmerchant reserveactivity................................................................ |
| (7,735 | ) |
|
| (47,602 | ) |
|
Net cash used infinancingactivities........................................................ |
| (35,593 | ) |
|
| (96,631 | ) |
|
Effect ofexchange rate fluctuations on cash, cash equivalents and restrictedcash... |
| (1,872 | ) |
|
| (1,653 | ) |
|
|
|
|
|
|
|
|
|
|
Net decreasein cash, cash equivalents and restrictedcash........................................... |
| (440 | ) |
|
| (29,204 | ) |
|
|
|
|
|
|
|
|
|
|
Cash, cashequivalents and restricted cash, beginning ofperiod.................................... |
| 354,730 |
|
|
| 337,654 |
|
|
Cash, cash equivalents andrestricted cash, end ofperiod............................................. | $ 354,290 |
|
| $ 308,450 |
|
| ||
|
|
|
|
|
|
|
|
|
Supplementaldisclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid during the period for- |
|
|
|
|
|
|
|
|
Interest............................................................................................................. | $ 11,947 |
|
| $ 12,941 |
|
| ||
Incometaxes.................................................................................................... |
| 25,688 |
|
|
| 14,756 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cashequivalents and restricted cash: |
|
|
|
|
|
|
|
|
Cash and cashequivalents..................................................................................... | $ 195,365 |
|
| $ 174,489 |
|
| ||
Settlement and merchant reserveassets................................................................. |
| 158,925 |
|
|
| 133,961 |
|
|
Total cash, cashequivalents and restrictedcash........................................................ | $ 354,290 |
|
| $ 308,450 |
|
|
- Beginning with the second quarter of 2021,CSG reclassified certain cash flows related to settlement and merchantreserve assets and liabilities from cash flows from operatingactivities to cash flows from financing activities within theCondensed Consolidated Statements of Cash Flows. Prior period amountshave been reclassified to conform to the current period presentation.
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL, INC.
SUPPLEMENTALREVENUE ANALYSIS
Revenue by Significant Customers: 10% or more ofRevenue
|
| Quarter Ended |
|
| Quarter Ended |
|
| QuarterEnded |
| ||||||||||||
|
| September30, 2021 |
|
| June 30,2021 |
|
| September30, 2020 |
| ||||||||||||
|
| Amount |
|
| % ofRevenue |
|
| Amount |
|
| % ofRevenue |
|
| Amount |
|
| % ofRevenue |
| |||
Charter............ |
| $ 55,332 |
|
|
| % 21 |
| $ 55,102 |
|
|
| % 22 |
| $ 53,202 |
|
|
| % 22 | |||
Comcast.......... |
|
| 53,840 |
|
|
| % 20 |
|
| 53,789 |
|
|
| % 21 |
|
| 52,483 |
|
|
| % 22 |
Revenue by Vertical
|
| Quarter Ended |
|
| Quarter Ended |
|
| Quarter Ended |
|
|
| September30, |
|
| June30, |
|
| September 30, |
|
|
| 2021 |
|
| 2021 |
|
| 2020 |
|
Broadband/Cable/Satellite.................................. |
|
| % 56 |
|
| % 58 |
|
| % 59 |
Telecommunications........................................... |
|
| % 20 |
|
| % 18 |
|
| % 18 |
Allother............................................................. |
|
| % 24 |
|
| % 24 |
|
| % 23 |
Totalrevenue.................................................. |
|
| % 100 |
|
| % 100 |
|
| % 100 |
Revenue by Geography
|
| Quarter Ended |
|
| Quarter Ended |
|
| Quarter Ended |
|
|
| September30, |
|
| June30, |
|
| September 30, |
|
|
| 2021 |
|
| 2021 |
|
| 2020 |
|
Americas........................................................ |
|
| % 85 |
|
| % 85 |
|
| % 86 |
Europe, Middle East andAfrica........................ |
|
| % 12 |
|
| % 11 |
|
| % 10 |
AsiaPacific..................................................... |
|
| % 3 |
|
| % 4 |
|
| % 4 |
.. Totalrevenue............................................... |
|
| % 100 |
|
| % 100 |
|
| % 100 |
EXHIBIT 2
CSG SYSTEMSINTERNATIONAL, INC.
DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES
Use of Non-GAAPFinancial Measures and Limitations
To supplement its condensed consolidatedfinancial statements presented in accordance with generally acceptedaccounting principles (GAAP), CSG uses non-GAAP adjusted revenue,non-GAAP operating income, non-GAAP adjusted operating marginpercentage, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP freecash flow. CSG believes that these non-GAAP financial measures, whenreviewed in conjunction with its GAAP financial measures, provideinvestors with greater transparency to the information used by CSG’smanagement in its financial and operational decision making. CSG usesthese non-GAAP financial measures for the following purposes:
•Certain internal financial planning, reporting, and analysis;
• Forecasting and budgeting;
• Certain managementcompensation incentives; and
• Communications with CSG’sBoard of Directors, stockholders, financial analysts, and investors.
These non-GAAPfinancial measures are provided with the intent of providing investorswith the following information:
• A more completeunderstanding of CSG’s underlying operational results, trends, andcash generating capabilities;
• Consistency andcomparability with CSG’s historical financial results; and
• Comparability to similar companies, many of which present similarnon-GAAP financial measures to investors.
Non-GAAP financial measures are not measuresof performance under GAAP, and therefore should not be considered inisolation or as a substitute for GAAP financial information.Limitations with the use of non-GAAP financial measures include thefollowing items:
• Non-GAAP financial measures are not based onany comprehensive set of accounting rules or principles;
• The way in which CSG calculates non-GAAP financial measures may differfrom the way in which other companies calculate similar non-GAAPfinancial measures;
• Non-GAAP financial measures do notinclude all items of income and expense that affect CSG’s operationsand that are required by GAAP to be included in financial statements;
• Certain adjustments to CSG’s non-GAAP financial measuresresult in the exclusion of items that are recurring and will bereflected in CSG’s financial statements in future periods; and
• Certain charges excluded from CSG’s non-GAAP financialmeasures are cash expenses, and therefore do impact CSG’s cashposition.
CSGcompensates for these limitations by relying primarily on its GAAPresults and using non-GAAP financial measures as a supplement only.Additionally, CSG provides specific information regarding thetreatment of GAAP amounts considered in preparing the non-GAAPfinancial measures and reconciles each n on-GAAP financial measure tothe most directly comparable GAAP measure.
Non-GAAP FinancialMeasures: Basis of Presentation
The table below outlines the exclusions from CSG’s non-GAAPfinancial measures:
Non-GAAP Exclusions |
| Adjusted Revenue |
| Operating Income |
| Adjusted Operating MarginPercentage |
| EPS |
Transaction fees................................... |
| X |
| — |
| X |
| — |
Restructuring andreorganization charges................................................ |
| — |
| X |
| X |
| X |
Executive transition costs...................... |
| — |
| X |
| X |
| X |
Acquisition-related expenses: |
| — |
| X |
| X |
| X |
Amortization of acquired intangibleassets............................................. |
| — |
| X |
| X |
| X |
Earn-out compensation.................... |
| — |
| X |
| X |
| X |
Transaction-related costs................. |
| — |
| X |
| X |
| X |
Stock-based compensation................... |
| — |
| X |
| X |
| X |
Amortization of original issue discount(“OID”)................................................ |
| — |
| — |
| — |
| X |
Gain (loss) on extinguishment of debt.... |
| — |
| — |
| — |
| X |
Gain (loss) on acquisitions ordispositions.......................................... |
| — |
| — |
| — |
| X |
Unusual income tax matters.................. |
| — |
| — |
| — |
| X |
CSG believes that excluding certain items incalculating its non-GAAP financial measures provides meaningfulsupplemental information regarding CSG’s performance and these itemsare excluded for the following reasons:
- Transaction fees are primarily comprised of interchange andother payment-related fees paid, in conjunction with the delivery ofservice to customers under CSG’s payment services contracts, tothird-party payment processors and financial institutions by CSG.Because CSG controls the integrated service provided under its paymentservices customer contracts, these transaction fees are presentedgross, and not netted against revenue; however, other paymentscompanies who do not provide and/or control an integrated servicepresent their revenue net of transaction fees. The exclusion of thesefees in calculating CSG’s non-GAAP adjusted revenue providesmanagement and investors an additional means to use to compare CSG’scurrent revenue with historical and future periods, as well as withother payments companies.
- Restructuring and reorganizationcharges are expenses that result from cost reduction initiativesand/or significant changes to CSG’s business, to include such thingsas involuntary employee terminations, changes in management structure,divestitures of businesses, facility consolidations and abandonments,and fundamental reorganizations impacting operational focus anddirection. These charges are not considered reflective of CSG’srecurring business operating results. The exclusion of these items incalculating CSG’s non-GAAP financial measures allows management andinvestors an additional means to compare CSG’s current financialresults with historical and future periods.
- Executivetransition costs include expenses incurred related to a departure of aCSG executive officer under the terms of the related separationagreement. These types of costs are not considered reflective ofCSG’s recurring business operating results. The exclusion of thesecosts in calculating CSG’s non-GAAP financial measures allowsmanagement and investors an additional means to compare CSG’scurrent financial results with historical and future periods.
• Acquisition-related expenses include amortization ofacquired intangible assets, earn-out compensation, andtransaction-related costs. Transaction-related costs, which typicallyinclude expenses related to legal, accounting, and other professionalservices, are direct and incremental expenses related to businessacquisitions, and thus, are not considered reflective of CSG’srecurring business operating results. The total amount ofacquisition-related expenses can vary significantly between periodsbased on the number and size of acquisition activities, previouslyacquired intangible assets becoming fully amortized, and ultimaterealization of earn-out compensation. In addition, the timing of theseexpenses may not directly correlate with underlying performance of theCSG’s operations. Therefore, the exclusion of acquisition-relatedexpenses in calculating CSG’s non-GAAP financial measures allowsmanagement and investors an additional means to compare CSG’scurrent financial results with historical and future periods.
• Stock-based compensation results from CSG’s issuance of equityawards to its employees under incentive compensation programs. Theamount of this incentive compensation in any period is not generallylinked to the level of performance by employees or CSG. The exclusionof these expenses in calculating CSG’s non-GAAP financial measuresallows management and investors an additional means to evaluate thenon-cash expense related to compensation included in CSG’s resultsof operations, and therefore, the exclusion of this item allowsinvestors to further evaluate the cash generating capabilities ofCSG’s business.
• The convertible notes OID is the result of allocating aportion of the principal balance of the debt at issuance to the equitycomponent of the instrument, as required under current accountingrules. This OID is then amortized to interest expense over the life ofthe respective convertible debt instrument. The interest expenserelated to the amortization of the OID is a non-cash expense, andtherefore, the exclusion of this item allows investors to furtherevaluate the cash interest costs of CSG’s convertible notes for cashflow, liquidity, and debt service purposes.
- Gains and losses related to theextinguishment of debt are a result of the refinancing of CSG’scredit agreement and/or repurchase of CSG’s convertible notes. Theseactivities are not considered reflective of CSG’s recurring businessoperating results. Any resulting gain or loss is generally non-cashincome or expense, and therefore, the exclusion of these items allowsinvestors to further evaluate the cash impact of these activities forcash flow and liquidity purposes. In addition, the exclusion of thesegains and losses in calculating CSG’s non-GAAP EPS allows managementand investors an additional means to compare CSG’s current operatingresults with historical and future periods.
- Gains or lossesrelated to the acquisition or disposition of certain of CSG’sbusiness activities are not considered reflective of CSG’s recurringbusiness operating results. Any resulting gain or loss is generallynon-cash income or expense, and therefore, the exclusion of theseitems allows investors to further evaluate the cash impact of theseactivities for cash flow and liquidity purposes. In addition, theexclusion of these gains and losses in calculating CSG’s non-GAAPEPS allows management and investors an additional means to compareCSG’s current operating results with historical and future periods.
- Unusual items within CSG’s quarterly and/or annual incometax expense can occur from such things as income tax accounting timingmatters, income taxes related to unusual events, or as a result ofdifferent treatment of certain items for book accounting and incometax purposes. Consideration of such items in calculating CSG’snon-GAAP financial measures allows management and investors anadditional means to compare CSG’s current financial results withhistorical and future periods.
CSG also reports non-GAAP adjusted EBITDA andnon-GAAP free cash flow. Management believes non-GAAP adjusted EBITDAis a useful measure to investors in evaluating CSG’s operatingperformance, debt servicing capabilities, and enterprise valuation.CSG defines non-GAAP adjusted EBITDA as income before interest, incometaxes, depreciation, amortization, stock-based compensation, foreigncurrency transaction adjustments, acquisition-related expenses, andunusual items, such as restructuring and reorganization charges,executive transition costs, gains and losses related to theextinguishment of debt, and gains and losses on acquisitions ordispositions, as discussed above. Additionally, management usesnon-GAAP free cash flow, among other measures, to assess its financialperformance and cash generating capabilities, and believes that it isuseful to investors because it shows CSG’s cash available to servicedebt, make strategic acquisitions and investments, repurchase itscommon stock, pay cash dividends, and fund ongoing operations. CSGdefines non-GAAP free cash flow as net cash flows from operatingactivities less the purchases of software, property and equipment.
Non-GAAPFinancial Measures
Non-GAAP Adjusted Revenue:
The reconciliations of GAAP revenue to non-GAAP adjustedrevenue for the indicated periods are as follows (inthousands):
|
| Quarter Ended September 30, |
|
| Nine MonthsEnded September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
GAAPrevenue....................................... |
| $ 263,209 |
|
| $ 244,108 |
|
| $ 771,462 |
|
| $ 730,046 |
| ||||
Less: Transactionfees.......................... |
|
| (16,240 | ) |
|
| (16,413 | ) |
|
| (49,345 | ) |
|
| (50,432 | ) |
Non-GAAP adjusted revenue.................. |
| $ 246,969 |
|
| $ 227,695 |
|
| $ 722,117 |
|
| $ 679,614 |
|
Non-GAAP OperatingIncome:
The reconciliations ofGAAP operating income to non-GAAP operating income for the indicatedperiods are as follows (in thousands, except percentages):
|
| QuarterEnded September 30, |
|
| Nine MonthsEnded September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
GAAP operating income........... |
| $ 32,763 |
|
| $ 28,947 |
|
| $ 96,306 |
|
| $ 81,881 |
| ||||
Restructuring and reorganizationcharges (1)....... |
|
| 209 |
|
|
| 814 |
|
|
| 3,029 |
|
|
| 4,277 |
|
Executive transition costs......... |
|
| - |
|
|
| 1,786 |
|
|
| 60 |
|
|
| 1,786 |
|
Acquisition-relatedexpenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortizationof acquired intangible assets............... |
|
| 3,213 |
|
|
| 3,051 |
|
|
| 8,072 |
|
|
| 9,135 |
|
Earn-outcompensation..... |
|
| - |
|
|
| - |
|
|
| (2,521 | ) |
|
| - |
|
Transaction-related costs.. |
|
| 435 |
|
|
| 15 |
|
|
| 1,137 |
|
|
| 141 |
|
Stock-based compensation (1). |
|
| 4,945 |
|
|
| 4,500 |
|
|
| 15,478 |
|
|
| 14,680 |
|
Non-GAAP operating income... |
| $ 41,565 |
|
| $ 39,113 |
|
| $ 121,561 |
|
| $ 111,900 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted revenue... |
| $ 246,969 |
|
| $ 227,695 |
|
| $ 722,117 |
|
| $ 679,614 |
| ||||
Non-GAAP adjusted operatingmargin percentage.................. |
|
| % 16.8 |
|
| % 17.2 |
|
| % 16.8 |
|
| % 16.5 |
(1)Stock-based compensation included in the tables above and followingexcludes amounts that have been recorded in restructuring andreorganization charges.
Non-GAAP EPS:
Thereconciliations of GAAP EPS to non-GAAP EPS for the indicated periodsare as follows (in thousands, except per share amounts):
|
| Quarter Ended |
|
| Quarter Ended |
| ||||||||||
|
| September 30, 2021 |
|
| September30, 2020 |
| ||||||||||
|
| Amounts |
|
| EPS (4) |
|
| Amounts |
|
| EPS (4) |
| ||||
GAAP net income........................ |
| $ 16,130 |
|
| $ 0.50 |
|
| $ 13,566 |
|
| $ 0.42 |
| ||||
GAAP income tax provision(3)..... |
|
| 6,406 |
|
|
|
|
|
|
| 9,176 |
|
|
|
|
|
GAAPincome before income taxes.......................................... |
|
| 22,536 |
|
|
|
|
|
|
| 22,742 |
|
|
|
|
|
Restructuring and reorganizationcharges (1)................................. |
|
| 209 |
|
|
|
|
|
|
| 814 |
|
|
|
|
|
Executive transitioncosts............. |
|
| - |
|
|
|
|
|
|
| 1,786 |
|
|
|
|
|
Acquisition-related costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangibleassets................... |
|
| 3,213 |
|
|
|
|
|
|
| 3,051 |
|
|
|
|
|
Earn-out compensation......... |
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
Transaction-related costs...... |
|
| 435 |
|
|
|
|
|
|
| 15 |
|
|
|
|
|
Stock-based compensation (1)..... |
|
| 4,945 |
|
|
|
|
|
|
| 4,500 |
|
|
|
|
|
Amortization ofOID..................... |
|
| 794 |
|
|
|
|
|
|
| 751 |
|
|
|
|
|
Loss onacquisition of controlling interest(2).................................. |
|
| 6,180 |
|
|
|
|
|
|
| - |
|
|
|
|
|
Non-GAAPincome before income taxes.......................................... |
|
| 38,312 |
|
|
|
|
|
|
| 33,659 |
|
|
|
|
|
Non-GAAP income tax provision(3).............................................. |
|
| (10,344 | ) |
|
|
|
|
|
| (9,088 | ) |
|
|
|
|
Non-GAAP netincome................. |
| $ 27,968 |
|
| $ 0.88 |
|
| $ 24,571 |
|
| $ 0.76 |
|
|
| NineMonths Ended |
|
| NineMonths Ended |
| ||||||||||
|
| September30, 2021 |
|
| September30, 2020 |
| ||||||||||
|
| Amounts |
|
| EPS (4) |
|
| Amounts |
|
| EPS (4) |
| ||||
GAAP net income........................ |
| $ 55,082 |
|
| $ 1.72 |
|
| $ 45,446 |
|
| $ 1.41 |
| ||||
GAAP income tax provision(2)..... |
|
| 21,769 |
|
|
|
|
|
|
| 20,222 |
|
|
|
|
|
GAAPincome before income taxes........................................... |
|
| 76,851 |
|
|
|
|
|
|
| 65,668 |
|
|
|
|
|
Restructuring and reorganizationcharges (1).................................. |
|
| 3,029 |
|
|
|
|
|
|
| 4,277 |
|
|
|
|
|
Executive transitioncosts............. |
|
| 60 |
|
|
|
|
|
|
| 1,786 |
|
|
|
|
|
Acquisition-related expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangibleassets................... |
|
| 8,072 |
|
|
|
|
|
|
| 9,135 |
|
|
|
|
|
Earn-out compensation......... |
|
| (2,521 | ) |
|
|
|
|
|
| - |
|
|
|
|
|
Transaction-related costs...... |
|
| 1,137 |
|
|
|
|
|
|
| 141 |
|
|
|
|
|
Stock-based compensation (1)..... |
|
| 15,478 |
|
|
|
|
|
|
| 14,680 |
|
|
|
|
|
Amortization ofOID..................... |
|
| 2,350 |
|
|
|
|
|
|
| 2,221 |
|
|
|
|
|
Loss onacquisition of controlling interest(2)................................... |
|
| 6,180 |
|
|
|
|
|
|
| - |
|
|
|
|
|
Non-GAAPincome before income taxes........................................... |
|
| 110,636 |
|
|
|
|
|
|
| 97,908 |
|
|
|
|
|
Non-GAAP income tax provision(3)............................................... |
|
| (29,872 | ) |
|
|
|
|
|
| (26,114 | ) |
|
|
|
|
Non-GAAP netincome................. |
| $ 80,764 |
|
| $ 2.52 |
|
| $ 71,794 |
|
| $ 2.22 |
|
(2)During the third quarter of 2021, CSG acquired a controlling interestin a mobile money fintech payment company that it previously held onlyan equity interest in. Upon acquisition of the controlling interest,CSG recognized a non-cash loss in other income (expense) related tothe fair value remeasurement of the pre-existing equityinvestment.
(3) For the third quarter and nine months endedSeptember 30, 2021 the GAAP effective income tax rate wasapproximately 28% for both periods, and the non-GAAP effective incometax rate was approximately 27% for both periods. For the third quarterand nine months ended September 30, 2020 the GAAP effective income taxrates were approximately 40% and 31%, respectively, and the non-GAAPeffective income tax rate was approximately 27% for both periods. Thedifference between the GAAP and non-GAAP effective income tax rateswas due primarily to the unfavorable GAAP basis tax impact related tothe separation agreement entered into during the third quarter of 2020with CSG’s then CEO.
(4) The outstanding diluted shares for thethird quarter and nine months ended September 30, 2021 and 2020 were32.0 million and 32.3 million for both periods, respectively.
Non-GAAP Adjusted EBITDA:
CSG’s calculation of non-GAAP adjusted EBITDA and thereconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP netincome is provided below for the indicated periods (in thousands,except percentages):
|
| Quarter Ended |
|
| NineMonths Ended |
| ||||||||||
|
| September30, |
|
| September30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
GAAP netincome................................. |
| $ 16,130 |
|
| $ 13,566 |
|
| $ 55,082 |
|
| $ 45,446 |
| ||||
GAAP incometax provision................. |
|
| 6,406 |
|
|
| 9,176 |
|
|
| 21,769 |
|
|
| 20,222 |
|
Interest expense(5)............................ |
|
| 3,636 |
|
|
| 3,641 |
|
|
| 10,861 |
|
|
| 11,894 |
|
Amortization ofOID............................ |
|
| 794 |
|
|
| 751 |
|
|
| 2,350 |
|
|
| 2,221 |
|
Interest and investmentincome and other, net (7)...................................... |
|
| 5,797 |
|
|
| 1,813 |
|
|
| 6,244 |
|
|
| 2,098 |
|
GAAP operatingincome........................ |
|
| 32,763 |
|
|
| 28,947 |
|
|
| 96,306 |
|
|
| 81,881 |
|
Restructuring andreorganization charges (1)........................................ |
|
| 209 |
|
|
| 814 |
|
|
| 3,029 |
|
|
| 4,277 |
|
Executivetransition costs.................... |
|
| - |
|
|
| 1,786 |
|
|
| 60 |
|
|
| 1,786 |
|
Acquisition-relatedexpenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortizationof acquired intangible assets(6)...................................... |
|
| 3,213 |
|
|
| 3,051 |
|
|
| 8,072 |
|
|
| 9,135 |
|
Earn-outcompensation.................. |
|
| - |
|
|
| - |
|
|
| (2,521 | ) |
|
| - |
|
Transaction-related costs............... |
|
| 435 |
|
|
| 15 |
|
|
| 1,137 |
|
|
| 141 |
|
Stock-basedcompensation (1)............ |
|
| 4,945 |
|
|
| 4,500 |
|
|
| 15,478 |
|
|
| 14,680 |
|
Amortization of otherintangible assets(6)..................................................... |
|
| 3,330 |
|
|
| 3,282 |
|
|
| 9,933 |
|
|
| 9,816 |
|
Amortizationof customer contract costs(6)............................................ |
|
| 5,293 |
|
|
| 4,190 |
|
|
| 14,971 |
|
|
| 12,758 |
|
Depreciation....................................... |
|
| 6,225 |
|
|
| 5,817 |
|
|
| 18,604 |
|
|
| 17,016 |
|
Non-GAAP adjustedEBITDA................. |
| $ 56,413 |
|
| $ 52,402 |
|
| $ 165,069 |
|
| $ 151,490 |
| ||||
Non-GAAP adjusted EBITDA as a percentage ofnon-GAAP adjusted revenue.......................................... |
|
| % 22.8 |
|
| % 23.0 |
|
| % 22.9 |
|
| % 22.3 |
(5)Interest expense includes amortization of deferred financing costs asprovided in Note 5 below.
(6) Amortization on the statement of cash flows is made up ofthe following items for the indicated periods (in thousands):
|
| Quarter Ended |
|
| NineMonths Ended |
| ||||||||||
|
| September30, |
|
| September30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Amortization of acquired intangibleassets.... |
| $ 3,213 |
|
| $ 3,051 |
|
| $ 8,072 |
|
| $ 9,135 |
| ||||
Amortization of other intangible assets......... |
|
| 3,330 |
|
|
| 3,282 |
|
|
| 9,933 |
|
|
| 9,816 |
|
Amortization of customercontract costs....... |
|
| 5,293 |
|
|
| 4,190 |
|
|
| 14,971 |
|
|
| 12,758 |
|
Amortization of deferred financingcosts....... |
|
| 460 |
|
|
| 432 |
|
|
| 1,338 |
|
|
| 1,289 |
|
Totalamortization.................................. |
| $ 12,296 |
|
| $ 10,955 |
|
| $ 34,314 |
|
| $ 32,998 |
|
(7)Included in interest and investment income and other, net is the $6.2million loss on acquisition of controlling interest, discussedabove.
Non-GAAPFree Cash Flow:
CSG’scalculation of non-GAAP free cash flow and the reconciliation ofCSG’s non-GAAP free cash flow measure to cash flows from operatingactivities are provided below for the indicated periods (inthousands):
|
| Quarter Ended |
|
| NineMonths Ended |
| ||||||||||
|
| September30, |
|
| September30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Cash flows from operating activities........ |
| $ 46,080 |
|
| $ 65,269 |
|
| $ 88,309 |
|
| $ 116,129 |
| ||||
Purchases ofsoftware, property and equipment.................................... |
|
| (7,373 | ) |
|
| (9,867 | ) |
|
| (22,531 | ) |
|
| (24,201 | ) |
Non-GAAP free cashflow...................... |
| $ 38,707 |
|
| $ 55,402 |
|
| $ 65,778 |
|
| $ 91,928 |
|
Non-GAAP FinancialMeasures – 2021 Financial Guidance
Refer to the “Non-GAAP Financial Measures– 2021 Financial Guidance” in Exhibit 2 to CSG’s earningsrelease dated August 4, 2021, which can be found on the InvestorRelations page of CSG’s website at csgi.com for the reconciliation of our2021 financial guidance.
Non-GAAP Financial Measures – 2022 Preliminary FinancialOutlook
Non-GAAP Adjusted Revenue:
The reconciliation of GAAP revenue to non-GAAP adjustedrevenue, as included in CSG’s 2022 full year preliminary financialoutlook, is as follows:
|
| 2022Outlook Range |
| |||||
|
| LowRange |
|
| High Range |
| ||
GAAPrevenue......................................................... |
| $ 1,060,000 |
|
| $ 1,100,000 |
| ||
Less: Transactionfees............................................ |
|
| (70,000 | ) |
|
| (80,000 | ) |
Non-GAAP adjustedrevenue.................................... |
| $ 990,000 |
|
| $ 1,020,000 |
|
ContactDetails
CSG
John Rea
+1210-687-4409
CompanyWebsite
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