PADUCAH, Ky. (January 7, 2015) – Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and net income for the third quarter and nine months ended November 30, 2014.
CSI’s revenues grew 5.5% to $55.9 million for the third quarter of fiscal 2015 compared with $53.1 million for the third quarter of fiscal 2014. Net income rose 7.4% to $7.2 million for the third quarter of fiscal 2015 compared with $6.7 million in the third quarter of fiscal 2014. Net income per share increased 8.5% to $0.51 for the third quarter of fiscal 2015 compared with $0.47 for the prior year’s third quarter.
“CSI reported its 42nd consecutive quarterly growth in revenues based on new customer activity, as well as on increased sales and volumes from existing customers,” stated Chief Executive Officer Steven A. Powless. “We also continued to benefit from high contract renewal rates from existing customers that provide CSI with a solid base of recurring revenues.
“We expect that fiscal 2015 will be another record year for revenues and net income based on our expectations for the fourth quarter. We believe CSI is positioned well to drive future growth through our expanded sales and marketing programs. We also invested $10.2 million in new hardware and software during the first nine months of fiscal 2015 and expect these investments to support strongly our continued growth next year,” Powless continued.
During the third quarter, CSI’s Board of Directors declared a cash dividend of $0.22 per share. The dividend was paid on December 26, 2014, to shareholders of record as of the close of business on December 1, 2014.
Third Quarter Results
Consolidated revenues rose 5.5% to $55.9 million for the third quarter of fiscal 2015 compared with $53.1 million in the third quarter of fiscal 2014. Processing revenues rose 7.5% to $35.5 million compared with $33.1 million for the third quarter of fiscal 2014. The growth in processing revenues was driven primarily by the addition of new customers, cross-sales to existing customers and increases in transaction volumes from existing customers, partially offset by the effect of lost business. Processing revenues included early contract termination fees of $525,000 for the third quarter and $2.2 million for the first nine months of fiscal 2015 compared with $957,000 for the third quarter and $2.7 million for the first nine months of fiscal 2014.
“We are beginning to see increased rates of merger and acquisition activity among community banks due to improved bank earnings,” stated Powless. “We expect our bank customers to be active in this market in the coming year, resulting in both increased fees as our customers acquire other banks and higher early contract termination fees as customers are acquired by non-CSI customer banks.”
Other revenues rose 2.1% to $20.4 million compared with the third quarter of fiscal 2014. Other revenues benefited from growth in mobile and Internet banking services, growth in homeland security and fraud prevention services, higher eBusiness group revenues, and higher forms and envelope revenue.
Operating income rose 7.7% to $11.9 million for the third quarter of fiscal 2015 compared with $11.1 million for the third quarter of fiscal 2014. Operating margin increased to 21.3% in the third quarter of fiscal 2015 compared with 20.9% for the third quarter of fiscal 2014. The increase in operating margin was due primarily to increased sales and improved sales mix.
Net income for the third quarter of fiscal 2015 rose 7.4% to $7.2 million compared with $6.7 million for the third quarter of fiscal 2014. Net income per share increased 8.5% to $0.51 for the third quarter of fiscal 2015 on 14.1 million weighted average shares outstanding compared with $0.47 for the third quarter of fiscal 2014 on 14.4 million weighted average shares outstanding.
Nine Months Results
Consolidated revenues for the first nine months of fiscal 2015 rose 4.6% to $166.1 million compared with $158.8 million for the first nine months of fiscal 2014. CSI’s increase in revenues benefited from a 4.4% increase in processing revenues and a 5.0% increase in other revenues compared with the first nine months of fiscal 2014.
Operating income rose 10.3% to $35.1 million for the first nine months of fiscal 2015 compared with $31.8 million for the first nine months of fiscal 2014. Operating margin increased to 21.1% in the first nine months of fiscal 2015 compared with 20.0% in the first nine months of fiscal 2014.
Net income for the first nine months of fiscal 2015 rose 10.0% to $21.1 million compared with $19.2 million in the first nine months of fiscal 2014. Net income per share increased 12% to $1.49 for the first nine months of fiscal 2015 compared with $1.33 for the first nine months of fiscal 2014.
“We continue to use our strong financial position and cash flow to return a portion of our earnings to shareholders through our cash dividend program and repurchases of CSI stock,” Powless said. “During the first nine months of fiscal 2015, we returned $7.7 million to shareholders in cash dividends and $5.1 million in stock repurchases and redemptions. At the end of the third quarter, CSI had $6.1 million available under existing stock repurchase authorizations.
“CSI’s cash flow from operations rose 4.1% to $31.0 million in the first nine months of fiscal 2015, and our cash position has more than doubled since last year to $9.0 million. In addition, we had no long-term debt at November 30, 2014,” Powless concluded.
About Computer Services, Inc.
Computer Services, Inc. delivers core processing, managed services, mobile and Internet solutions, payments processing, print and electronic distribution, and regulatory compliance solutions to financial institutions and corporate customers across the nation. Exceptional service, dynamic solutions and superior results are the foundation of CSI’s reputation, and have resulted in the company’s inclusion in such top industry-wide rankings as the FinTech 100, Talkin’ Cloud 100 and MSPmentor Top 501 Global Managed Service Providers List. CSI’s stock is traded on OTCQX under the symbol CSVI. For more information about CSI, visit www.csiweb.com.
This news release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. All statements except historical statements contained herein constitute “forward-looking statements.” Forward-looking statements are inherently uncertain and are based only on current expectations and assumptions that are subject to future developments that may cause results to differ materially. Readers should carefully consider: (i) economic, competitive, technological and governmental factors affecting CSI’s operations, customers, markets, services, products and prices; (ii) risk factors affecting the financial services information technology industry generally including, but not limited to, cybersecurity risks that may result in increased costs for us to protect against the risks, as well as liability or reputational damage to CSI in the event of a breach of our security; and (iii) other factors discussed in CSI's Annual Reports, Quarterly Reports, Information and Disclosure Statements and other documents posted from time to time on the OTCQX website (available either at www.otcmarkets.com or www.otcqx.com, including without limitation, the description of the nature of CSI's business and its management discussion and analysis of financial condition and results of operations for reported periods. Except as required by law or OTC Markets Group, Inc., CSI undertakes no obligation to update, and is not responsible for updating, the information contained or incorporated by reference in this report beyond the publication date, whether as a result of new information or future events, or to conform this document to actual results or changes in CSI's expectations, or for changes made to this document by wire services or Internet services or otherwise.