CSI Reports Record Fourth Quarter and Fiscal Year 2014 Results Net Income Increases for 17th Consecutive Year

PADUCAH, Ky., May 7, 2014 /PRNewswire/ -- Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and net income for the fourth quarter and fiscal year ended February 28, 2014.  The record results for fiscal 2014 marked CSI's 14th consecutive year of revenue growth and 17th consecutive year of growth in net income.

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

Fourth quarter revenues rose 3.9% to a record $54.1 million in fiscal 2014 compared with $52.1 million in the fourth quarter of fiscal 2013. Net income was a record $7.4 million, or $0.52 per fully diluted share, in the fourth quarter of fiscal 2014 compared with $7.3 million, or $0.50 per fully diluted share, in the fourth quarter of fiscal 2013. 

CSI's revenues for fiscal 2014 were a record $212.9 million and rose 7.4% compared with $198.3 million for fiscal 2013. Net income for fiscal 2014 was a record $26.7 million, a 3.2% increase compared with fiscal 2013 income of $25.8 million. Net income per fully diluted share increased 5.1% to $1.85 compared with $1.76 in the prior fiscal year. 

"We completed our most successful sales year in fiscal 2014 and benefited from revenue growth from every CSI division," stated Chief Executive Officer Steven A. Powless. "Our growth in processing revenues gained momentum with sales to new core customers and increased cross-sales to existing customers.  We added numerous new core customers across the country accounting for a record $58.9 million in total contract value in fiscal 2014.  We also strengthened our recurring revenue base with new long-term contracts from renewals and new customers, highlighting our customers' high satisfaction levels and their confidence in CSI's future.

"CSI enters fiscal 2015 with excellent potential to set new records in our 50th year of operation. We have a growing back-log of pending business augmented by a high percentage of recurring revenues from core processing customers.  We also remain focused on delivering service and support that exceeds our customers' expectations and believe these will be key in supporting our continued growth," continued Mr. Powless. 

Fiscal 2014 Results

Consolidated revenues rose 7.4% to $212.9 million for fiscal 2014 compared with $198.3 million for fiscal 2013. CSI's growth in revenues reflects new customers added since last year, cross-sales to existing customers, and increased transaction volume. Processing revenues rose 6.5% to $134.1 million for fiscal 2014 compared with $126.0 million for fiscal 2013. The growth in processing revenues included record sales to new customers, cross-sales to existing customers and increases in transaction volumes from existing customers. Other revenues increased 9.0% to $78.8 million for fiscal 2014 compared with $72.3 million for fiscal 2013. The increase in other revenues was due primarily to growth in mobile and Internet banking services, growth in homeland security and fraud prevention services, and higher eBusiness group revenues.

Operating expenses rose 7.9% to $168.8 million in fiscal 2014 compared with fiscal 2013. The increase in operating expenses was due primarily to costs related to CSI's Strategic Growth Initiative (SGI).

"We made significant investments in ramping up SGI over the past three years," continued Powless.  "We expect to leverage these expenses in sales, marketing, and expanded management talent.  We believe these investments in SGI will accelerate our revenue and earnings growth potential and will be key to building future shareholder value." 

Operating income rose 5.3% to $44.1 million in fiscal 2014 compared with $41.9 million in fiscal 2013. Operating margins were 20.7% in fiscal 2014 compared with 21.1% in fiscal 2013. The decline in CSI's operating margin was due primarily to staffing additions as part of SGI compared with the prior fiscal year. 

Net income for fiscal 2014 rose 3.2% to $26.7 million compared with $25.8 million for fiscal 2013. Net income per fully diluted share increased 5.1% to $1.85 for fiscal 2014 compared with $1.76 for fiscal 2013. Weighted average fully diluted shares outstanding declined 1.9% from fiscal year 2013 due to CSI shares repurchased under the Company's stock repurchase program. CSI repurchased 421,951 shares of its stock in fiscal 2014.

CSI's cash flow from operations was $36.6 million in fiscal 2014. The Company returned $22.4 million to shareholders during fiscal 2014 in cash dividends and stock repurchased or redeemed. Total long-term debt was eliminated in fiscal 2014 from $7,000 the prior year. Cash and cash equivalents totaled $1.1 million at February 28, 2014.

"CSI's financial position remained strong in fiscal 2014 and benefited from growth in net income and our strong cash flow from operations," stated Mr. Powless.  "Our Board remains focused on building shareholder value through our cash dividend and stock repurchase programs. We used our earnings power to increase our quarterly cash dividend for the 42nd consecutive year and to add $10 million to the Company's share repurchase program. We also invested $13.4 million in new property, equipment, hardware and software during fiscal 2014 to support our continued growth."

Fourth Quarter Results

Fourth quarter consolidated revenues rose 3.9% to a record $54.1 million compared with $52.1 million for the fourth quarter ended February 28, 2013. Processing revenues increased 2.9% to $33.5 million in the fourth quarter of fiscal 2014 compared with $32.5 million in the fourth quarter of fiscal 2013. Other revenues were up 5.6% to $20.7 million in the fourth quarter of fiscal 2014 compared with $19.6 million in the fourth quarter of fiscal 2013. The significant growth in other revenues benefited from new customers for regulatory compliance services, growth in transaction volumes, and higher sales of eBusiness and document services.

Fourth quarter 2014 operating expenses rose 4.0% to $41.8 million compared with $40.2 million in the fourth quarter of 2013. The increase in operating expenses was due partly to higher employee-related expenses attributed to personnel additions to support SGI, which was announced in early fiscal 2012.

Operating income for the fourth quarter rose 3.6% to $12.3 million in fiscal 2014 compared with $11.9 million in fiscal 2013. Operating margins decreased to 22.7% in the fourth quarter of fiscal 2014 compared with 22.8% in the fourth quarter of fiscal 2013. The decline in CSI's operating margin was due primarily to staffing additions as part of SGI compared with the prior fiscal year. 

Income before taxes rose 3.6% to $12.3 million in the fourth quarter of fiscal 2014 compared with $11.9 million in the same quarter of fiscal 2013. Provision for income taxes rose to $4.9 million in the fourth quarter of fiscal 2014 compared with $4.5 million in the fourth quarter of fiscal 2013. The effective income tax rate was 39.5% in the fourth quarter of fiscal 2014 compared with 38.3% in the fourth quarter of fiscal 2013.

Net income for the fourth quarter of fiscal 2014 rose to $7.4 million, or $0.52 per fully diluted share, compared with $7.3 million, or $0.50 per fully diluted share, for the fourth quarter of fiscal 2013.

About Computer Services, Inc.

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

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

 

COMPUTER SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Audited)

(in thousands, except share and per share data)














Three Months Ended February 28,


Year Ended February 28,




2014


2013


2014


2013











Processing revenues

$      33,456


$     32,522


$    134,133


$    126,002

Other revenues

20,658


19,568


78,781


72,254


Total revenues

54,114


52,090


212,914


198,256

Operating expenses

41,808


40,207


168,821


156,395


Operating income

12,306


11,883


44,093


41,861

Interest expense, net

(4)


(14)


(34)


(16)


Income before income taxes

12,302


11,869


44,059


41,845

Provision for income taxes

4,859


4,540


17,403


16,006












Net income

$       7,443


$       7,329


$     26,656


$     25,839











Earnings per share









Basic

$         0.52


$         0.50


$         1.85


$         1.76


Diluted

$         0.52


$         0.50


$         1.85


$         1.76











Shares used in computing earnings per









common and common equivalent share










Basic

14,265,434


14,640,549


14,440,668


14,695,122



Diluted

14,265,434


14,651,023


14,440,668


14,721,622

 

 

 

COMPUTER SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Audited)

(in thousands, except share data)














02/28/2014


02/28/2013

ASSETS





Current assets






Cash and cash equivalents

$     1,078


$        499



Accounts receivable

25,962


21,953



Income tax receivable

538


797



Prepaid expenses and other current assets

9,628


6,625




Total current assets

37,206


29,874


Property and equipment, net of accumulated depreciation

35,252


34,996


Software and software licenses, net of accumulated amortization

17,963


18,952


Goodwill

60,115


60,115


Intangible assets

8,264


9,374


Other assets

16,120


8,703









Total assets

$  174,920


$  162,014

















LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities






Accounts payable and accrued expenses

$    18,536


$    12,979



Deferred revenue

9,430


9,337



Notes payable

7


60




Total current liabilities

27,973


22,376


Long-term liabilities






Notes payable

-


7



Deferred income taxes

14,418


13,193



Other long-term liabilities

1,198


1,071




Total long-term liabilities

15,616


14,271












Total liabilities

43,589


36,647










Shareholders' equity






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

-


-



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







2013; shares issued and outstanding, 14,227,951 at February 28, 2014








and 14,620,743 at February 28, 2013


20,316


19,522



Retained earnings

111,015


105,845




Total shareholders' equity

131,331


125,367









Total liabilities and shareholders' equity

$  174,920


$  162,014









 

SOURCE Computer Services, Inc.



RELATED LINKS
http://www.csiweb.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.