CSI Reports Record Second Quarter Revenues And Net Income

PADUCAH, Ky., Oct. 6, 2014 /PRNewswire/ -- Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and net income for the second quarter of fiscal 2015, which ended August 31, 2014. 

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CSI's revenues grew 2.9% to $55.6 million for the second quarter of fiscal 2015 compared with $54.0 million for the second quarter of fiscal 2014. Net income rose 17.5% to $7.6 million for the second quarter of fiscal 2015 compared with $6.5 million in the second quarter of fiscal 2014. Net income per share increased 20.0% to $0.54 for the second quarter of fiscal 2015 compared with $0.45 for the prior year's second quarter. 

"CSI reported record revenues and net income in our second fiscal quarter and benefited from new customer contracts coming online and cross-sales to existing customers," stated Chief Executive Officer Steven A. Powless. "We also continue to have high contract renewal rates from existing customers that provide CSI with a solid base of recurring revenues.  This marked our 41^st consecutive quarter of revenue growth, and we are poised to report continued revenue growth this fiscal year based on these trends. 

"During the second quarter, our Board of Directors increased our cash dividend by 37.5% to $0.22 per share and authorized an additional $5 million in our share repurchase program, highlighting our long-term growth record and solid financial condition. This dividend increase marks our 43^rd consecutive year of increasing our cash dividend.  We remain focused on broadening our market reach through our expanded national sales network and expect increased demand for our regulatory compliance services and Internet and mobile banking products to be drivers for future growth," Powless continued.

Second Quarter Results

Consolidated revenues rose 2.9% to $55.6 million for the second quarter of fiscal 2015 compared with $54.0 million in the second quarter of fiscal 2014. Processing revenues rose 4.2% to $35.4 million compared with $34.0 million for the second quarter of fiscal 2014.  The growth in processing revenues was driven primarily by sales to new customers, cross-sales to existing customers and increases in transaction volume from existing customers, offset partially by the effect of lost business. Other revenues rose 0.7% to $20.2 million compared with the second quarter of fiscal 2014. Other revenues benefited from growth in Internet and mobile banking services, growth in homeland security products and fraud prevention services, higher hardware revenues, and growth in managed services.

Operating income rose 17.8% to $12.6 million for the second quarter of fiscal 2015 compared with $10.7 million for the second quarter of fiscal 2014. Operating margin increased to 22.7% in the second quarter of fiscal 2015 compared with 19.8% for the second quarter of fiscal 2014. The increase in operating margin was due primarily to lower operating expenses compared with the second quarter of last fiscal year.  Operating expenses were down 0.8% from the prior year's second quarter and benefited from lower employee-related expenses, including lower recognized commission expense due to a change in accounting for commissions to the deferral method in the fourth quarter of fiscal 2014, and savings realized from data center consolidations completed during the third quarter of fiscal 2014 and the first quarter of fiscal 2015. The reduced expenses were offset partially by higher self-funded medical plan expenses due to adverse claims experience that are projected to be higher during the second half of the year compared with the prior fiscal year.

Net income for the second quarter of fiscal 2015 rose 17.5% to $7.6 million compared with $6.5 million for the second quarter of fiscal 2014. Net income per share increased 20.0% to $0.54 for the second quarter of fiscal 2015 on 14.2 million weighted average shares outstanding compared with $0.45 for the second quarter of fiscal 2014 on 14.5 million weighted average shares outstanding.  

Six Months Results

Consolidated revenues for the first six months of fiscal 2015 rose 4.2% to $110.2 million compared with $105.8 million for the first six months of fiscal 2014.  CSI's increase in revenues represented growth in both processing and other revenues categories.

Operating income rose 11.7% to $23.1 million for the first six months of fiscal 2015 compared with $20.7 million for the first six months of fiscal 2014.  Operating margin increased to 21.0% in the first six months of fiscal 2015 compared with 19.6% in the first six months of fiscal 2014. 

Net income for the first six months of fiscal 2015 rose 11.4% to $13.9 million compared with $12.5 million in the first six months of fiscal 2014.  Net income per share increased 14.0% to $0.98 for the first six months of fiscal 2015 compared with $0.86 for the first six months of fiscal 2014.

"CSI's cash flow from operations rose 14% to $23.5 million in the first half of fiscal 2015," Powless said. "Our cash position has more than doubled since last year to $7.6 million, and we had no long-term debt at August 31, 2014.  We continue to use our strong financial position to invest in our business while returning a portion of our earnings to shareholders through our cash dividend program and repurchases of CSI stock. During the first half of fiscal 2015, we invested about $7.9 million in new equipment and software to support our continued growth and returned $9.2 million to shareholders in cash dividends and stock repurchases and redemptions."

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.

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 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.

SOURCE Computer Services, Inc.