CSG Systems International, Inc. (CSGS)

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CSG Systems International, Inc. (CSGS)

Q3 2008 Earnings Call Transcript

October 21, 2008 5:00 pm ET


Roger Metz – VP, IR

Peter Kalan – President and CEO

Randy Wiese – EVP and CFO


Tom Roderick – Thomas Weisel

Peter Jacobson – Brean Murray

Karl Keirstead – Kaufman Brothers

Todd Rosenbluth – Standard & Poor's

Ashwin Shirvaikar – Citigroup

Scott Sutherland – Wedbush Morgan Securities

Shaul Eyal – Oppenheimer & Company



Good afternoon, ladies and gentlemen, thank you so much for standing by. Welcome to the CSG Systems Q3 earnings conference call. During today’s presentation all parties will be in a listen-only mode, following the presentation the conference will be open for questions. (Operation instructions) As a reminder this conference is being recorded today on Tuesday the 21st of October, 2008. I’ll now turn the conference over to Mr. Roger Metz, Vice President of Investor Relations. Please go ahead sir.

Roger Metz

Thank you, Michael, and thanks to everyone on the call for joining us. Today’s discussion will contain a number of forward-looking statements. In particular, these will include statements regarding our projected financial results, our ability to meet our client’s needs through our products, services and performance and our ability to successfully integrate and manage, acquired businesses in order to achieve their expected strategic operating and financial goals.

While these statements reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release any revisions to these forward-looking statements in light of new information or future events.

In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in today’s press release as well as in our most recently filed 10-K and 10-Q which are all available in the Investor Relations section of our website.

With me today on the phone are Peter Kalan, Chief Executive Officer and Randy Wiese, Chief Financial Officer. Peter will begin.

Peter Kalan

Thank you, Roger, and thanks to all of you on the call today for joining us today. CSG continued to perform well on the recent third quarter, posting revenues of $118 million and net income of $0.40 per share. We also generated strong cash flows and continue to execute on our plans to grow and diversify our business. Randy will share more details on our financial performance after I conclude.

Now we all know that the last two months, we’ve seen some of the most multiuse times and decades. Despite the economic and credit market term all-round us, CSG remains on very solid ground. Our capital structure continues to provide us security, stability and investment options while other businesses might be constrained in current economic conditions.

Additionally our clients have stable financial capital and business models that generally performed well in down economies. History has shown that economic downturns have not resulted in any meaningful negative trends for the communication service providers in terms of customer losses. If nothing else consumers are inclined to keep or even increase their PayTV and information services when times get tough, as it is a relatively inexpensive entertainment option compared to going out to dinner and a movie, taking a vacation or other things that may get cut back in a tough economy.

Additionally the triple play bundle being offered by our clients is a very compelling product offering for consumers looking for ways to save on their monthly expenses. So, the historical strength of our clients businesses combined with our business model of delivering key business services under a recurring revenue business model creates visibility and consistency of results.

Our business model and strong client relationships have set the foundation of CSG’s financial stability thus far, and we see these client’s ties strengthening in the future as we become an even more and valued partner. We have established strong relationships with our clients, which were reflected in the 10-year of these relationships in the high contract renewal rates. We have been very successful in recent quarters and renewing relationships with key clients and we are actively negotiating with DISH networks on a renewal of our credit contract which we expect to ramp up in the fourth quarter.

We’ve talk to you in the past about the dramatically changing landscape that are largest vertical market, the cable in DBS providers face right now with increase complexity of services and deliver models and increasing competition from AT&A and Verizon. The current economic conditions will only add to this list of challenges and our clients will need to continue looking for ways to deepen their customer relationships.

Fortunately, CSG is well positioned to help our clients to work through these challenges and continue on with their growth strategies. Many of the solutions that CSG offers come with measurable return on investment propositions because they help our clients to work smarter and more effectively. For example, our interactive messaging solutions, which we continue to deploy to our clients help deliver better customer service at a fraction of the cost of using customer service reps.

Our workforce management solutions including new GPS functionality ensure that our clients get the right employee to the right home at the right time, alleviating many of the inefficiencies generally associated with managing a large base of filed employees. Our Order Workflow to all helps our clients interface with customers in a fast and accurate manner, cutting down on call times in the call centers and reducing follow-up call for further information.

Our product catalog and offer management solutions make the process of getting the highest value service offerings built, identified, sold and deployed to consumers in an efficient manner. Our business services platform is designed to help our clients more efficiently sell to and manage their relationships with small and medium-size business customers an important growth vehicle for them going forward.

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