CSG Systems International, Inc. (CSGS)

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CSG Systems International Inc. (CSGS)

Q4 2008 Earnings Call

January 27, 2009 5:00 pm ET


Kathleen Marvin – Director of Investor Relations

Peter E. Kalan – Chief Executive Officer

Randy R. Wiese – Chief Financial Officer


Ashwin Shirvaikar - Citigroup Investment

[Unidentified Analyst] - Thomas Weisel Partners

Karl Keirstead - Kaufman Bros.

DeForest Hinman - Walthausen & Company

Shyam Patil - Raymond James & Associates, Inc.



Good afternoon ladies and gentlemen. Thank you for standing by. Welcome to the CSG Systems fourth quarter earnings conference call. (Operator Instructions) This conference is being recorded today, Tuesday, January 27, 2009. Now I’d like to turn the conference over to Miss Kathleen Marvin. Please go ahead.

Kathleen Marvin

Thank you David 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 clients needs through our products, services and performance; and our ability to successfully integrate and manage acquired businesses in order to achieve their 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 call. 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. Also we will discuss certain financial information that is not prepared in accordance with GAAP. We use this non-GAAP information in our internal analysis in order to exclude significant items that may have a disproportionate affect in a particular period.

Accordingly, we believe isolating the effects of such events enables us as well as investors to consistently analyze the critical components of our operating results and to add meaningful comparisons to prior periods. For more information regarding our use of non-GAAP financial measures, we refer you to today’s earnings release on our website, which will also be furnished to the SEC on Form 8-K.

With me today on the phone are Peter Kalan, our Chief Executive Officer and Randy Wiese, our Chief Financial Officer. I would now like to turn the call over to Peter.

Peter E. Kalan

Thank you Kathleen and thanks to all of you for joining us today. Before I get started I’d like to welcome Kathleen Marvin to her first quarterly earnings call. And as many of you may know, Roger Metz our former head of Investor Relations and Treasury accepted a CFO position with a local Denver software company in the fourth quarter.

Kathleen has been assisting in our Investor Relations efforts over the past several years and took on these responsibilities upon Roger’s departure. We congratulate Kathleen on her expanded Investor Relations duties for CSG and we welcome her to this call.

Now onto the results. I’m pleased to report that CSG continued to perform well in the recent fourth quarter, posting revenues of $124 million and net income of $0.59 per share for the quarter and revenues of $472 million and net income of $1.84 per share for the full year. These results included a $7 million gain or $0.14 per share, resulting from the repurchase of some of our convertible debt during the fourth quarter.

We’re pleased with our solid financial performance in 2008 and also with our execution from an operational perspective on behalf of our clients. We also made good progress in 2008 on our plans to grow and diversify our business and advance our product suite, which I’ll discuss in more detail later. Randy will share more details on our financial performance after I conclude.

During the earnings call last October, I commented on the tumultuous economic and credit situations that the world and our country were facing. Since that time, the economic and financial markets have worsened, corporate restructurings have increased, and government bailouts have become more the norm. As I look back on 2008 and also into 2009, I’m appreciative of the areas of strength on which CSG is built.

These strengths include stable capital, a consistently solid business model, and clients who have strong viable businesses. But all businesses are likely to be impacted by the current economic challenges. The increase in unemployment; decline in home values and personal investment portfolios; and decreases in consumer confidence have all contributed to weaknesses in the consumer related markets.

Our clients are not without concern for these weaknesses and the impacts on their businesses, and we expect that our clients will cautiously watch their discretionary spending as they manage through this downturn.

As we look at our own business, we are fortunate to have several areas of strength on which to build. Our innovative billing and interaction management systems are integral to many of the daily operations of our clients’ businesses. Though we derive some revenues from products and services that could be more discretionary in nature, the majority of our revenues are for services already deployed and generating value in our clients’ operations.

That being said, we are cautious in our outlook for 2009 and recognize that longer sales cycles and discretionary spending cutbacks may have a negative impact on our business. We don’t anticipate that our clients will undertake any large, transformational projects in 2009 but will instead focus on smaller projects that quickly generate operational and economic benefits.

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