CSGS

CSG Systems International, Inc. (CSGS)

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CSG Systems International Inc. (CSGS)

Q4 2009 Earnings Call

January 26, 2010 05:00 p.m. ET

Executives

Liz Bauer - VP of IR

Peter Kalan - CEO and President,

Randy Wiese - EVP & CFO

Analysts

Ashwin Shirvaikar - Citigroup

Scott Sutherland - Wedbush Securities

Karl Keirstead - Kaufman Brothers

Kerry Kelly - Ironworks Capital

Presentation

Operator

Good day ladies and gentlemen. Thank you for standing by. Welcome to the CSG Systems fourth quarter 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. (Operator Instructions). This conference is being recorded today, Tuesday January 26, 2010.

I would now like to turn the conference over to our host Liz Bauer. Please go ahead ma'am.

Liz Bauer

Thank you Jeremy and thanks 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 product services and performance and our ability to successfully integrate and manage acquired businesses, in order to achieve their expected strategic operating and financial goal.

While these statements their 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 an event enables us as well as investors to consistently analyze the critical components of our operating results and to have meaningful comparisons to prior periods. For more information regarding the use of our non-GAAP financial measures, we refer you to today's earnings release on our website which will also be furnished to the SEC and Form 8-K.

With me today on the phone are Peter Kalan, our CEO and Randy Wiese, our CFO. I would now like to turn the call over to Peter.

Peter Kalan

Thank you, Liz and thanks to everyone for joining us on the call today. I am pleased to report that CSG continues to execute well posting fourth quarter revenues of $128 million and non-GAAP EPS of $0.40 per share. For the full year, total revenues were $501 million, and non-GAAP EPS was $1.64 per share.

Our 2009 results demonstrates the strength of our solutions, client relationships and business model. This year, we generated over a $150 million in cash flows, invested over 14% of our revenues in research and development, extended our relationship with our second largest client DISH Networks and increased our market share in the cable space.

These results reinforced CSG's commitment to creating shareholder value. 2009 was not a year in which we retreated in the face of IT budgets being cut. We believe that our value proposition as a company providing highly scalable fully integrated outsource solutions that maximize and monetize every customer interaction, allows our clients to successfully execute on their business objectives.

Moving market share and securing long-term relationships in this ever changing market is not easy in a business environment in which decisions have been put on hold. However, our focus and commitment to doing what is right for our clients like continuing to invest in our people, R&D, and capital expenditures continue to pay off.

For 2010, just like 2009, we are committed to creating shareholder value by growing revenues profits and cash flows, and we plan to achieve this by executing on three strategies. First, we'll expand what we do for our clients as the leading provider of customer interaction management solutions to North American communication providers.

Second, we plan to grow our relationships with the providers in vertical markets where we already have relationships. And finally, we will improve the profitability of our business. Let me give you an update as how we are performing on each of these three strategies. On November 30th, we announced that we extended our relationship with Dish Networks through December 31, 2012 for billing services and through December 31st 2014 for print and mail services.

In addition, the new agreement includes an option to extend the billing services contract for three more years through 2015 and migrate to our next generation ACP platform which currently supports CSG's other 34 million customer accounts today. We believe that this option provides Dish with the greatest opportunity to achieve its long-term objectives as its business continues to grow and evolve. This extension provides visibility into an important relationship for CSG as there has been a lot of uncertainty, speculation and rumors surrounding our relationship with Dish. We believe that this eliminates a major overhang on the stock. And with this contract extension CSG does not have the major contract up for renewal until December 31, 2012.

I am also pleased to report that in the fourth quarter, we converted 2.4 million new customers under our ACP platform. With the most recent conversions the entire charter customer base is now being processed on our next generation customer caring billing platform. During 2009, we converted a total of three million customers under our solutions. And so far we have 400,000 customers to convert onto our system during 2010 and we expect those to be completed by the summer.

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