CSG Systems International, Inc. (CSGS)

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CSG Systems International, Inc. (CSGS)

Q4 2013 Earnings Call

February 4, 2014 05:00 pm ET


Peter Kalan – President & Chief Executive Officer

Randy Wiese – Executive Vice President & Chief Financial Officer

Liz Bauer – Senior Vice President of Investor Relations & Strategic Communications


Mark Sue – RBC Capital Markets

Paul Thomas – Goldman Sachs

Sterling Auty – JP Morgan

Tom Roderick – Stifel Nicolaus



Good day, ladies and gentlemen, thank you for standing by. Welcome to the CSG Systems Q4 2013 Conference Call. (Operator instructions.) I would now like to hand the presentation over to Liz Bauer. Please go ahead, ma’am.

Liz Bauer

Thank you, Danielle, and thanks to everyone for joining us. Today’s discussion will contain a number of forward-looking statements. These will include but are not limited to 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 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 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 revision to these forward-looking statements in light of new 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 our most recently filed 10(k) and 10(q) which are all available on the “Investor Relations” section of our website.

Also we disclose certain financial information that is not prepared in accordance with GAAP. We believe that these non-GAAP financial matters when reviewed in conjunction with our GAAP financial measures provide investors with greater transparency to the information used by our management team in our financial and operational decision making. For more information regarding our use of non-GAAP financial measures we refer you to today’s earnings release and non-GAAP reconciliation tables on our website which will also be furnished via cc on Form 8(k).

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

Peter Kalan

Thanks, Liz, and thanks to everyone for joining us on today’s call. We had another solid quarter and year generating strong revenues, earnings and cash flows, demonstrating the strength of our business model and our focus on execution. We position ourselves to be a reliable and dependable partner who helps our clients compete and win in today’s challenging marketplace. And most importantly we continue to strengthen our relationships with our clients around the world by continuing to do what we do best – execute.

As I look towards the future I’d be remiss in not reminding those on the call about some key activities we accomplished in 2013 that are important to the company’s long-term growth. In 2013 we secured long-term contracts into 2017 with two of our largest clients, Comcast and Time Warner, providing us with strong visibility into our revenues and cash flows for many years.

Second, we saw further expansion of our Content Direct solution into our cable and satellite clients, movie studios and big box retailers. And finally during the year we introduced and have secured several long-term contracts for our managed services offering with providers in AMEA and APAC regions.

Now, while all of these activities are positive I don’t want to leave you with the impression that it’s not a challenging business environment. Last year, while we saw growth in the AMEA and APAC markets we saw a decline in our Americas region. Overall the broad telecom market continued to be a difficult market in 2013.

Revenues from our cable and satellite clients in North America were flat between years but we absorbed the pricing impacts from two large client contract renewals in 2013 which equaled approximately 3% of our total revenues.

I don’t think the challenges facing the broader telecom market are unique by region or client and in fact they’re similar to the challenges our cable and satellite clients have confronted. After looking back at this last year I think that how operators decide to solve their challenges is beginning to evolve and change across the globe. Therein lies why we’re so excited about expanding our managed services offering globally.

Many communications service providers around the world are facing many of the same (inaudible). Their revenues and profits associated with their traditional businesses like video and voice are under pressure. They’re facing increased and new competition from folks like Google, Amazon, and others. And their customers’ expectations are shifting and increasing in demand. Not only do customers want it now they expect you to know what they want before they ask for it.

These challenges are forcing service providers to explore new business models, fresh approaches to innovation and different ways to drive costs out of their operations. This bodes well for CSG. We have a mindset aimed at identifying ways to manage and reduce costs of system ownership while continuing to move a business forward. Our 30-year approach to managed services is based on delivering not only enhanced technological and service results but also an improved bottom line for our clients.

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