News

CSI Reports Growth in Revenues and Net Income for First Quarter

PADUCAH, Ky. (June 27, 2017) – Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported growth in revenues and net income for the first quarter ended May 31, 2017. 

CSI’s revenues rose 15.2% to $64.7 million for the first quarter of fiscal 2018 compared with $56.1 million for the first quarter of fiscal 2017. First quarter net income rose 47.0% to $9.9 million compared with $6.8 million for the first quarter of fiscal 2017. Net income per share rose 47.9% to $0.71 compared with $0.48 for the first quarter of fiscal 2017. The results for the first quarter of 2018 benefited from approximately $5.3 million in early contract termination fees compared with $85,000 in the first quarter of fiscal 2017. Excluding the effect of early contract termination fees, net revenues increased approximately 6% and net income rose approximately 5% in the first quarter of fiscal 2018 compared with the first quarter of fiscal 2017. The early contract termination fees are generated when a customer terminates its contract prior to the end of the contracted term, a circumstance that typically arises when an existing CSI customer is acquired by another financial institution that is not a CSI customer. These fees can vary significantly from period to period based on the number and size of customers that are acquired and how early in the contract term a customer is acquired. 

“CSI reported solid growth in revenues across our business lines in the first quarter due to new business and cross-sales to existing customers,” stated Steven A. Powless, CEO of CSI. “We continue to benefit from a high recurring revenue base with long-term contracts and high renewal rates on customer contracts. 

Our core business remains solid and we expect our revenues and net income to be up for fiscal 2018 compared with fiscal 2017 based on the stability of existing contracts, new business projections and increased demand from existing customers.”

First Quarter Results

Consolidated revenues increased 15.2% to $64.7 million in the first quarter of fiscal 2018 compared with $56.1 million in the first quarter of fiscal 2017. The growth in revenues benefited from higher sales of core processing, digital banking, regulatory compliance services and managed services. Revenues included approximately $5.3 million in early contract termination fees in the first quarter of fiscal 2018 compared with $85,000 in the first quarter of fiscal 2017. Excluding the effect of the early contract termination fees, first quarter fiscal 2018 processing revenues increased approximately 6% compared with the first quarter of last fiscal year.

“We expect total revenues for fiscal 2018 to be higher than the prior fiscal year, notwithstanding the early contract termination fees. Revenue and earnings growth may be lower in the second half of this fiscal year due to higher early contract termination fees in the third and fourth quarters of last fiscal year compared with possible lower early contract termination fees in the second half of this year,” continued Powless.

Operating income rose 48.3% to $16.2 million for the first quarter of fiscal 2018 compared with $10.9 million for the first quarter of fiscal 2017. Operating margin was 25.1% in the first quarter of fiscal 2018 compared with 19.5% for the first quarter of fiscal 2016. The increase in operating income and margin were due to growth in sales and the effect of higher early contract termination fees received in the first quarter of fiscal 2018 compared with the first quarter of fiscal 2017.

Net income for the first quarter of fiscal 2018 was up 47.0% to $9.9 million compared with $6.8 million for the first quarter of fiscal 2017. Net income per share increased 47.9% to $0.71 for the first quarter of fiscal 2018 on 14.0 million weighted average shares outstanding compared with $0.48 for the first quarter of fiscal 2017 on 14.0 million weighted average shares outstanding. The early contract termination fees benefited per share earnings by approximately $0.22 in the first quarter of fiscal 2018 compared with a negligible per share benefit in the first quarter of fiscal 2017.

CSI’s cash flow from operations rose 19.2% to $21.8 million in the first quarter of fiscal 2018 compared with $18.3 million in the first quarter of fiscal 2017. Cash and cash equivalents increased 74.7% to $48.4 million as of May 31, 2017, from $27.7 million as of May 31, 2016.

“CSI’s financial position remained strong with growth in cash flow from operations, higher cash and cash equivalents and no long-term debt,” Powless continued. “During the first quarter we returned approximately $4.1 million to shareholders in cash dividends and repurchases of common stock and invested another $3.6 million in hardware and software. We continue to be in a very good position to reinvest in our business in areas of new product development, market expansion and overall growth in our customer base.”

About Computer Services, Inc.

Computer Services, Inc. delivers core processing, managed services, digital banking, 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.

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