DJ CSG Systems International Reports Third Quarter 2021 Results
CSG CSG Systems International Reports Third Quarter 2021 Results 03-Nov-2021 / 21:05 CET/CEST
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Reconfirming All 2021 Financial Guidance Targets; Preliminary 2022 Targets Announced
Robust Q3 2021 Revenue & Adjusted Revenue Growth Up 7.8% and 8.5% Year-Over-Year
Signed Landmark Charter Communications Contract Extension and Expansion through 2027
Successful Conversion of 800,000 Charter Communications Customers in Midwest
Signed DISH Network Contract Extension Through Mid-2026
CSG (NASDAQ: CSGS) today reported results for the quarter ended September 30, 2021.
Financial Results:
Third quarter 2021 financial results: . Total revenue was USD263.2 million and total non-GAAP adjusted revenue was USD247.0 million. . GAAP operating income was USD32.8 million, or 12.4% of total revenue, and non-GAAP operating income wasUSD41.6 million, or 16.8% of non-GAAP adjusted revenue. . GAAP earnings per diluted share (EPS) was USD0.50 and non-GAAP EPS was USD0.88. . Cash flows used in operations were USD46.1 million, with a non-GAAP free cash flow of USD38.7 million.
Shareholder Returns: . In August 2021, CSG declared its quarterly cash dividend of USD0.25 per share of common stock, or a totalof approximately USD8 million, to shareholders. . During the third quarter of 2021, CSG repurchased under its stock repurchase program, approximately143,000 shares of its common stock for approximately USD7 million.
Business Activities: . In September 2021, CSG refinanced its existing credit agreement, extending the term of the agreementthrough September 2026, and increasing the revolving credit facility from USD200 million to USD450 million. . In October 2021, CSG extended its contract with Charter, its largest client, through December 31, 2027. . In October 2021, CSG extended its contract with DISH through June 30, 2026.
'Our third quarter results and the landmark Charter contract expansion highlight the excellent momentum we currently have across our global business,' said Brian Shepherd, President and Chief Executive Officer of CSG. 'With regards to the six-year Charter contract, which represents the largest deal ever signed in CSG's history, we are extremely proud to become the revenue management provider of choice for all 32 million Charter subscribers across their residential and small-and-medium-sized business footprints. Additionally, we reported a robust set of financial results highlighted by our best quarterly organic revenue and adjusted revenue growth results since Q3 2010. And on the back of our strong year-to-date 2021 results, our continued sales success in the market, and the exciting renewals at both Charter and DISH Network, we are pleased to issue growth-oriented 2022 preliminary financial guidance targets. Looking ahead, CSG remains well positioned to create meaningful value for our customers, our employees and our shareholders as we lengthen and strengthen our relationships with existing customers, accelerate our organic revenue growth, close good new strategic acquisitions, and diversify into higher growth industry verticals.'
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
Quarter Ended September 30, Nine Months Ended September
30,
Percent Percent
2021 2020 Changed 2021 2020 Changed
GAAP Results:
USD USD % USD USD %
Revenue...........................
263,209 244,108 7.8 771,462 730,046 5.7
% %
Operating Income.............. 32,763 28,947 96,306 81,881
13.2 17.6
% % % %
Operating Margin Percentage.......................
12.4 11.9 12.5 11.2
USD USD % USD USD %
EPS..................................
0.50 0.42 19.0 1.72 1.41 22.0
Non-GAAP Results:
USD USD % USD USD %
Adjusted Revenue.............
246,969 227,695 8.5 722,117 679,614 6.3
% %
Operating Income.............. 41,565 39,113 121,561 111,900
6.3 8.6
% % % %
Adjusted Operating Margin Percentage....................
16.8 17.2 16.8 16.5
USD USD % USD USD %
EPS..................................
0.88 0.76 15.8 2.52 2.22 13.5
For additional information and reconciliations regarding CSG's use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG's website at csgi.com.
Results of Operations
GAAP Results: Total revenue for the third quarter of 2021 was USD263.2 million, a 7.8% increase when compared to revenue of USD244.1 million for the third quarter of 2020, and a 3.2% increase when compared to revenue of USD255.1 million for the second quarter of 2021. These increases in revenue can be primarily attributed to the continued growth of CSG's revenue management solutions, as substantially all was attributed to organic growth year-over-year.
GAAP operating income for the third quarter of 2021 was USD32.8 million, or 12.4% of total revenue, compared to USD28.9 million, or 11.9% of total revenue, for the third quarter of 2020, and USD32.2 million, or 12.6% of total revenue, for the second quarter of 2021. The increase in year-over-year operating income can be primarily attributed to the revenue growth in 2021.
GAAP EPS for the third quarter of 2021 was USD0.50, as compared to USD0.42 for the third quarter of 2020, and USD0.60 for the second quarter of 2021. GAAP EPS for the third quarter of 2021 was impacted by a USD6.2 million loss, or USD0.14 per share, recorded on obtaining a controlling interest in a pre-existing equity investment.
Non-GAAP Results: Non-GAAP adjusted revenue for the third quarter of 2021 was USD247.0 million, an 8.5% increase when compared to non-GAAP adjusted revenue of USD227.7 million for the third quarter of 2020, and a 3.6% increase when compared to USD238.5 million for the second quarter of 2021.
Non-GAAP operating income for the third quarter of 2021 was USD41.6 million, or 16.8% of total non-GAAP adjusted revenue, compared to USD39.1 million, or 17.2% of total non-GAAP adjusted revenue for the third quarter of 2020, and USD39.8 million, or 16.7% of total non-GAAP adjusted revenue for the second quarter of 2021.
Non-GAAP EPS for the third quarter of 2021 was USD0.88 compared to USD0.76 for the third quarter of 2020, and USD0.82 for the second quarter of 2021.
The changes in non-GAAP adjusted revenue and non-GAAP operating income between quarters are primarily due to the factors discussed above.
Balance Sheet and Cash Flows
Cash, cash equivalents and short-term investments as of September 30, 2021 were USD224.5 million compared to USD212.1 million as of June 30, 2021 and USD240.3 million as of December 31, 2020. CSG had net cash flows from operations for the third quarters ended September 30, 2021 and 2020 of USD46.1 million and USD65.3 million, respectively, and had non-GAAP free cash flow of USD38.7 million and USD55.4 million, respectively.
Summary of Financial Guidance
CSG is reaffirming its financial guidance for the full year 2021 and providing a preliminary financial outlook for certain full year 2022 financial measures, as follows:
2021 Preliminary 2022
GAAP Measures:
USD USD
Revenue.................................................................
1,015 - USD1,045 1,060 - USD1,100
million million
Operating Margin Percentage.................................. 12.3% - 12.7%
USD
EPS.......................................................................
2.35 - USD2.53
USD
Cash Flows from Operating Activities.......................
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