Jan 9 - Computer Services Inc. (CSI) (OTCQX: CSVI) has reported growth in revenue and net income for the third quarter and nine months ended Nov. 30, 2012.
Third quarter revenues rose 4.2 percent to $49.6 million in fiscal 2013 compared with $47.6 million in the third quarter of fiscal 2012. Third quarter net income increased 5.5 percent to $6.6 million, or $0.45 per diluted share compared with $6.2 million, or $0.42 per diluted share, in the third quarter of last fiscal year.
“Our growth in third quarter revenue benefited from the addition of new processing accounts coming online and continued growth from our other business units,” stated CEO Steven A. Powless. “We are pleased to report our 34th consecutive quarter of revenue growth that benefited from higher processing revenues generated from long-term contracts and solid growth in transaction volume from our regulatory and compliance services.
“Our board of directors highlighted our continued growth by declaring a special cash dividend of $1 per share in October that was paid to shareholders in December 2012,” continued Powless. “In addition, our board approved a $5 million increase in our company’s share repurchase program as part of our long-term program to return a portion of CSI’s earnings to our shareholders. We returned approximately $8.1 million to CSI shareholders through our cash dividend and stock repurchase programs during the first nine months of fiscal 2013, and in December we paid out an additional $14.7 million to shareholders in the special cash dividend.
“Our focus remains on driving revenue growth through product innovation, merging resources companywide to broaden our product suites, and capitalizing on growth opportunities in our regulatory and compliance businesses. We also continue to use our strong cash flow and balance sheet to invest in our operations. During the first nine months of this fiscal year, we invested $15.9 in new equipment and software, including $5.1 million for a new host processor. We expect our investments in new hardware and software to support our continued growth in transaction volume. Our outlook for fiscal 2013 remains very positive. We expect the addition of the new processing accounts and growth from our other business units to contribute to record revenues and earnings in fiscal 2013,” continued Powless.
Third Quarter Results
Third quarter consolidated revenues rose 4.2 percent to $49.6 million compared with $47.6 million for the third quarter ended Nov. 30, 2011. Processing revenues increased 6.1 percent to $31.6 million compared with $29.8 million in the third quarter of last year. The growth in processing revenues reflects new customers added since last year, cross-sales to existing customers, and increases in transaction volumes from existing customers, partially offset by lost business. Other revenues rose 1 percent to $17.9 million in the third quarter of fiscal 2013 compared with $17.8 million in the third quarter of fiscal 2012. Growth in other revenue benefited from higher transaction volume for regulatory and compliance services, higher eBusiness group revenues, and growth in Internet banking and mobile banking services.
Third quarter operating income increased 3.3 percent to $10.6 million compared with $10.3 million in the third quarter of the prior year. Operating margin for the third quarter was 21.5 percent compared with 21.7 percent in the third quarter of fiscal 2012. The decline in CSI’s operating margin was primarily due to staffing additions as part of Strategic Growth Initiative; higher network communication expense; and higher general and administrative expenses compared with the third quarter of the prior fiscal year.
Net income increased 5.5 percent to $6.6 million in the third quarter compared with $6.2 million in the prior-year period. Net income per fully diluted share rose 7.1 percent to $0.45 in the third quarter of fiscal 2013 compared with $0.42 in the same quarter last year. Weighted average diluted shares outstanding were down 0.9 percent to 14.7 million since last year due primarily to CSI shares repurchased under the Company’s stock repurchase program. CSI repurchased 76,571 shares during the nine months of this fiscal year, including 24,140 in the third quarter. CSI had approximately $6.9 million available under existing stock purchase authorizations outstanding at Nov. 30, 2012, including a $5 million increase in the company’s share repurchase program announced in November 2012.
CSI’s cash and cash equivalents rose to $17.4 million at Nov. 30, 2012, up from $8.5 million at Feb. 29, 2012. The growth in cash was largely attributable to cash flow from operations that totaled $33.5 million in the first nine months of fiscal 2013. Total debt at Nov. 30, 2012 declined to $89,000.
Nine Month Results
Consolidated revenues for the first nine months of fiscal 2013 rose 11.1 percent to a record $146.2 million compared with $131.5 million for the same period in fiscal 2012. CSI’s growth in revenues benefited from a 4 percent increase in processing revenues and a 26.4 percent increase in other revenues compared with the first nine months of the prior fiscal year. The increase in other revenue was due primarily to the acquisition of HEIT Consulting Inc. that was acquired in September 2011.
Operating income was $30 million for the first nine months of fiscal 2013 compared with $30.2 million for the same period last year. Operating margin declined to 20.5 percent in the first nine months of fiscal 2013 compared with 22.9 percent in the same period of fiscal 2012. The decrease in operating income and margin was due primarily to increased personnel costs associated with planned staffing additions as part of SGI; higher network communication expense; and higher general and administrative expenses compared to the same period of fiscal 2012.
Net income for the first nine months of fiscal 2013 rose 1.3 percent to $18.5 million compared with $18.3 million in the first nine months of fiscal 2012. Net income per diluted share rose to $1.26 for the latest nine month period compared with $1.24 for the same period last year.
About Computer Services Inc.
Computer Services Inc. delivers core processing, managed services, mobile and Internet solutions, 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 100 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.