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CSI Reports Results for Second Quarter Fiscal 2013

 

Oct 8 - Computer Services Inc. (OTCQX: CSVI) has reported results for the second quarter and six months ended Aug. 31, 2012.

Second quarter revenues rose 11.8 percent to $48.6 million in fiscal 2013 compared with $43.5 million in the second quarter of fiscal 2012. Second quarter net income was $6.1 million, or $0.41 per diluted share compared with $6.4 million, or $0.43 per diluted share, in the second quarter of last fiscal year.

“Our growth in revenue benefited from the continued demand for our processing services and the contribution from HEIT Consulting Inc. that we acquired in September 2011,” stated CEO Steven A. Powless. “This quarter marked our 33rd consecutive quarter of revenue growth, which reflects continued higher processing revenues generated from long-term contracts and solid growth in transaction volume from our regulatory and compliance services.

Second quarter consolidated revenues rose 11.8 percent to $48.6 million compared with $43.5 million for the second quarter ended Aug. 31, 2011. Processing revenues increased 1.2 percent to $30.8 million compared with $30.4 million in the second quarter of last year. The growth in processing revenues reflects sales to new customers, cross-sales to existing customers and increases in transaction volumes from existing customers, partially offset by lost business. Other revenues rose 36.2 percent to $17.9 million in the second quarter of fiscal 2013 and accounted for 36.7 percent of total revenues compared with $13.1 million, or 30.1 percent of total revenues, in the second quarter of fiscal 2012. Other areas of revenue growth were the result of higher transaction volume for regulatory and compliance services, higher eBusiness group revenues, and growth in Internet banking and mobile banking services.

Second quarter operating income declined 6.8 percent to $9.8 million compared with $10.6 million in the second quarter of the prior year. Operating margin for the second quarter was 20.2 percent compared with 24.3 percent in the second quarter of fiscal 2012. The decline in CSI’s operating income and margin was primarily due to increased personnel costs associated with staffing additions as part of SGI and higher costs associated with the conversion of new accounts compared with the second quarter of the prior fiscal year. 

Net income declined 5.4 percent to $6.1 million in the second quarter compared with $6.4 million in the prior-year period. Net income per fully diluted share was $0.41 in the second quarter of fiscal 2013 compared with $0.43 in the same quarter last year. Weighted average shares outstanding were down 0.1 percent to 14.8 million since last year due primarily to CSI shares repurchased under the company’s stock repurchase program. CSI repurchased 52,431 shares during the first half of this fiscal year, including 33,296 in the second quarter. CSI had approximately $2.6 million available under existing stock purchase authorizations outstanding as of Aug. 31, 2012.

CSI’s cash and cash equivalents rose to $10.4 million at Aug. 31, 2012, up from $8.5 million at Feb. 29, 2012. The growth in cash was largely attributable to cash flow from operations that totaled $21.9 million in the first half of fiscal 2013. 

“CSI’s strong balance sheet is highlighted by our growing cash position and low debt,” said Powless. “We continue to use our cash flow from operations to invest in our business. During the first half of this fiscal year, we invested $14.1 million in new equipment and software, including $5.1 million for a new host processor. We also returned approximately $5.9 million to CSI shareholders through our cash dividend and stock repurchase programs during the first half of fiscal 2013. 

“Last quarter, the board approved a 12 percent increase in our cash dividend to $0.14 per share, representing the 24th consecutive annual increase in CSI’s cash dividend. We remain committed to building long-term shareholder value by investing in our company and distributing a portion of our earnings to shareholders through our stock repurchase and cash dividend programs,” concluded Powless.

Consolidated revenues for the first six months of fiscal 2013 rose 15.1 percent to a record $96.6 million compared with $83.9 million for the same period in fiscal 2012. CSI’s growth in revenues benefited from a 3 percent increase in processing revenues and a 45.3 percent increase in other revenues compared with the first half of the prior fiscal year.

Operating income declined 2.6 percent to $19.3 million for the first six months of fiscal 2013 compared with $19.9 million for the same period last year. Operating margin declined to 20 percent in the first six months of fiscal 2013 compared with 23.6 percent in the same period of fiscal 2012. The decrease in operating income and margin was due to increased personnel costs associated with planned staffing additions as part of SGI and higher costs associated with the conversion of new accounts.  

Net income for the first six months of fiscal 2013 was $11.9 million compared with $12 million in the first six months of fiscal 2012. Net income per diluted share was $0.81 for the latest six month period compared with $0.82 for the same period last year.

About Computer Services Inc.
Computer Services Inc. (CSI) delivers core processing, managed services, mobile and Internet, payments processing, print and electronic distribution, and regulatory and 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 in empowering businesses to remain competitive, compliant and profitable. CSI’s stock is traded on OTCQX under the symbol CSVI. For more information about CSI, visit www.csiweb.com.



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