Complete Story
04/23/2010
CSI REPORTS RECORD FISCAL YEAR 2010 RESULTS
PADUCAH, Ky. (April 23, 2010) - Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and net income for the fiscal year ended February 28, 2010.
CSI's revenues for fiscal 2010 were a record $154.0 million and rose 2.2% compared with $150.6 million for fiscal 2009. Net income for fiscal 2010 rose to $21.6 million, a 4.5% increase compared with fiscal 2009 income of $20.7 million. Net income per fully diluted share increased 9.5% to $2.87 compared with $2.62 last year. Fiscal 2009 results included $4.8 million (approximately $0.37 per diluted share after-tax) in one-time fees related to early contract terminations from accounts lost primarily through bank mergers compared with only $275,000 (approximately $0.02 per diluted share after-tax) in fiscal 2010.
Fourth quarter revenues rose 0.6% to $41.8 million in fiscal 2010 compared with $41.5 million in the fourth quarter of fiscal 2009. Net income was $6.6 million, or $0.88 per diluted share, in the fourth quarter of fiscal 2010 compared with $6.9 million, or $0.89 per diluted share, in the fourth quarter of fiscal 2009. The one-time fees related to early contract terminations from lost accounts were recorded in the fourth quarter of the respective fiscal years.
"CSI reported continued growth in revenue in the fourth quarter and for the fiscal year ended February 28, 2010," stated President and Chief Executive Officer Steven A. Powless. "This quarter marked the 24th consecutive quarter of revenue growth and highlights the benefits of our long-term customer contracts and high retention rates. We anticipate that the recent acquisition of Myriad Systems, Inc. (MSI) will provide additional momentum to our revenue growth going forward while further diversifying our revenue base.
"We are pleased with CSI's 2010 performance in light of the soft economy," continued Mr. Powless. "We grew sales, reduced operating costs and invested in new hardware and software to support our continued growth. CSI's cash position rose to $3.3 million at fiscal year end, and we used our solid cash flow to repurchase almost $8.5 million in CSI stock during the year. We remain optimistic about our continued growth in fiscal 2011."
Fiscal 2010 Results
Consolidated revenues rose 2.2% to $154.0 million for fiscal 2010 compared with $150.6 million for fiscal 2009. Processing revenues rose 5.3% to $109.8 million compared with $104.3 million for fiscal 2009, and other revenues declined 4.7% to $44.2 million compared with fiscal 2009. Growth in processing revenues benefited from sales to new customers, cross-sales to existing customers, increases in transaction volumes, the contribution from new products and services and the acquisition of MSI effective October 1, 2009. Other revenue growth slowed in fiscal 2010 due to customers postponing discretionary spending on new products and services, including one-time software and hardware purchases, during the weak economy. Fiscal 2010 revenues included $275,000 in one-time fees related to early contract terminations from lost accounts and fiscal 2009 results included $4.8 million in similar fees.
-MORE CSI Reports Record Fiscal Year 2010 Results Page 2 April 23, 2010 -MORE-
Operating income rose 4.2% to $35.7 million for fiscal 2010 compared with $34.3 million for last year. Operating margin for fiscal 2010 rose to 23.2% compared with 22.8% for fiscal 2009. The increase in operating income and margin benefited from a higher sales base and improved operating costs. A primary driver in reducing operating costs has been the shift in customers adopting remote data capture technology and away from processing transactions at CSI's fixed data centers. CSI expects to benefit from this trend as data centers are consolidated, resulting in lower personnel and operating costs.
Net income for fiscal 2010 rose 4.5% to $21.6 million compared with $20.7 million for fiscal 2009. Net income per diluted share increased 9.5% to $2.87 for fiscal 2010 on 7.5 million weighted average diluted shares outstanding compared with $2.62 for fiscal 2009 on 7.9 million weighted average diluted shares outstanding.
CSI's cash flow from operations rose to $35.6 million in fiscal 2010, and cash and cash equivalents more than doubled to $3.2 million at February 28, 2010, compared with the prior fiscal year. During fiscal 2010, CSI repurchased $8.5 million in common stock, invested approximately $10.7 million in new hardware and software, and paid approximately $10.0 million for the MSI acquisition. These investments were funded with a combination of cash flow from operations and approximately a $3.0 million increase in debt.
Fourth Quarter Results
Fourth quarter consolidated revenues rose to $41.8 million compared with $41.5 million for the fourth quarter ended February 28, 2009. Processing revenues were $29.1 million in the fourth quarter of fiscal 2010 and included $275,000 in early termination fees compared with $31.4 million in the fourth quarter of last year that included $4.8 million in similar fees. Excluding the one-time fees related to early contract terminations, processing revenues were up 8.2% and other revenues were up 25.5% compared with the fourth quarter of last year. The growth in revenues benefited from the MSI acquisition and higher software sales compared with the fourth quarter of 2009.
"We had solid growth in revenues and net income in the fourth quarter when you exclude the one-time early contract termination fees," continued Mr. Powless. "The growth in our processing revenues benefited from sales to new customers, cross-sales to existing customers, higher transaction-based revenue and the MSI acquisition. We are particularly pleased with the contribution from MSI in its first full quarter of operations as part of CSI. We made progress in integrating MSI to build our cross-sales and believe it will be a solid contributor to our continued growth in fiscal 2011."
Fourth quarter 2010 operating income was $10.9 million compared with $11.5 million for the fourth quarter of the prior year. Operating margin for the fourth quarter was 26.2% compared with 27.7% for the fourth quarter of fiscal 2009.
Net income was $6.6 million for the fourth quarter of fiscal 2010 compared with $6.9 million for the prior-year period. Net income per fully diluted share was $0.88 compared with $0.89 for the same quarter last year. Net income included early termination fees of approximately $0.02 per diluted share for the fourth quarter of fiscal 2010 compared with approximately $0.38 per diluted share in the fourth quarter of fiscal 2009.
