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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CSG Systems International Inc | NASDAQ:CSGS | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.08 | -0.19% | 41.00 | 39.25 | 44.99 | 41.36 | 40.87 | 41.10 | 133,829 | 23:00:03 |
Achieved or Exceeded All 2023 Financial Guidance Targets
2023 Organic Revenue Grew 7.3% YoY; CSG’s Best Annual Results in Nearly Two Decades
Dividend Payout Increased 7% in 2024; Marks 11th Consecutive Year of Increased Payout
Returned Over $150 Million to Shareholders in 2023 including $117 Million of Share Repurchases
Q4 Operating Cash Flow of $80 Million with Record Quarterly Non-GAAP Free Cash Flow of $74 Million
CSG (NASDAQ: CSGS) today reported results for the quarter and year ended December 31, 2023.
Financial Results:
Fourth quarter 2023 financial results:
Full year 2023 financial results:
Shareholder Returns:
“Team CSG had a record-setting 2023 as we delivered excellent financial results across the board highlighted by 7.3% year-over-year organic revenue growth, our strongest annual result in nearly two decades,” said Brian Shepherd, President and Chief Executive Officer of CSG. “Additionally, we delivered strong profitability and cash flow generation as our non-GAAP adjusted operating margin improved from 16.6% in 2022 to 17.2% in 2023, while generating $104 million in non-GAAP free cash flow. Plus, we continue to return capital to shareholders in the form of buybacks and dividends, having delivered over $150 million in shareholder remuneration in 2023. On this note, we are pleased to announce our 11th consecutive year of increasing dividend payout in 2024. Looking forward, we anticipate mid-single-digit organic revenue growth, resulting in revenue between $1.2 and $1.24 billion in 2024 with non-GAAP adjusted operating margins in the range of 17.0% to 17.4%.”
Financial Overview (unaudited)
(in thousands, except per share amounts and percentages):
Quarter Ended December 31,
Year Ended December 31,
Percent
Percent
2023
2022
Changed
2023
2022
Changed
GAAP Results:
Revenue
$
297,324
$
289,876
2.6
%
$
1,169,258
$
1,089,752
7.3
%
Operating Income
24,747
35,072
(29.4
%)
123,877
78,747
57.3
%
Operating Margin Percentage
8.3
%
12.1
%
10.6
%
7.2
%
EPS
$
0.44
$
0.66
(33.3
%)
$
2.20
$
1.41
56.0
%
Non-GAAP Results:
Operating Income
$
44,063
$
45,157
(2.4
%)
$
185,727
$
168,830
10.0
%
Adjusted Operating Margin Percentage
16.1
%
16.8
%
17.2
%
16.6
%
EPS
$
0.92
$
0.84
9.5
%
$
3.69
$
3.61
2.2
%
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 fourth quarter of 2023 was $297.3 million, a 2.6% increase when compared to revenue of $289.9 million for the fourth quarter of 2022. Total revenue for the full year 2023 was $1,169.3 million, a 7.3% increase when compared to revenue of $1,089.8 million for the full year 2022. The increases in revenue can be mainly attributed to the continued growth of CSG’s revenue management solutions, to include the conversion of customer accounts on CSG solutions, growth in digital solutions, and increased payments volumes.
GAAP operating income for the fourth quarter of 2023 was $24.7 million, or 8.3% of total revenue, compared to $35.1 million, or 12.1% of total revenue, for the fourth quarter of 2022. GAAP operating income for the full year 2023 was $123.9 million, or 10.6% of total revenue, compared to $78.7 million, or 7.2% of total revenue, for the full year 2022. These changes in operating income can be mainly attributed to the $7.9 million quarterly increase in restructuring and reorganization charges, and the $30.0 million full year decrease in restructuring and reorganization charges.
GAAP EPS for the fourth quarter of 2023 was $0.44, as compared to $0.66 for the fourth quarter of 2022. GAAP EPS for the full year 2023 was $2.20, compared to $1.41 for the full year 2022. The changes in GAAP EPS are mainly due to fluctuations in operating income, discussed above, with the full year increase in GAAP EPS partially offset by higher interest expense.
Non-GAAP Results: Non-GAAP operating income for the fourth quarter of 2023 was $44.1 million, or a non-GAAP adjusted operating margin of 16.1%, compared to $45.2 million, or a non-GAAP adjusted operating margin of 16.8% for the fourth quarter of 2022. Non-GAAP operating income for the full year 2023 was $185.7 million, or a non-GAAP adjusted operating margin of 17.2%, compared to $168.8 million, or a non-GAAP adjusted operating margin of 16.6% for the full year 2022.
Non-GAAP EPS for the fourth quarter of 2023 was $0.92 compared to $0.84 for the fourth quarter of 2022. Non-GAAP EPS for the full year 2023 was $3.69 compared to $3.61 for the full year 2022.
Balance Sheet and Cash Flows
Cash, cash equivalents, and short-term investments as of December 31, 2023 were $186.3 million compared to $146.7 million as of September 30, 2023 and $150.4 million as of December 31, 2022. CSG generated net cash flows from operations for the fourth quarters ended December 31, 2023 and 2022 of $79.5 million and $54.0 million, respectively, and had non-GAAP free cash flow of $74.5 million and $48.6 million, respectively. For the year ended December 31, 2023 and 2022, CSG generated net cash flows from operations of $131.9 million and $63.6 million, respectively, and had non-GAAP free cash flow of $103.9 million and $26.6 million, respectively.
Summary of Financial Guidance
CSG’s financial guidance for the full year 2024 is as follows:
GAAP Measures:
Revenue
$1,200 - $1,240 million
Non-GAAP Measures:
Adjusted Operating Margin Percentage
17.0% - 17.4%
EPS
$3.85 - $4.15
Adjusted EBITDA
$245 - $255 million
Free Cash Flow
$95 - $135 million
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.
Conference Call
CSG will host a conference call on Wednesday, February 7, 2024 at 5:00 p.m. ET, to discuss CSG’s fourth quarter and full year 2023 earnings results. The call will be carried live and archived on the Internet. A link to the conference call is available at http://ir.csgi.com. In addition, to reach the conference by phone, call 1-888-412-4131 and use the passcode 2327393.
Additional Information
For information about CSG, please visit CSG’s web site at csgi.com. Additional information can be found in the Investor Relations section of the website.
About CSG
CSG empowers companies to build unforgettable experiences, making it easier for people and businesses to connect with, use and pay for the services they value most. Our customer experience, billing and payments solutions help companies of any size make money and make a difference. With our SaaS solutions, company leaders can take control of their future and tap into guidance along the way from our fiercely committed and forward-thinking CSGers around the world.
Want to be future-ready and a change-maker like the global brands that trust CSG? Visit csgi.com to learn more.
Forward-Looking Statements
This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. Some of these key factors include, but are not limited to the following items:
This list is not exhaustive, and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the SEC.
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(in thousands)
December 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
186,264
$
150,365
Short-term investments
-
71
Total cash, cash equivalents, and short-term investments
186,264
150,436
Settlement and merchant reserve assets
274,699
238,653
Trade accounts receivable:
Billed, net of allowance of $5,432 and $5,528
267,680
274,189
Unbilled
82,163
52,830
Income taxes receivable
1,345
1,270
Other current assets
50,075
48,577
Total current assets
862,226
765,955
Non-current assets:
Property and equipment, net of depreciation of $121,816 and $105,466
65,545
71,787
Operating lease right-of-use assets
34,283
49,687
Software, net of amortization of $157,601 and $150,337
14,224
22,774
Goodwill
308,596
304,036
Acquired customer contracts, net of amortization of $126,469 and $120,080
35,879
45,417
Customer contract costs, net of amortization of $42,094 and $30,601
54,421
54,735
Deferred income taxes
57,855
26,206
Other assets
10,017
7,956
Total non-current assets
580,820
582,598
Total assets
$
1,443,046
$
1,348,553
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
7,500
$
37,500
Operating lease liabilities
15,946
21,012
Customer deposits
41,035
40,472
Trade accounts payable
46,406
47,720
Accrued employee compensation
84,380
68,321
Settlement and merchant reserve liabilities
273,817
237,810
Deferred revenue
54,199
46,033
Income taxes payable
4,104
5,455
Other current liabilities
33,449
22,886
Total current liabilities
560,836
527,209
Non-current liabilities:
Long-term debt, net of unamortized discounts of $15,628 and $2,656
534,997
375,469
Operating lease liabilities
34,360
53,207
Deferred revenue
23,447
21,991
Income taxes payable
3,041
3,410
Deferred income taxes
123
117
Other non-current liabilities
12,916
11,901
Total non-current liabilities
608,884
466,095
Total liabilities
1,169,720
993,304
Stockholders' equity:
Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding
-
-
Common stock, par value $.01 per share; 100,000 shares authorized; 29,541 and 31,269 shares outstanding
713
708
Additional paid-in capital
490,947
495,189
Treasury stock, at cost; 40,398 and 38,210 shares
(1,136,055
)
(1,018,034
)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax
1
1
Cumulative foreign currency translation adjustments
(50,414
)
(58,830
)
Accumulated earnings
968,134
936,215
Total stockholders' equity
273,326
355,249
Total liabilities and stockholders' equity
$
1,443,046
$
1,348,553
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per share amounts)
Quarter Ended
Year Ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Revenue
$
297,324
$
289,876
$
1,169,258
$
1,089,752
Cost of revenue (exclusive of depreciation, shown separately below)
156,145
150,154
615,042
565,168
Other operating expenses:
Research and development
35,800
34,548
143,201
137,913
Selling, general and administrative
66,683
64,185
247,613
238,018
Depreciation
6,034
5,913
23,189
23,598
Restructuring and reorganization charges
7,915
4
16,336
46,308
Total operating expenses
272,577
254,804
1,045,381
1,011,005
Operating income
24,747
35,072
123,877
78,747
Other income (expense):
Interest expense
(8,084
)
(6,146
)
(31,176
)
(16,432
)
Interest and investment income, net
1,820
340
4,336
877
Loss on derivative liability upon debt conversion
-
-
-
(7,456
)
Other, net
(1,639
)
(999
)
(4,686
)
5,045
Total other
(7,903
)
(6,805
)
(31,526
)
(17,966
)
Income before income taxes
16,844
28,267
92,351
60,781
Income tax provision
(4,174
)
(8,118
)
(26,105
)
(16,721
)
Net income
$
12,670
$
20,149
$
66,246
$
44,060
Weighted-average shares outstanding:
Basic
28,607
30,455
29,938
31,028
Diluted
28,842
30,732
30,115
31,298
Earnings per common share:
Basic
$
0.44
$
0.66
$
2.21
$
1.42
Diluted
0.44
0.66
2.20
1.41
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
Year Ended
December 31,
2023
December 31,
2022
Cash flows from operating activities:
Net income
$
66,246
$
44,060
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation
23,585
27,967
Amortization
47,667
48,984
Asset impairment
2,061
31,761
Gain on lease modifications
(4,349
)
-
Loss on short-term investments and other
-
18
Loss on derivative liability upon debt conversion
-
7,456
Unrealized foreign currency transactions (gain)/loss, net
225
(103
)
Deferred income taxes
(23,560
)
(27,627
)
Stock-based compensation
28,990
27,243
Subtotal
140,865
159,759
Changes in operating assets and liabilities:
Trade accounts receivable, net
(22,401
)
(51,005
)
Other current and non-current assets and liabilities
(6,566
)
(12,833
)
Income taxes payable/receivable
(1,849
)
9,336
Trade accounts payable and accrued liabilities
12,541
(36,971
)
Deferred revenue
9,306
(4,689
)
Net cash provided by operating activities
131,896
63,597
Cash flows from investing activities:
Purchases of software, property and equipment
(27,977
)
(36,991
)
Proceeds from sale/maturity of short-term investments
71
27,953
Net cash used in investing activities
(27,906
)
(9,038
)
Cash flows from financing activities:
Proceeds from issuance of common stock
3,284
2,969
Payment of cash dividends
(33,930
)
(33,475
)
Repurchase of common stock
(127,065
)
(96,720
)
Deferred acquisition payments
(3,220
)
(2,314
)
Proceeds from long-term debt
470,000
290,000
Payments on long-term debt
(327,500
)
(264,801
)
Purchase of capped call transactions related to convertible notes
(34,298
)
-
Payments of deferred financing costs
(14,539
)
-
Settlement and merchant reserve activity
35,963
52,656
Net cash used in financing activities
(31,305
)
(51,685
)
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash
2,173
(5,758
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
74,858
(2,884
)
Cash, cash equivalents, and restricted cash, beginning of period
389,018
391,902
Cash, cash equivalents, and restricted cash, end of period
$
463,876
$
389,018
Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest
$
24,730
$
18,314
Income taxes
51,675
34,671
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents
$
186,264
$
150,365
Settlement and merchant reserve assets
274,699
238,653
Restricted cash included in current and non-current assets
2,913
-
Total cash, cash equivalents, and restricted cash
$
463,876
$
389,018
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL, INC.
SUPPLEMENTAL REVENUE ANALYSIS
Revenue by Significant Customers: 10% or more of Revenue
Quarter Ended
Quarter Ended
Quarter Ended
December 31, 2023
September 30, 2023
December 31, 2022
Amount
% of
Revenue
Amount
% of
Revenue
Amount
% of
Revenue
Charter
$
60,128
20
%
$
59,432
21
%
$
58,006
20
%
Comcast
54,651
18
%
53,653
19
%
55,383
19
%
Year Ended
Year Ended
December 31, 2023
December 31, 2022
Amount
% of
Revenue
Amount
% of
Revenue
Charter
$
241,267
21
%
$
221,222
20
%
Comcast
215,476
18
%
214,359
20
%
Revenue by Vertical
Quarter Ended
Quarter Ended
Quarter Ended
December 31,
September 30,
December 31,
2023
2023
2022
Broadband/Cable/Satellite
51
%
53
%
53
%
Telecommunications
21
%
20
%
20
%
All other
28
%
27
%
27
%
Total revenue
100
%
100
%
100
%
Year Ended
Year Ended
December 31,
December 31,
2023
2022
Broadband/Cable/Satellite
52
%
54
%
Telecommunications
20
%
20
%
All other
28
%
26
%
Total revenue
100
%
100
%
Revenue by Geography
Quarter Ended
Quarter Ended
Quarter Ended
December 31,
September 30,
December 31,
2023
2023
2022
Americas
85
%
86
%
86
%
Europe, Middle East and Africa
10
%
9
%
9
%
Asia Pacific
5
%
5
%
5
%
Total revenue
100
%
100
%
100
%
Year Ended
Year Ended
December 31,
December 31,
2023
2022
Americas
86
%
85
%
Europe, Middle East and Africa
10
%
11
%
Asia Pacific
4
%
4
%
Total revenue
100
%
100
%
EXHIBIT 2
CSG SYSTEMS INTERNATIONAL, INC.
DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES
Use of Non-GAAP Financial Measures and Limitations
To supplement its condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), CSG uses non-GAAP operating income, non-GAAP adjusted operating margin percentage, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP free cash flow. CSG believes that these non-GAAP financial measures, when reviewed in conjunction with its GAAP financial measures, provide investors with greater transparency to the information used by CSG’s management in its financial and operational decision making. CSG uses these non-GAAP financial measures for the following purposes:
These non-GAAP financial measures are provided with the intent of providing investors with the following information:
Non-GAAP financial measures are not measures of performance under GAAP, and therefore should not be considered in isolation or as a substitute for GAAP financial information. Limitations with the use of non-GAAP financial measures include the following items:
CSG compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures as a supplement only. Additionally, CSG provides specific information regarding the treatment of GAAP amounts considered in preparing the non-GAAP financial measures and reconciles each non-GAAP financial measure to the most directly comparable GAAP measure.
Non-GAAP Financial Measures: Basis of Presentation
The table below outlines the exclusions from CSG’s non-GAAP financial measures:
Non-GAAP Exclusions
Operating Income
Adjusted Operating
Margin Percentage
EPS
Transaction fees
—
X
—
Restructuring and reorganization charges
X
X
X
Executive transition costs
X
X
X
Acquisition-related expenses:
Amortization of acquired intangible assets
X
X
X
Transaction-related costs
X
X
X
Stock-based compensation
X
X
X
Gain (loss) on debt extinguishment/conversion
—
—
X
Gain (loss) on acquisitions or dispositions
—
—
X
Unusual income tax matters
—
—
X
CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSG’s performance and these items are excluded for the following reasons:
CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow. Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSG’s operating performance, debt servicing capabilities, and enterprise valuation. CSG defines non-GAAP adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, acquisition-related expenses, and unusual items, such as restructuring and reorganization charges, executive transition costs, gains and losses related to the extinguishment of debt, and gains and losses on acquisitions or dispositions, as discussed above. Additionally, management uses non-GAAP free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSG’s cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, pay cash dividends, and fund ongoing operations. CSG defines non-GAAP free cash flow as net cash flows from operating activities less the purchases of software, property and equipment.
Non-GAAP Financial Measures
Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:
The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of CSG’s non- GAAP adjusted operating margin percentage, for the indicated periods are as follows (in thousands, except percentages):
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Non-GAAP Operating Income
GAAP operating income
$
24,747
$
35,072
$
123,877
$
78,747
Restructuring and reorganization charges (1)
7,915
4
16,336
46,308
Executive transition costs
606
-
1,754
1,302
Acquisition-related expenses:
Amortization of acquired intangible assets
2,982
3,338
12,185
14,355
Transaction-related costs
(27
)
(296
)
2,095
173
Stock-based compensation (1)
7,840
7,039
29,480
27,945
Non-GAAP operating income
$
44,063
$
45,157
$
185,727
$
168,830
Non-GAAP Adjusted Operating Margin Percentage
Revenue
$
297,324
$
289,876
$
1,169,258
$
1,089,752
Less: Transaction fees (2)
(23,967
)
(20,751
)
(87,430
)
(75,679
)
Revenue less transaction fees
$
273,357
$
269,125
$
1,081,828
$
1,014,073
Non-GAAP adjusted operating margin percentage
16.1
%
16.8
%
17.2
%
16.6
%
(1)
Restructuring and reorganization charges include stock-based compensation, which is not included in the stock-based compensation line in the tables above and following, and depreciation, which has not been recorded to the depreciation line item on CSG’s Income Statement.
(2)
Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG's Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.
Non-GAAP EPS:
The reconciliations of GAAP EPS to non-GAAP EPS for the indicated periods are as follows (in thousands, except per share amounts):
Quarter Ended
Quarter Ended
December 31, 2023
December 31, 2022
Amounts
EPS (4)
Amounts
EPS (4)
GAAP net income
$
12,670
$
0.44
$
20,149
$
0.66
GAAP income tax provision (3)
4,174
8,118
GAAP income before income taxes
16,844
28,267
Restructuring and reorganization charges (1)
7,915
4
Executive transition costs
606
-
Acquisition-related costs:
Amortization of acquired intangible assets
2,982
3,338
Transaction-related costs
(27
)
(296
)
Stock-based compensation (1)
7,840
7,039
Non-GAAP income before income taxes
36,160
38,352
Non-GAAP income tax provision (3)
(9,535
)
(12,435
)
Non-GAAP net income
$
26,625
$
0.92
$
25,917
$
0.84
Year Ended
Year Ended
December 31, 2023
December 31, 2022
Amounts
EPS (4)
Amounts
EPS (4)
GAAP net income
$
66,246
$
2.20
$
44,060
$
1.41
GAAP income tax provision (3)
26,105
16,721
GAAP income before income taxes
92,351
60,781
Restructuring and reorganization charges (1)
16,336
46,308
Executive transition costs
1,754
1,302
Acquisition-related expenses:
Amortization of acquired intangible assets
12,185
14,355
Transaction-related costs
2,095
173
Stock-based compensation (1)
29,480
27,945
Loss on extinguishment of debt
-
7,456
Non-GAAP income before income taxes
154,201
158,320
Non-GAAP income tax provision (3)
(43,176
)
(45,427
)
Non-GAAP net income
$
111,025
$
3.69
$
112,893
$
3.61
(3)
For the fourth quarter and year ended December 31, 2023 the GAAP effective income tax rates were approximately 25% and 28%, respectively, and the non-GAAP effective income tax rates were approximately 26% and 28%, respectively. For the fourth quarter and year ended December 31, 2022 the GAAP effective income tax rates were approximately 29% and 28%, respectively, and the non-GAAP effective income tax rates were approximately 32% and 29%, respectively.
(4)
The outstanding diluted shares for the fourth quarter and year ended December 31, 2023 were 28.8 million and 30.1 million, respectively, and for the fourth quarter and year ended December 31, 2022 were 30.7 million and 31.3 million, respectively.
Non-GAAP Adjusted EBITDA:
CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for the indicated periods (in thousands, except percentages):
Quarter Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
GAAP net income
$
12,670
$
20,149
$
66,246
$
44,060
GAAP income tax provision
4,174
8,118
26,105
16,721
Interest expense (5)
8,084
6,146
31,176
16,432
Loss on derivative liability upon debt conversion
-
-
-
7,456
Interest and investment income and other, net
(181
)
659
350
(5,922
)
GAAP operating income
24,747
35,072
123,877
78,747
Restructuring and reorganization charges (1)
7,915
4
16,336
46,308
Executive transition costs
606
-
1,754
1,302
Acquisition-related expenses:
Amortization of acquired intangible assets (6)
2,982
3,338
12,185
14,355
Transaction-related costs
(27
)
(296
)
2,095
173
Stock-based compensation (1)
7,840
7,039
29,480
27,945
Amortization of other intangible assets (6)
3,350
3,399
13,624
14,140
Amortization of customer contract costs (6)
5,901
5,588
20,291
19,738
Depreciation (1)
6,034
5,913
23,189
23,598
Non-GAAP adjusted EBITDA
$
59,348
$
60,057
$
242,831
$
226,306
Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)
21.7
%
22.3
%
22.4
%
22.3
%
(5)
Interest expense includes amortization of deferred financing costs as provided in Note 6 below.
(6)
Amortization on the statement of cash flows is made up of the following items for the indicated periods (in thousands):
Quarter Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Amortization of acquired intangible assets
$
2,982
$
3,338
$
12,185
$
14,355
Amortization of other intangible assets
3,350
3,399
13,624
14,140
Amortization of customer contract costs
5,901
5,588
20,291
19,738
Amortization of deferred financing costs
891
189
1,567
751
Total amortization
$
13,124
$
12,514
$
47,667
$
48,984
Non-GAAP Free Cash Flow:
CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities are provided below for the indicated periods (in thousands):
Quarter Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Cash flows from operating activities
$
79,531
$
54,024
$
131,896
$
63,597
Purchases of software, property and equipment
(5,037
)
(5,427
)
(27,977
)
(36,991
)
Non-GAAP free cash flow
$
74,494
$
48,597
$
103,919
$
26,606
Non-GAAP Financial Measures – 2024 Financial Guidance
Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:
The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of non-GAAP adjusted operating margin percentage, as included in CSG’s 2024 full year financial guidance, is as follows (in thousands, except percentages):
2024 Guidance Range
Low Range
High Range
Non-GAAP Operating Income
GAAP operating income
$
145,100
$
155,100
Executive transition costs
500
500
Acquisition-related expenses:
Amortization of acquired intangible assets
11,100
11,100
Stock-based compensation
31,000
31,000
Non-GAAP operating income
$
187,700
$
197,700
Non-GAAP Operating Margin Percentage
Revenue
$
1,200,000
$
1,240,000
Less: Transaction fees
(98,000
)
(103,000
)
Revenue less transaction fees
$
1,102,000
$
1,137,000
Non-GAAP adjusted operating margin percentage
17.0
%
17.4
%
Non-GAAP EPS:
The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG’s 2024 full year financial guidance is as follows (in thousands, except per share amounts):
2024 Guidance Range
Low Range
High Range
Amounts
EPS (8)
Amounts
EPS (8)
GAAP net income
$
84,000
$
2.86
$
91,200
$
3.13
GAAP income tax provision (7)
35,100
37,900
GAAP income before income taxes
119,100
129,100
Executive transition costs
500
500
Acquisition-related expenses:
Amortization of acquired intangible assets
11,100
11,100
Stock-based compensation
31,000
31,000
Non-GAAP income before income taxes
161,700
171,700
Non-GAAP income tax provision (7)
(47,700
)
(50,500
)
Non-GAAP net income
$
114,000
$
3.85
$
121,200
$
4.15
(7)
For 2024, the estimated effective income tax rate for GAAP and non-GAAP purposes is expected to be approximately 29%.
(8)
The weighted-average diluted shares outstanding are expected to be approximately 29 million.
Non-GAAP Adjusted EBITDA:
CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for CSG’s 2024 full year financial guidance (in thousands, except percentages):
2024 Guidance Range
Low Range
High Range
GAAP net income
$
84,000
$
91,200
GAAP income tax provision (7)
35,100
37,900
Interest expense
30,000
30,000
Interest and investment income
(4,000
)
(4,000
)
GAAP operating income
145,100
155,100
Executive transition costs
500
500
Acquisition-related expenses:
Amortization of acquired intangible assets
11,100
11,100
Stock-based compensation
31,000
31,000
Amortization of other intangible assets
5,200
5,200
Amortization of client contract costs
22,100
22,100
Depreciation
30,000
30,000
Non-GAAP adjusted EBITDA
$
245,000
$
255,000
Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)
22.2
%
22.4
%
Non-GAAP Free Cash Flow:
CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities is provided below for CSG’s 2023 full year financial guidance (in thousands):
2024 Guidance Range
Low Range
High Range
Cash flows from operating activities
$
120,000
$
170,000
Purchases of software, property and equipment
(25,000
)
(35,000
)
Non-GAAP free cash flow
$
95,000
$
135,000
View source version on businesswire.com: https://www.businesswire.com/news/home/20240207762697/en/
John Rea, Investor Relations (210) 687-4409 E-mail: john.rea@csgi.com
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