|[September 14, 2018]
CSG Announces Comprehensive Capital Allocation Framework
CSG (NASDAQ: CSGS), the trusted partner to simplify the complexity of business
transformation in the digital age, announced today that its Board of
Directors has reviewed the Company's capital allocation strategy and
authorized a framework it believes will maximize shareholder value.
"The board has gone through a careful evaluation of our capital
allocation strategy and determined that we have the balance sheet and
cash to make acquisitions that strengthen our leadership position in the
revenue management and payments industry and increase the repurchase of
our own stock," said Don Reed, chairman of the CSG International Board
of Directors. "We are taking a holistic approach to our uses of cash
with a focus on driving long-term shareholder value."
Consistent with this framework, CSG announced today it has signed a
definitive agreement to acquire Forte Payment Systems, Inc., a leading
provider of advanced payment solutions, and that the Board has
authorized a stock repurchase program under which CSG may purchase up to
$150 million worth of shares of CSG common stock over the next three
years. CSG expects that the acquisition of Forte and the repurchase of
CSG stock will be financed through existing cash balances and future
free cash flow.
The Forte Payments Systems Acquisition
The acquisition of Forte will extend CSG's current payment and
monetization capabilities, offering an advanced, cloud-based integrated
suite of products and solutions across many industries. Forte's broad
offering and strategic partnerships with thousands of merchants,
resellers and independent software vendors has fueled its aggressive
growth and success in the integrated payments space. This acquisition
accelerates CSG's ability to offer a comprehensive suite of next
generation payment solutions that enable service providers to provide a
differentiated customer experience.
"The Forte acquisition will strengthen our leadership position in the
revenue management and payments sector and allows us to grow our
footprint into new verticals at a time when digital disruption is
impacting how every company in every industry serves its customers,"
said Brian Shepherd, executive vice president and group president of
CSG. "Today, payments are becoming more complex and payment choices more
important to consumers. Consumers demand increased convenience and the
ability to easily switch between online and physical stores and between
smart devices and traditional forms of payment to compare, review and
purchase goods on their terms, through their preferred channel.
Together, CSG with the Forte capabilities will be uniquely positioned to
satisfy this ever-increasing demand by consumers and enable companies to
increase customer loyalty and share of wallet."
"Forte's success lies in our ability to provide a simple, seamless and
fully integrated payments experience for consumers," said Jeff Thorness,
CEO of Forte Payment Systems, Inc. "CSG's cloud-first philosophy in
enabling a digital transformation with some of the world's leading
brands aligns with our heritage and our experience. The Forte team
brings extensive domain expertise in developing innovative payments
solutions for a broad range of clients in multiple industries. With the
power and reach of CSG, we will enable a single monetization experience
across all channels for consumers, while accelerating our growth across
the global enterprise market."
The agreement provides that CSG will acquire Forte, debt-free, for
approximately $85 million in cash at closing, net of cash acquired. At
closing, approximately $13 million may beheld back subject to certain
tax filings. In addition, if Forte's performance meets or exceeds
specified targets, certain earn-out payments may also become payable.
Excluding these earn-out payments, the purchase price is approximately
equal to Forte's projected 2018 revenue. The acquisition is expected to
close by the end of Q4 2018, subject to the satisfaction of customary
CSG expects the acquisition will be accretive to non-GAAP earnings, but
dilutive to our consolidated non-GAAP operating margin percentage. CSG
expects to incur certain acquisition-related charges and ongoing
amortization of intangible assets related to this acquisition in 2018.
CSG will provide more details regarding the anticipated impact of the
acquisition to its financials on its third quarter earnings call.
Share Repurchase Authorization
The Board has authorized the repurchase of up to $150 million of CSG
common stock over the next three years. Under the authorization,
purchases of CSG stock may be made from time to time at the company's
discretion or under a Rule 10b5-1 plan. The company undertakes no
obligation to complete the repurchase plan, and the plan may be
suspended or discontinued at any time.
Bret Griess, chief executive officer and president of CSG, concluded,
"The strength of our business model and cash flow generation puts us in
a strong position to create value for our shareholders, our customers
and our employees. This framework enables us to invest in our people,
products and solutions aimed at driving above-industry growth and return
cash to our shareholders through both share buybacks and dividends.
Today's announcements - the Forte acquisition and our $150 million share
repurchase plan - are examples of this strategy in action."
CSG simplifies the complexity of business transformation in the digital
age for the most respected communications, media and entertainment
service providers worldwide. With over 35 years of experience, CSG
experience and digital
monetization solutions for every stage of the customer lifecycle.
The company is the trusted partner driving digital transformation for
leading global brands, including Arrow Electronics (News - Alert), AT&T, Bharti Airtel,
Charter Communications, Comcast, DISH, Eastlink, iflix, MTN, TalkTalk,
Telefonica, Telstra and Verizon.
At CSG, we have one vision: flexible, seamless, limitless
communications, information and content services for everyone. For more
information, visit our website at csgi.com
and follow us on LinkedIn,
About Forte Payment Systems, Inc.
Founded in 1998 and headquartered in Allen, Texas, Forte Payment
Systems, Inc. is a leading provider of innovative payment solutions.
Offering unique and scalable enterprise-class solutions, Forte helps
organizations of all sizes build, manage and perfect the way they take
payments. A single source solution provider, Forte offers full stack
APIs and dynamic processing services for developers and merchants who
seek comprehensive and robust web, mobile and retail options. Forte's
robust solution offering includes Payment Gateway (News - Alert), eWallet and
Tokenization, Check Verification, Check Recovery, EBPP, IVR, Payment /
Hosted Order Page (iFrame and JS), and a Virtual Terminal solutions.
Find out more information at www.forte.net.
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. The forward-looking statements relate to our
commitment to return capital to our stockholders. These risks and
uncertainties include, but are not limited to, the timing and number of
shares to be repurchased and the funding sources to be used to
effectuate the repurchases. Factors which may impact our ability to
implement the repurchase program include, but are not limited to, our
ability to generate sufficient cash to enable stock repurchases, the use
of our cash for other corporate initiatives, and fluctuations in stock
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.
The forward-looking statements in this press release are based on
management's current views, beliefs and assumptions regarding future
events and speak only as of the dates when made. We undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by the federal securities laws.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180914005083/en/
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