Good day, and welcome to the CSG Systems First Quarter 2015 Earnings Announcement Conference Call. Today’s conference is being recorded. All participants are in a listen-only mode. A question-and-answer session will follow today’s presentation and instructions will be provided at that time. At this time, I would like to turn the conference over to your host Liz Bauer. Please go ahead.

Thank you, Danny. And thanks to everyone for joining us. Today’s discussion will contain a number of forward-looking statements. These will include but are not limited to statements regarding our projected financial results, our ability to meet our clients’ needs through our products, services and performance; and our ability to successfully convert the backlog of customer accounts on to our solution in a timely manner. While these statements reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to differ materially. Please note that these forward-looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release any revisions to these forward-looking statements in light of new or future events. In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in today’s press release as well as our most recently filed 10-K and 10-Q, which are all available on the Investor Relations section of our website. Also we will discuss certain financial information that is not prepared in accordance with GAAP. We believe that these non-GAAP financial measures when reviewed in conjunction with our GAAP financial measures provide investors with greater transparency to the information used by our management team in our financial and operational decision-making. For more information regarding our use of non-GAAP financial measures, we refer you to today’s earnings release and non-GAAP reconciliation tables on our website, which will also be furnished to the SEC on Form 8-K. With me today on the phone are Peter Kalan, our Chief Executive Officer; and Randy Wiese, our Chief Financial Officer. With that, I’d like to now turn the call over to Peter.

Thank you, Liz. And thank you to everyone for joining us today. For the first quarter we reported total revenues of $186 million and non-GAAP earnings per share of $0.51. During the quarter we continue to solidify our leadership position in the Northern American video market with three key renewals. First, we signed a seven year contract extension with Eastlink, a cable and broadband provider based in Canada. Second, we signed a five year extension with the Canadian satellite provider. And third, we signed a five year extension with Charter Communications, the fourth largest cable operator in the United States. Charter is a long time client of CSG who chose to consolidate on our platform a little over five years ago to help drive standardization and improved efficiencies. Charter understood that the standardization enabled them to also provide an enhanced customer experience. We are pleased to have the opportunity to continue to help Charter grow revenues, expand margins and drive an enhanced customer experience for many years to come. For those of who you follow the industry, Charter is one of several players looking to increase their size and scale through consolidation. And this phenomenon is not just happening here in the United States but all across the world. And we don't see it ending anytime soon. I want to provide you my perspective on how consolidation is impacting companies like us both in the short term and longer term. On the positive side, consolidation is opening up doors for us to go in and discuss with operators what we do best. Drive standardization and automation which not only increases efficiencies and effectiveness but improves bottom line. This plays to our strength in managed services and enables us to change the conversation from being a vendor to being a trusted…

Thank you, Peter. And welcome to all of you on the call today to discuss our financial results for the first quarter and our outlook for the remainder of 2015. We continue to make good progress on many of our key initiatives to strengthen our business and position us for future growth opportunities while delivering capital back to our shareholders. Now I'd like to walk you through our finance results in more detail. Total revenues for the first quarter were $186 million, down slightly from the same period last year, sequentially revenues in the quarter decreased 4% from the fourth quarter mainly due to the seasonally higher software and services revenues we typically see in the fourth quarter. Our first quarter revenues reflect the continued strength we are seeing in our processing revenues to include our international managed services offering and the successes we are seeing with our content monetization platform that was previously mentioned by Peter. The strength in this area of our business was more than offset by lower revenues within our international software and services business driven in part by foreign currency headwinds and long sale cycles on larger projects. Moving on, our non-GAAP operating income for the first quarter was $31 million with a margin of 16.6%. GAAP operating income for the quarter was $22 million or a margin 12%. Let me expand a bit on our operating results for the quarter. As result continued good expense management, we are able to overcome the impact of a significant cost overrun we experienced on larger software and services implementation project which allowed us to deliver our operating margin in line with our expectations for the quarter. Moving on, for the first quarter our non-GAAP adjusted EBITDA was $38 million, or 21% of total revenues. Our non-GAAP effective…

[Operator Instructions] And we will take our first question now from Howard Smith with First Analysis.

Yes, good afternoon. I'd like to follow up for a moment on the discussion of the cost over run as well as managing the expenses in a quarter. It looked to me like SG&A came down substantially sequentially on that cost control and your cost to service is pretty high-- software and services. Are those expected to reverse going forward? In other words are we -- is that expense control on that SG&A kind of the new run rate?

Howard, this is Peter. I'll let Randy give some of the specifics of how we think about the SG&A side. We did have to take a one time financial charge for higher cost in the quarter associated with some higher cost on a very complex project which I can only tell you is very disappointing to me. We would expect that those -- that higher operating cost would not continue into the following quarters because we believe we fully recognize what the full cost to that project, would be at least the cost over run. So we think that--

That's all in this quarter, yes.

Yes. We think to get in the first quarter that the benefits on the SG&A, I'll let Randy comment on that.

Yes. On the lost contract itself, was about a $5 million impact, negative impact to the quarter. And Howard you can see that go through to the cost to good sold line through software and services, so you can see that the overall cost and the margin are kind of bottom line what we would call more typical for that portion of our business. It showed about 7% margin for that and without this $5 million loss it would have been more in the normal range of 25 to 30. So you can see it comes through financials right there. As it relates to some of the cost savings, some of those were planned, we had started last year, making some adjustments to some of our SG&A cost and you see the benefit of some of that coming through this quarter. It said about 18% right now for the quarter, the SG&A is historically over the last four or five quarter it has been more in the -- probably 20% to 21%, whether or not it stayed at 18%, I think it might go up a little bit just because there were some discretionary spending items that we also held back on to the first quarter as well to kind offset some of these higher cost. So I think it is the SG&A is coming down as anticipated that is probably not the new run rate that you see there but it is going to be improved I think over time as we had anticipated. And I think we did a good job of managing although disappointed by the lost contract we did a good job of responding to that and still delivering solid margins for the first quarter.

And Howard probably one other question that maybe on your mind or other investors is to take a charge on a contract shows a challenge to a project and as many people may recall we had one in the first quarter of 2014. We've done a lot to make sure that we address this both on this specific project as well as within the business. We brought a new senior leadership for our services and delivery organization. We focused on the project leadership team and we worked with partners to readdress some of the more challenging aspects of the project. And I think we've done the right thing to fix this specific challenge projects in front of us. But more importantly to ensure that we don't experience this type of issues going forward. So don't know if that was going to be follow up but I --

That was it right there so I don't need to ask, so I just leave it. I get back in queue. Thanks much.

From RBC Capital Markets we have Mark Su. Please go ahead.

Thank you. This is actually Amit Prabhu calling on behalf of Mark Su. I just wanted to follow up on the terminated and headwinds for the related Comcast repricing. Just wanted to check whether any of that is getting pushed into 2016 or was that related to the Time Warner side and therefore goes way?

Well, there is -- let me clarify on the $12 million of headwind. When we talked about this over the last couple of quarters, the full year impact was always estimated to about $15 million to $20 million and the timing of the closure of the deal this year equated to $12 million of headwind for 2015. So that headwind now will go away. Right, it will go away and as I went through my comments there were some corresponding items that offset that but the headwind itself is no longer in our guidance. And it will not be in 2016 at this point in time.

Yes. Because it was specifically, Amit, tied to the Time Warner acquisition. Since that acquisition is not going to take place, we won't see a repricing associated with Time Warner and therefore our base run rate would assume the level that we are experiencing today on our revenues from those clients.

Right. And just on the 2 million to 4 million that was expected in the back half of 2015. Should we expect that more in terms of first half of 2016 or is it more broad based in terms of 2016 expectation?

We still, I mean we still have very high confidence at all these subscribers who are going to convert in 2016 and probably 2017 is the time period that we would be looking. We don't have specific timing of when to provide you that as we get further into the planning with Comcast we will be able to give more insight as we get later in the year. But and as we give next year's guidance. Most importantly, we've great confidence of our plans and Comcast plans because last week we were -- had a chance to meet with the executives of Comcast, catch their expectations coming on the heels of the Time Warner merger being called off and understand that they are still heavily, heavily focused on standardization, understanding that we are the platform that's going to drive that standardization and through that, that they are going to be able to drive new revenues on top of that. So we are in a very confident position as we finish up this year and start looking into next year.

Just a point of clarification and make sure, our previous expectations were 2 million to 4 million of those conversions in the back half of the year that is now changed to 1 to 2 million conversions. So we do anticipate conversions this year and also remind we did 2 million in conversions last year as well.

Right. And just a quick on the FX headwind. Could you discuss whether you have any hedging contacts in place or maybe plan to have some hedges just in terms of where the FOREX is right now?

Right. We look at this very closely. We have no synthetic hedges put in place at this time. We've been relying a lot on natural hedges which have been relatively effective for us but we watched it very close and whether or not we decide to get into a synthetic hedge, we will just keep evaluating it.

Next we have Tom Roderick with Stifel.

Yes, hi, Matt VanVliet on for Tom guys. First question on the Charter extension. Could you talk about if there is any repricing immediately involved in that or if there is any kind of contingent repricing and if so what are the timing and maybe the keys to kick that in?

So one is we do have some -- we provided some pricing plans in the event that Charter was to grow through acquisitions and so we do have pricing and incentives to bring business along in the future if they were to grow through acquisitions. From the base contract, I'll let Randy speak to some of those specifics on that.

Yes. I think probably the biggest point to make here is that we have set our guidance initially at the beginning of the year with expectations of the pricing under the contract; it hasn't changed so it is embedded within our guidance and it is not any aspect of our changing guidance.

And the results came in line with what we --

Correct, yes.

And so I guess the $12 million headwind previously was also going to include any subs that were shifted into whatever -- whether it was spin co or two Charter and that was included in that number?

Correct. That encompassed all the swaps in the trades and the sales between Time Warner and Charter that were impacting subscribers on our systems. So yes it was inclusive of that.

All right. And then just second question on the content direct side, and you talk about some of the success you had with the ESPN and some new monetization. What impact in a first quarter did you see from that on the year-over-year basis and how much of the growth in 2015 is from sort of these newer services?

Well, we don't get into the specifics of any results for any one client and the overall numbers for what we are doing for what I call over the top and digital services is still it pales in comparison to what we are doing in our traditional piece. So the year-over-year differences are not going to be overall material to our results, Matt. But I'd tell you that what we are seeing is the clients that we've been working with this kind of leading brands start to see business models where they are generating revenues from the new services which means we are going to start seeing revenues come from that. We think as we get into out years that we are well positioned for that. Randy, anything from the financial perspective --

I think you covered it well. I mean you see a little bit of coming through on the top line. I think our processing revenues will be up $1.5 million to $2 million year-over-year. I'd say piece of that is coming both from the new initiatives around managed services as well as content monetization. So start to see a coming a little bit. But again as Peter said it is not a significant portion of our revenue stream yet.

And then just lastly as you see a little bit of delay here in the Comcast implementation and we have gotten in pretty detailed into that but can you remind us on kind of how quickly to I guess profitability, do those customers become maybe ask in different way, are you just pushing a little bit of profitability out into 2016 that you maybe expected to see before hand?

No. We talked about this in the past on the structure, the contract we had. We set this up so the very first subset profitability this, these were not lost leader subs as they come on, they come in a profitable level immediately upon conversion. So there is no shifting of significant profits between years because of delay.

[Operator Instructions]

Well it sounds like we have come to the end of our questions and exhausted those that some of the listeners have -- if nothing is coming through in the last second here I will just provide closing comments. Nothings at the queue?

No, sir, there are no questions in the queue.

All right. Well, I just wanted to thank everybody on the call for continued interest. This is a business that we are very proud of and believe strongly not only in the markets we serve but in the types of services in a way we provide them to our clients. And we want to thank everybody and we look forward to continue positive success with this company and reporting in the next quarter. Thank you.