Press Release Details

CSPi Reports Third-Quarter Fiscal 2017 Financial Results

08/14/2017

LOWELL, Mass., Aug. 14, 2017 (GLOBE NEWSWIRE) -- CSP Inc. (NASDAQ:CSPI), a provider of advanced security products and security services, as well as IT technology managed services for diverse applications, today reported financial results for the third quarter of fiscal 2017 ended June 30, 2017.

The Company also announced that its board of directors has voted to pay its quarterly dividend of $0.11 per share to shareholders of record August 21, 2017 payable September 5, 2017.

Management Comments
“We had a solid third quarter as we executed on our growth strategy across our High Performance Products (HPP) and Technology Solutions (TS) divisions,” said Chief Executive Officer Victor Dellovo. “Our cross-selling efforts are gaining traction, our managed services pipeline is growing, and we are advancing the development of our HPP products to capitalize on the rapidly growing security space. From a financial perspective, third-quarter sales were up 13% year over year, primarily due to strong demand at our U.S. business in the TS division, while our bottom line was negatively affected by a greater mix of higher margin products in Q3 last year.

“In HPP, we launched an enhancement to our Myricom nVoy Series solution that enables the automatic detection of a data breach to critical databases or file stores. The newly announced Myricom nVoy AIR application automatically provides security teams with indisputable breach evidence at the earliest and most critical stages of incident response, meaning that investigative activities can typically be wrapped up within hours of total duration instead of the weeks that is normal today.  We are partnering with established security leaders to create integrated cost-effective solutions that automate breach detection.  Our first such solution is an integration between Myricom nVoy AIR application and Cisco FirePOWER firewall and network IPS products. We are confident in our efforts to reposition HPP as a security solution provider with actions taking place in engineering, marketing and sales. We received royalty revenues from two and a half E-2D planes in the third quarter, and our expectation is to receive royalties from two additional planes in the fourth quarter.

“In TS, there was a revenue increase mostly driven by strong product sales and several new contract wins in the U.S. We are continuing to hire engineers in the U.S. to support future growth.  The U.K. performed well during the quarter, while Germany reported a loss as a result of shipments of several large orders for which it will not record associated revenue until the fourth quarter. We expect a strong fourth quarter in both regions as customer sales continue to ramp up.

“Looking forward, we are expecting solid performance in the fourth quarter given our backlog in both divisions.  Longer term, we are making great progress against our strategic initiatives and are positioning CSP to capitalize on many growth opportunities,” concluded Dellovo.

Financial Results
For the third quarter of fiscal 2017, revenue was $30.5 million compared with $26.9 million in the third quarter a year ago.

Gross margin for the third quarter of fiscal 2017 decreased to 22.3% from 26.8% for the prior-year period due to product mix.

Net income for the third quarter of fiscal 2017 was $695,000, or $0.17 per diluted share, compared with net income of $1.3 million, or $0.32 per diluted share, in the third quarter of fiscal 2016.

Cash and short-term investments increased to $16.0 million at the end of the third quarter of fiscal 2017 from $13.1 million at year end as a result of changes in working capital. 

Conference Call Details
CSPi Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W. Levine will host a conference call at 10:00 a.m. (ET) today to review CSPi’s financial results and provide a business update.  To listen to a live webcast of the call, please visit the “Investor Relations” section of the company’s website at www.cspi.com.  Individuals may also listen to the call via telephone, by dialing 888-632-3382 or 785-424-1677.  For interested parties unable to participate in the live call, an archived version of the webcast will be available for approximately one year on CSPi’s website. 

About CSP Inc.
CSPi (NASDAQ:CSPI) maintains two distinct and dynamic divisions – High Performance Products and Technology Solutions – with a shared vision for technology excellence. CSPi’s High Performance Products division offers extreme-performance Ethernet products for diverse applications, including cybersecurity, financial trading, content creation/distribution, storage networking applications, as well computer signal processing systems. CSPi’s Technology Solutions division provides innovative technology solutions for network solutions, wireless & mobility, unified communications & collaboration, data center solutions, advanced security, along with professional and managed services across those technology focus areas. CSPi Technology Solutions works with the world’s leading IT software and infrastructure companies to create solutions for the unique IT requirements of its customers. For more information, please visit www.cspi.com.

Safe Harbor 
The Company wishes to take advantage of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. Such forward-looking statements may include, but are not limited to, those related to  receiving royalties from two additional planes in the fourth quarter and we are expecting solid performance in the fourth quarter given our backlog in both divisions. The Company cautions that numerous factors could cause actual results to differ materially from forward-looking statements made by the Company. Such risks include general economic conditions, market factors, competitive factors and pricing pressures, and others described in the Company's filings with the SEC. Please refer to the section on forward-looking statements included in the Company's filings with the Securities and Exchange Commission.

        
CSP INC. AND SUBSIDIARIES
    
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    
(Amounts in thousands)
    
        
        
 June 30, September 30,    
 2017  2016    
        
Assets       
        
Current assets:       
Cash and short-term investments$16,001  $13,103     
Accounts receivable, net 21,139   19,564     
Inventories 9,136   5,580     
Deferred costs 2,215   635     
Other current assets 2,654   2,917     
        
Total current assets 51,145   41,799     
Property, equipment and improvements, net 1,547   1,680     
Other assets 5,415   5,228     
        
Total assets$58,107  $48,707     
        
        
Liabilities and Shareholders' Equity       
        
        
Current liabilities$26,527  $17,383     
        
Pension and retirement plans 13,605   13,441     
Non-current liabilities 28   228     
        
Shareholders' equity 17,947   17,655     
        
Total liabilities and shareholders' equity$58,107  $48,707     
        
        
        
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data )
        
        
 Three Months Ended Nine Months Ended
 June 30, June 30, June 30, June 30,
 2017  2016  2017  2016
Sales:       
Product$23,512  $20,345  $56,834 $58,320 
Services 7,020   6,567   18,930  19,407 
        
Total sales 30,532   26,912   75,764  77,727 
        
Cost of sales:       
Product 19,934   16,460   48,037  47,750 
Services 3,797   3,247   10,779  11,249 
        
Total cost of sales 23,731   19,707   58,816  58,999 
        
Gross Profit 6,801   7,205   16,948  18,728 
        
Operating expenses:       
Engineering and development 578   779   1,747  2,368 
Selling, general & administrative 5,163   4,573   13,621  13,286 
Total operating expenses 5,741   5,352   15,368  15,654 
        
        
Operating income  1,060   1,853   1,580  3,074 
        
        
Other income (expense), net (27)  (76)  34  (165)
        
Income before income taxes 1,033   1,777   1,614  2,909 
        
Income tax expense 338   520   533  866 
        
Net income $695  $1,257  $1,081 $2,043 
        
Net income attributable to common stockholders$664  $1,198  $1,035 $1,959 
        
Income per share - basic$0.18  $0.33  $0.28 $0.54 
        
Weighted average shares outstanding - basic 3,744   3,618   3,713  3,599 
        
Income per share - diluted$0.17  $0.32  $0.27 $0.52 
        
Weighted average shares outstanding - diluted 3,819   3,743   3,811  3,733 
        


Contact:

Gary Levine
Chief Financial Officer
CSP Inc.
Tel: 978.954.5040
Fax: 978.455.3251

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Source: CSP Inc.

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