Press Release Details

CSPi Reports Second-Quarter Fiscal 2018 Financial Results

05/09/2018

LOWELL, Mass., May 09, 2018 (GLOBE NEWSWIRE) -- CSPi (NASDAQ:CSPI), a provider of IT managed services, security solutions and packet capture products, today reported financial results for the second quarter ended March 31, 2018.                                                                                                                                                                     

The Company also announced that its board of directors has voted to pay a quarterly dividend of $0.11 per share to shareholders of record on May 31, 2018, payable on June 15, 2018.
                                                       
Management Comments

“During the second quarter, we made good progress toward our strategy of transforming CSPi into a provider of innovative technology solutions and cybersecurity products. Our pipeline of managed services has grown, as we continue to focus on the development of new security products which expand market opportunities” said Chief Executive Officer, Victor Dellovo. “Revenues were down 13% due primarily to softness in our European Technology Solutions businesses, as well as the timing of E-2D multicomputer orders coupled with the delay of new product launches in our High Performance Products (HPP) division. On the bottom line, we reported a loss per share of $0.16 versus net income per share $0.11 a year ago, due to lower year-over-year volume and planned investments in new product development.”

“In the High Performance Products, we are actively investing in the development of our recently announced ARIA Software Defined Security platform, which provides advanced cybersecurity protection capabilities. During the quarter we partnered closely with our customers to add services and functionality to our platform. With these new capabilities, we have the opportunity to grow ARIA revenues within the Managed Security Service Provider (MSSP) market. We expect to launch a beta version of the product in the current third fiscal quarter and begin to realize revenues from this new market by the end of the year.”

“Multicomputer sales this quarter were primarily for boards for projects within the E-2D military programs. We continue to expect greater E-2D program revenues in the second half of this fiscal year.”

“In Technology Solutions, we are gaining traction with our IT managed services business as our opportunity pipeline continues to grow. We also are seeing excellent demand for our wireless security offerings, particularly in the U.S. where we have made significant headway in the cruise ship market.” 

“We remain confident in our strategy to transform CSPi from a company focused on multicomputers solely for the defense market to a growing managed services business that can capitalize on the strong demand for cybersecurity products and the proliferation of wireless communication solutions. We are at a significant juncture as we prepare to launch exciting new products late in the fiscal year.”

Financial Results
For the second quarter of fiscal 2018, revenue decreased to $22.0 million from $25.3 million in the second quarter a year.

Gross profit for the second quarter of fiscal 2018 was $4.9 million, or 22.4% of sales, compared with $5.7 million, or 22.5% of sales, a year ago.

Net loss for the second quarter of fiscal 2018 was $594,000, or $0.16 per share, compared with net income of $428,000, or $0.11 per diluted share, for the second quarter of fiscal 2017.

Cash and short-term investments decreased to $12 million at the end of the second quarter of fiscal 2018 from $13.9 million at 2017 fiscal year end primarily as a result of payment of the quarterly dividends, reduction of the accounts payable and accrued expenses, partially offset by decrease in accounts receivable. 

Conference Call Details
CSPi Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W. Levine will host a conference call at 9:00 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 877-876-9177 or 785-424-1669.  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, including the Cybersecurity Center of Excellence, and Technology Solutions – with a shared vision for technology excellence. CSPi’s cybersecurity solutions protect an organization’s critical assets to minimize, or remove, the impact of the inevitable data breach. Our ARIA Software Defined Security platform solves the complexities associated with securing devops environments, while our Myricom nVoy Series appliances provide automated breach identification and notification, enabled by the 10G dropless packet capture inherent in our Myricom® ARC intelligent adapters. CSPi’s Technology Solutions division helps clients achieve their business goals and accelerate time to market through innovative IT solutions and security services by partnering with best in class technology providers. For organizations that want the benefits of an IT department without the cost, we offer a robust catalog of Managed IT Services providing 24×365 proactive support. Our team of engineers have expertise across major industries supporting five key technology areas: Advanced Security; Communication and Collaboration; Data Center; Networking and Wireless & Mobility. For more information, please visit www.cspi.com. Myricom and ARIA are trademarks of CSPi Inc. All other brand names, product names or trademarks belong to their respective owners.

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,  expect greater E-2D program revenues in the second half of this fiscal year and expect to launch a beta version of the ARIA product in the current third fiscal quarter and begin to realize revenues from this new market by the end of the year. 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.

Contact:  Gary Levine 
  Chief Financial Officer 
  CSPi
  Tel: 978.954.5040 
  Fax: 978.455.3251


CSP INC. AND SUBSIDIARIES 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 
(Amounts in thousands) 
       
  March 31,   September 30,
   2018      2017
       
Assets      
       
Current assets:      
  Cash and short-term investments $  11,967     $  13,885
  Accounts receivable, net   24,518       28,402
  Inventories   4,749       5,971
  Deferred costs   3,065       929
  Other current assets   2,796       1,139
     Total current assets   47,095       50,326
Property, equipment and improvements, net   1,560       1,508
Other assets   6,683       7,094
Total assets $  55,338     $  58,928
       
Liabilities and Shareholders' Equity      
       
Current liabilities $  23,764     $  26,023
Pension and retirement plans   12,212       11,818
Non-current liabilities   723       86
Shareholders' equity   18,639       21,001
Total liabilities and shareholders' equity $  55,338     $  58,928


CSP INC. AND SUBSIDIARIES           
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)          
 
           
    /-----Three Months Ended-----/      /-----Six Months Ended-----/ 
  March 31,     March 31,   March 31,     March 31,
  2018     2017   2018     2017
Sales:                  
   Product  $  15,184      $  18,684    $  30,827      $  33,322
   Services 6,798     6,632   13,154     11,910
      Total sales 21,982     25,316   43,981     45,232
                   
Cost of sales:                  
   Product 12,559     15,878   25,589     28,103
   Services 4,493     3,743   8,329     6,982
      Total cost of sales 17,052     19,621   33,918     35,085
   Gross Profit 4,930     5,695   10,063     10,147
                   
Operating expenses:                  
   Engineering and development  759     573   1,457     1,169
   Selling, general & administrative 4,894     4,500   9,322     8,458
      Total operating expenses 5,653     5,073   10,779     9,627
   
                 
Operating income (loss) (723 )   622   (716 )   520
                   
Other income (expense), net 1     17   (104 )   61
Income before income taxes (722 )   639   (820 )   581
   Income tax expense (benefit) (128 )   211   974     196
Net income(loss)   $  (594 )    $  428    $  (1,794 )    $  385
Net income (loss) attributable to common stockholders  $  (594 )    $  410    $  (1,794 )    $  357
                   
Income (loss) per share - basic  $  (0.16 )    $  0.11    $  (0.47 )    $  0.10
Weighted average shares outstanding - basic 3,823     3,724   3,795     3,697
                   
Income (loss) per share - diluted  $  (0.16 )    $  0.11    $  (0.47 )    $  0.09
Weighted average shares outstanding - diluted 3,823     3,847   3,795     3,807

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Source: CSP Inc.

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