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 | ||||||||||