LOWELL, Mass., Dec. 28, 2020 (GLOBE NEWSWIRE) -- CSP Inc. (NASDAQ: CSPI), an award-winning provider of security and packet capture products, managed IT and professional services and technology solutions, reported financial and operating results for the 2020 fiscal fourth quarter and fiscal year ended September 30, 2020 and provided a business update.
Fourth Quarter Key Achievements
- Gross margin improved by 8 percentage points compared to the year-ago fiscal fourth quarter, as higher margin offerings gain market acceptance
- Managed Services Practice remains strong as new and existing customers continue to generate meaningful momentum
- Ended fiscal year 2020 with a robust cash balance to fund growth objectives
“Our fiscal fourth quarter financial performance, as well as the full fiscal year, was impacted by the challenging business environment created by the COVID-19 pandemic. While the challenges remain, we have made numerous adjustments to our operations and have made progress that positions CSPi for greater accomplishments in 2021 and beyond,” commented Victor Dellovo, Chief Executive Officer. “The expansion of our gross margin by 8 percentage points is encouraging and demonstrates our commitment to building our profitability. Further, we prudently managed our cash throughout the year and, despite the unprecedented landscape, we have sufficient resources to navigate the near-term uncertainty to grow and prosper. For example, we are generating strong momentum in our Managed Services Practice, including our UCaaS offering. We are pursuing a number of larger transactions with this offering that could contribute nicely to fiscal year 2021 and drive higher margin improvement. Our fiscal 2021 looks promising and I believe growth drivers in the coming year, including ARIA and a full resumption of our cruise line business, will allow us to significantly exceed the revenue, gross margin and bottom line results we reported in fiscal year 2020”.
Fiscal Year 2020 Fourth Quarter Results
Revenue for the fiscal fourth quarter was $14.3 million, compared to $22.2 million in the year-ago fiscal fourth quarter. Gross profit for the fiscal fourth quarter was $4.4 million, or 31% of sales, compared to $5.1 million, or 23% of sales, in the year-ago fiscal fourth quarter, reflecting improved product gross margin percentage plus a mix of higher margin services and product business. The Company reported a net profit of $36,000 for the fourth fiscal quarter, or $0.01 per share, compared with a net loss of $(334,000), or $(0.08) per share, for the fourth quarter of fiscal year 2019. Loss before income tax was $(689,000) for the fiscal fourth quarter, compared to net income before income tax of $61,000 for the same quarter of the prior fiscal year. The Company’s income tax benefit for the fiscal fourth quarter was $725,000. The tax benefit was due to a partial valuation allowance against US deferred tax assets that are more likely to be partially realized, offset by current year federal research & development credits and the benefit resulting from the carryback of federal net operating losses.
At September 30, 2020, the Company had cash and cash equivalents of $19.3 million.
Fiscal 2020 Full Year Results
Revenue for the full fiscal year ended September 30, 2020 was $61.8 million compared to revenue of $79.1 million in the prior full year period. Gross profit for the twelve months ended September 30, 2020 was $17.2 million, or 27.8% of sales, compared with $18.0 million, or 22.8% of sales, in the twelve months ended September 30, 2019. Net loss for the full year ended September 30, 2020 was $(1.4) million, or $(0.36) per share, compared with net loss of $(371,000), or $(0.09) per share for the fiscal 2019.
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 877-876-9173 or 785-424-1667 and using the conference ID: CSPQ420 when greeted by the live operator. 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 CSPi
CSPi (NASDAQ: CSPI) operates two divisions, each with unique expertise in designing and implementing technology solutions to help their customers use technology to succeed. The High Performance Product division, including ARIA Cybersecurity Solutions, originated from supporting initiatives for the Department of Defense and Western intelligence agencies related to network monitoring, data protection, and intelligence initiatives. This focused mindset now results in foolproof data protection, enterprise wide. Our ARIA Software Defined Security solutions set provides enhanced network security, as well as accelerating incident response capabilities, while our Myricom nVoy Series appliances provide automated breach identification and notification, enabled by the 10G drop less packet capture inherent in our Myricom intelligent adapters. CSPi’s Technology Solutions division helps clients achieve their business goals and accelerate time to market through innovative IT solutions and professional 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.
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, made numerous adjustments to our operations and have made some progress that positions CSPi for greater accomplishments in 2021 and beyond, pursuing a number of larger transactions with this offering that could contribute nicely to fiscal year 2021 and drive the higher margin improvement and fiscal 2021 looks promising.
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 Securities and Exchange Commission (“SEC”). Please refer to the section on forward-looking statements included in the Company's filings with the SEC.
| CSP INC. AND SUBSIDIARIES | ||||||
| AUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Amounts in thousands) | ||||||
| September 30, 2020 | September 30, 2019 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and short-term investments | $ | 19,264 | $ | 18,099 | ||
| Accounts receivable, net | 13,362 | 15,114 | ||||
| Inventories | 5,285 | 7,818 | ||||
| Other current assets | 3,678 | 5,503 | ||||
| Total current assets | 41,589 | 46,534 | ||||
| Property, equipment and improvements, net | 1,047 | 1,273 | ||||
| Operating lease right-of-use assets | 2,014 | — | ||||
| Long-term receivable | 3,642 | 5,328 | ||||
| Other assets | 5,353 | 6,234 | ||||
| Total assets | $ | 53,645 | $ | 59,369 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities | $ | 12,977 | $ | 20,027 | ||
| Pension and retirement plans | 6,471 | 6,904 | ||||
| Operating lease liabilities | 1,390 | — | ||||
| Notes Payable | 2,485 | 684 | ||||
| Other non-current liabilities | 788 | 1,326 | ||||
| Shareholders’ equity | 29,534 | 30,428 | ||||
| Total liabilities and shareholders’ equity | $ | 53,645 | $ | 59,369 | ||
| CSP INC. AND SUBSIDIARIES | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Amounts in thousands, except per share data ) | ||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Sales: | ||||||||||||||||
| Product | $ | 10,885 | $ | 18,627 | $ | 47,989 | $ | 66,017 | ||||||||
| Services | 3,387 | 3,534 | 13,804 | 13,044 | ||||||||||||
| Total sales | 14,272 | 22,161 | 61,793 | 79,061 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| Product | 8,670 | 15,846 | 39,907 | 55,836 | ||||||||||||
| Services | 1,173 | 1,223 | 4,719 | 5,199 | ||||||||||||
| Total cost of sales | 9,843 | 17,069 | 44,626 | 61,035 | ||||||||||||
| Gross profit | 4,429 | 5,092 | 17,167 | 18,026 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Engineering and development | 717 | 691 | 2,798 | 2,800 | ||||||||||||
| Selling, general and administrative | 4,198 | 4,616 | 15,793 | 16,052 | ||||||||||||
| Total operating expenses | 4,915 | 5,307 | 18,591 | 18,852 | ||||||||||||
| Operating loss | (486 | ) | (215 | ) | (1,424 | ) | (826 | ) | ||||||||
| Other income (expense), net | (203 | ) | 276 | 362 | 384 | |||||||||||
| Income (loss) before income taxes | (689 | ) | 61 | (1,062 | ) | (442 | ) | |||||||||
| Income tax (benefit) expense | (725 | ) | 395 | 384 | (71 | ) | ||||||||||
| Net income (loss) | $ | 36 | $ | (334 | ) | $ | (1,446 | ) | $ | (371 | ) | |||||
| Net income (loss) attributable to common stockholders | $ | 34 | $ | (334 | ) | $ | (1,446 | ) | $ | (371 | ) | |||||
| Net income (loss) per share – basic | $ | 0.01 | $ | (0.08 | ) | $ | (0.36 | ) | $ | (0.09 | ) | |||||
| Weighted average shares outstanding – basic | 4,064 | 4,063 | 4,028 | 3,924 | ||||||||||||
| Net income (loss) per share – diluted | $ | 0.01 | $ | (0.08 | ) | $ | (0.36 | ) | $ | (0.09 | ) | |||||
| Weighted average shares outstanding – diluted | 4,148 | 4,063 | 4,028 | 3,924 | ||||||||||||
Gary W. Levine
CFO and Secretary
gary.levine@cspi.com
Direct: 978.954-5040