Contact:Gary Levine
Chief Financial Officer
CSPi
Tel: 978.954.5040
Fax: 978.616.9065
CSPi Reports Third-Quarter 2019 Financial Results
Declares Quarterly Dividend of $0.15 Per Share
Lowell, MA, August 07, 2019 – CSPi (NASDAQ: CSPI), a provider of IT managed services, security solutions and packet capture products, today reported financial results for the third quarter ended June 30, 2019.
The Company also announced that its board of directors has voted to pay a quarterly dividend of $0.15 per share to shareholders of record on August 30, 2019, payable on September 13, 2019.
Management Comments
“Our third quarter was marked by solid revenue growth as we continued to move forward with our transformation to a cybersecurity and wireless managed services company,” said Chief Executive Officer Victor Dellovo. “Strong demand for our managed IT services was partially offset by softer multi-computer sales. We continued to invest in our cybersecurity products and pipeline, including our new ARIA cybersecurity platform, which began shipping in the third quarter and is poised for growth over the next fiscal year.”
“Initial feedback from our ARIA customers has been very positive, particularly with respect to its ease of deployment and ease of use,” said Dellovo. “We plan to expand our sales resources to support this high-growth-potential product. At the same time, we will pursue a number of integration opportunities to enhance ARIA’s capabilities for the benefit of security teams that require speed with a high degree of automation and push-button functionality in identifying and isolating cyber threats.”
Financial Results
For the third quarter of fiscal 2019, revenue was $21.6 million compared with $20.0 million a year ago.
Gross profit for the third quarter of fiscal 2019 quarter was $4.8 million, or 22.4% of sales, compared with $5.2 million, or 26.0% of sales, a year ago.
Net income for the third quarter of fiscal 2019 was $532,000, or $0.12 per diluted share, compared with net income of $3,000, or $0.00 per diluted share, for the third quarter of fiscal 2018. The third quarter of fiscal 2018 included a loss of $428,000, or $0.11 per share, from discontinued operations. The Company had a tax benefit of $326,000 for the third quarter of fiscal 2019. The high effective tax rate was due in part to no tax expense recorded for U.K. income due to a large pension contribution, adjustments of taxes payable and reconciliation of tax provision to the prior year tax returns and the benefit of the research and development credit.
Cash and short-term investments were $16.8 million at the end of the third quarter, down from $25.1 million at the close of fiscal year 2018. The decrease was due to a $3.6 million increase in accounts receivable due to order timing, a $2.7 million increase in inventory, and $1.8 million paid in dividends.
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) on August 7, 2019 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 866-518-6930 or 203-518-9797. 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 CSP 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, invest in our cybersecurity products and pipeline, including our new ARIA cybersecurity platform, which began shipping in the third quarter and is poised for growth over the next fiscal 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.
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
,868 | | | | | | | |
| | | |
| June 30, 2019 | | September 30, 2018 |
Assets | | | |
Current assets: | | | |
Cash and short-term investments | $ | 16,793 | | | $ | 25,107 | |
Accounts receivable, net | 16,645 | | | 11,980 | |
Unbilled accounts receivable | — | | | 1,166 | |
Inventories | 9,868 | | | 7,558 | |
Other current assets | 4,982 | | | 2,604 | |
Total current assets | 48,288 | | | 48,415 | |
Property, equipment and improvements, net | 1,137 | | | 847 | |
Other assets | 7,067 | | | 6,013 | |
Total assets | $ | 56,492 | | | $ | 55,275 | |
| | | |
Liabilities and Shareholders’ Equity | | | |
Current liabilities | $ | 17,147 | | | $ | 14,061 | |
Pension and retirement plans | 5,509 | | | 6,168 | |
Non-current liabilities | 1,267 | | | 1,244 | |
Shareholders’ equity | 32,569 | | | 33,802 | |
Total liabilities and shareholders’ equity | $ | 56,492 | | | $ | 55,275 | |
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
| Three months ended | | Nine months ended |
| June 30, | | June 30, | | June 30, | | June 30, |
2019 | 2018 | | 2019 | 2018 |
Sales: | | | | | | | |
Product | $ | 18,076 | | | $ | 16,080 | | | $ | 47,390 | | | $ | 43,798 | |
Services | 3,494 | | | 3,964 | | | 9,510 | | | 9,480 | |
Total sales | 21,570 | | | 20,044 | | | 56,900 | | | 53,278 | |
| | | | | | | |
Cost of sales: | | | | | | | |
Product | 15,407 | | | 13,527 | | | 39,990 | | | 36,473 | |
Services | 1,324 | | | 1,306 | | | 3,976 | | | 3,247 | |
Total cost of sales | 16,731 | | | 14,833 | | | 43,966 | | | 39,720 | |
| | | | | | | |
Gross profit | 4,839 | | | 5,211 | | | 12,934 | | | 13,558 | |
| | | | | | | |
Operating expenses: | | | | | | | |
Engineering and development | 583 | | | 895 | | | 2,109 | | | 2,352 | |
Selling, general and administrative | 4,111 | | | 4,094 | | | 11,436 | | | 11,682 | |
Total operating expenses | 4,694 | | | 4,989 | | | 13,545 | | | 14,034 | |
| | | | | | | |
Operating income (loss) | 145 | | | 222 | | | (611) | | | (476) | |
| | | | | | | |
Other income, net | 61 | | | 458 | | | 108 | | | 413 | |
Net income (loss) before income taxes and discontinued operations | 206 | | | 680 | | | (503) | | | (63) | |
Income tax expense (benefit) | (326 | ) | | 249 | | | (466) | | | 1,225 | |
Net income (loss) from continuing operations | 532 | | | 431 | | | (37) | | | (1,288) | |
Net loss from discontinued operations | — | | | (428 | ) | | — | | | (503) | |
Net income (loss) | $ | 532 | | | $ | 3 | | | $ | (37) | | | $ | (1,791) | |
Net income (loss) attributable to common stockholders | $ | 509 | | | $ | 3 | | | $ | (37) | | | $ | (1,791) | |
| | | | | | | |
Net income (loss) from continuing operations per share – basic | $ | 0.13 | | | $ | 0.11 | | | $ | (0.01) | | | $ | (0.34) | |
Net loss from discontinued operations per share - basic | $ | — | | | $ | (0.11 | ) | | $ | — | | | $ | (0.13) | |
Net income (loss) per share – basic | $ | 0.13 | | | $ | — | | | $ | (0.01) | | | $ | (0.47) | |
Weighted average shares outstanding – basic | 4,051 | | | 3,842 | | | 3,913 | | | 3,811 | |
| | | | | | | |
Net income (loss) from continuing operations per share – diluted | $ | 0.12 | | | $ | 0.11 | | | $ | (0.01) | | | $ | (0.34) | |
Net loss from discontinued operations per share - diluted | $ | — | | | $ | (0.11 | ) | | $ | — | | | $ | (0.13 | ) |
Net income (loss) per share – diluted | $ | 0.12 | | | $ | — | | | $ | (0.01 | ) | | $ | (0.47 | ) |
Weighted average shares outstanding – diluted | 4,142 | | | 3,930 | | | 3,913 | | | 3,811 | |
