CSP Inc. Reports Fiscal Fourth Quarter and Fiscal Year 2020 Results

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


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