CSP Inc. Reports Fiscal Year 2020 Third Quarter Results
CSP Inc. (NASDAQ: CSPI) reported its fiscal third quarter results for 2020, with revenue falling to $13.5 million, down from $21.6 million a year ago. Despite a revenue decline, the company improved its gross margin percentage by 9%, reaching 31.2% due to higher margin products. CSPi posted a net loss of $210,000, or $(0.05) per share, compared to a net income of $509,000, or $0.12 per share, in the prior year. The company implemented cost-saving measures amid COVID-19, improving cash flow by approximately $3 million by suspending dividends and halting stock buybacks.
- Gross margin percentage improved by 9%, reaching 31.2%.
- Increased interest in ARIA Cybersecurity Solutions and UCaaS offerings.
- Cash and cash equivalents of $20.0 million at June 30, 2020.
- Revenue declined to $13.5 million from $21.6 million year-over-year.
- Net loss of $210,000 compared to a net income of $509,000 in the prior year.
- Net loss for nine months reached $1.5 million, compared to a net loss of $37,000 in the previous year.
LOWELL, Mass., Aug. 11, 2020 (GLOBE NEWSWIRE) -- CSP Inc. (NASDAQ: CSPI), a provider of security and packet capture products, managed IT and professional services and technology solutions, reported financial and operating results for the 2020 fiscal third quarter ended June 30, 2020 and provided a business update.
Fiscal Third Quarter Highlights and Recent Developments
- Improved gross margin percentage by
9% compared to the year-ago fiscal third quarter, driven by primarily higher margin products. - The ARIA Cybersecurity Solutions product pipeline has grown and Unified-Communications-as-a-Service (UCaaS) added several customers, highlighting the continued interest and demand for its feature-rich functionality.
- Expanded in our managed service practice, including cloud, Office 365 and other Microsoft offerings.
- In early April when it became evident that COVID-19 would have a severe impact on the economy we took three actions to improve our cash flow: we suspended our quarterly dividend; stopped our stock buyback program; and applied for and received a PPP loan at each segment. These actions improved our cash position by approximately three million dollars at the end of June.
“As we continue to adjust our business to meet our customers’ needs during this challenging COVID-19 period, I believe our team performed admirably during the fiscal third quarter,” commented Victor Dellovo, Chief Executive Officer. “Notwithstanding the business impact in certain sectors, the breadth and financial strength of our customers and our focus on generating recurring revenue allowed us to achieve a
Fiscal Year 2020 Third Quarter Results
Revenue for the fiscal third quarter was
At June 30, 2020, the Company had cash and cash equivalents of
Fiscal 2020 Nine Month Results
Revenue for the nine months ended June 30, 2020 was
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 800-894-5910 or 785-424-1052 and use the conference ID: CSPQ320 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 dropless 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, the ARIA Cybersecurity Solutions product, pipeline has grown and Unified-Communications-as-a-Service (UCaaS) added several customers highlighting the continued interest and demand for its feature-rich functionality and we are continuing to build the revenue pipeline during the fiscal quarter which we believe will fuel our growth in the coming years. Pandemics, epidemics, or disease outbreaks, such as COVID-19 may cause harm to us, our employees, our clients, our vendors and supply chain partners, and financial institutions, which could have a material adverse effect on our business, results of operations, cash flows, and financial condition. The impact of a pandemic, epidemic, or other disease outbreak, such as COVID-19, may include, but would not be limited to: (i) disruption to operations due to the unavailability of employees due to illness, quarantines, risk of illness, travel restrictions or factors that limit our existing or potential workforce; (ii) volatility in the demand for or availability of our products and services, (iii) inability to meet our customers’ needs due to disruptions in the manufacture, sourcing and distribution of our products and services, or (iv) failure of third parties on which we rely, including our suppliers, clients, and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so. As a result of the World Health Organization characterizing the COVID-19 outbreak as a pandemic on March 11, 2020, national, state, and local governments have taken actions such as declaring a state of emergency, social distancing guidelines, and shutting down certain businesses which are not considered essential in part or entirely. The Company has complied with such actions causing most employees to work remotely in all locations. Such measures could have a material adverse effect on our business.
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 | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Amounts in thousands) | ||||||
| June 30, 2020 | September 30, 2019 | |||||
| (Unaudited) | ||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and short-term investments | $ | 19,976 | $ | 18,099 | ||
| Accounts receivable, net | 10,856 | 15,114 | ||||
| Inventories | 6,412 | 7,818 | ||||
| Other current assets | 4,289 | 5,503 | ||||
| Total current assets | 41,533 | 46,534 | ||||
| Property, equipment and improvements, net | 1,205 | 1,273 | ||||
| Operating lease right-of-use assets | 2,180 | — | ||||
| Long-term receivable | 5,146 | 5,328 | ||||
| Other assets | 4,197 | 6,234 | ||||
| Total assets | $ | 54,261 | $ | 59,369 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities | $ | 14,116 | $ | 20,027 | ||
| Pension and retirement plans | 6,941 | 6,904 | ||||
| Operating lease liabilities | 1,562 | — | ||||
| Notes Payable | 2,919 | 684 | ||||
| Other non-current liabilities | 254 | 1,326 | ||||
| Shareholders’ equity | 28,469 | 30,428 | ||||
| Total liabilities and shareholders’ equity | $ | 54,261 | $ | 59,369 | ||
| 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, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Sales: | ||||||||||||||||
| Product | $ | 10,294 | $ | 18,076 | $ | 35,812 | $ | 47,390 | ||||||||
| Services | 3,238 | 3,494 | 10,387 | 9,510 | ||||||||||||
| Total sales | 13,532 | 21,570 | 46,199 | 56,900 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| Product | 8,361 | 15,407 | 29,924 | 39,990 | ||||||||||||
| Services | 947 | 1,324 | 3,537 | 3,976 | ||||||||||||
| Total cost of sales | 9,308 | 16,731 | 33,461 | 43,966 | ||||||||||||
| Gross profit | 4,224 | 4,839 | 12,738 | 12,934 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Engineering and development | 693 | 583 | 2,081 | 2,109 | ||||||||||||
| Selling, general and administrative | 3,924 | 4,111 | 11,595 | 11,436 | ||||||||||||
| Total operating expenses | 4,617 | 4,694 | 13,676 | 13,545 | ||||||||||||
| Operating income (loss) | (393 | ) | 145 | (938 | ) | (611 | ) | |||||||||
| Other income (expense), net | 193 | 61 | 565 | 108 | ||||||||||||
| Income (loss) before income taxes | (200 | ) | 206 | (373 | ) | (503 | ) | |||||||||
| Income tax (benefit) expense | 10 | (326 | ) | 1,109 | (466 | ) | ||||||||||
| Net income (loss) | (210 | ) | 532 | (1,482 | ) | (37 | ) | |||||||||
| Net income (loss) attributable to common stockholders | $ | (210 | ) | $ | 509 | $ | (1,482 | ) | $ | (37 | ) | |||||
| Net income (loss) per share – basic | $ | (0.05 | ) | $ | 0.13 | $ | (0.37 | ) | $ | (0.01 | ) | |||||
| Weighted average shares outstanding – basic | 4,048 | 4,051 | 4,015 | 3,913 | ||||||||||||
| Net income (loss) per share – diluted | $ | (0.05 | ) | $ | 0.12 | $ | (0.37 | ) | $ | (0.01 | ) | |||||
| Weighted average shares outstanding – diluted | 4,048 | 4,142 | 4,015 | 3,913 | ||||||||||||
Gary W. Levine
CFO and Secretary
gary.levine@cspi.com
Direct: 978.954-5040
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