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 fiscal 2021 fourth quarter and full year ended September 30,
2021, and provided a business update.
Fourth Quarter/Full Year Operating
Highlights and Recent Achievements
- Services revenue grew 27% compared
to the year-ago fourth quarter
- Favorable revenue mix led to a
quarterly and annual gross margin of 41.7% and 32.8%,
respectively
- Company-wide year-end backlog
reached $13 million demonstrating solid customer demand for
products and services and reflects a 165% increase over the prior
year
- Prudent expense management and
emergence and continued acceptance of new products and services
provides management with the resources to execute the multi-year
growth strategy
- Recorded a one-time $465,000 gain
in the fourth quarter from release of escrow money from the sale of
our German subsidiary in 2018
“The demand for our products and services remain
at an all-time high as we ended the fourth quarter with record
backlog of $13 million, which reflects a 165% increase from the
year-ago backlog,” commented Victor Dellovo, Chief Executive
Officer. “This level of success validates our strategic approach to
the market and gives us greater confidence to pursue our operating
objectives and focus on our higher margin offerings.
With the Technology Solutions (TS) business
again leading the way, our Managed Services Practice (MSP)
continued to add new and larger customers while the
better-than-expected activity level of Unified Communication as a
Service (UCaaS) is garnering enthusiasm in the current fiscal first
quarter. I believe UCaaS will turn profitable in the coming
quarters, which is quite a feat since it was launched two years ago
and just prior to one of the worst imaginable periods in our
country. While the HPP business had a slight rebound from Q3, the
signing of additional ARIA customers in the quarter and amount of
interest being generated supports our view that it will
dramatically change the revenue contribution from the HPP
business.
Our team continues to perform at a high level.
However, the effects of COVID-19, inflationary and supply chain
pressures being felt across all businesses means a return to a more
normalized business environment will be slower than expected.
Nevertheless, we remain focused, and our sales team is putting
greater emphasis on software sales since these can deliver
near-term revenue and further expand our gross margin, as was the
case in the fiscal fourth quarter. For fiscal 2022, we remain
cautiously optimistic, and I believe it will be an exciting year
for CSPi as ARIA and UCaaS gain traction. Further, we have received
orders for several cruise ships, and we are optimistic of a return
to executing our highly profitable cruise line business. We have a
solid foundation to build from, even during these turbulent times,
and will execute on opportunities that strengthen our long-term
growth and profit ambitions.”
Fiscal Year 2021 Fourth Quarter
Results
Revenue for the fiscal fourth quarter was $10.0
million, compared to $14.3 million in the year-ago fiscal fourth
quarter as the Company continues to navigate the impact of COVID-19
and ongoing well-chronicled supply chain issues, which is extending
timelines and impacting the Company’s ability to deliver customer
orders.
Gross profit for the fiscal fourth quarter was
$4.2 million, or 41.7% of sales, compared with $4.4 million, or
31.0% of sales, in the year-ago fiscal fourth quarter. This is the
eighth consecutive quarter of year-over-year gross margin
improvement as the Company is focused on selling higher margin
products and services plus increased amount of net revenue. The
Company reported net income from continuing operations of $353,000
in the fourth fiscal quarter, or $0.08 per share, compared with a
net income of $36,000, or $0.01 per share for the fourth fiscal
quarter of fiscal 2020.
Also, in Q4 the Company reported a one-time gain
of $465,000 from the sale of the previously disclosed German
operation (discontinued operation).
Net income for the fiscal fourth quarter of 2021
was $818,000, or $0.19 per share.
The Company had cash and cash equivalents of
$20.0 million as of September 30, 2021, an increase of $700,000
from September 30, 2020.
Fiscal 2021 Full Year
Results
Revenue for the full year ended September 30,
2021, was $49.2 million compared with revenue of $61.8 million in
the same prior year period. Gross profit for the twelve months
ended September 30, 2021, was $16.1 million, or 32.8% of sales,
compared with $17.2 million, or 27.8% of sales, in the prior year
reflecting a more favorable product mix. The Company reported net
income from continuing operations of $234,000 for the full year
ended September 30, 2021, or $0.05 per share compared with a net
loss of ($1.4) million, or $(0.36) loss per share for the full year
ended September 30, 2020. Including the one-time gain of $465,000
from the sale of discontinued German operation previously
disclosed, net income for the full year ended September 30, 2021,
was $699,000, or $0.16 per share. The 2021 full year results
include a gain on forgiveness of debt of the Paycheck Protection
Plan SBA Loans at the TS and HPP segment totaling $2.2 million,
which was established as part of the CARES Act loan and recognized
in fiscal 2021 first quarter.
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 800-891-3968 or 785-424-1675 and
using the conference ID: CSPQ421 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 success. 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, in addition, we just launched
ARIA CloudADR to help provide organizations with COVID-19 tightened
budgets, a lower entry cost solution to help protect against
cybersecurity threats. As such, we believe we have a substantial
opportunity ahead of us as our fiscal year unfolds, we continue to
weather the COVID-19 impacts, supply chain issues have affected the
timing of our sales and there is no short solution to this
world-wide problem as disclosed daily in the world media and with a
solid balance sheet we believe we have the resources to manage the
business and are positioned to execute our operating strategies
when our target customers are able to introduce new solutions into
their operations.
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) |
|
|
|
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|
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|
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|
September 30, 2021 |
|
September 30, 2020 |
|
|
|
|
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|
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Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and short-term investments |
|
$ |
20,007 |
|
|
$ |
19,264 |
|
Accounts receivable, net |
|
|
18,698 |
|
|
|
13,362 |
|
Inventories |
|
|
3,989 |
|
|
|
5,285 |
|
Other current assets |
|
|
6,340 |
|
|
|
3,678 |
|
Total current assets |
|
|
49,034 |
|
|
|
41,589 |
|
Property, equipment and improvements, net |
|
|
764 |
|
|
|
1,047 |
|
Operating lease right-of-use assets |
|
|
1,358 |
|
|
|
2,014 |
|
Long-term receivable |
|
|
7,522 |
|
|
|
3,642 |
|
Other assets |
|
|
4,296 |
|
|
|
5,353 |
|
Total assets |
|
$ |
62,974 |
|
|
$ |
53,645 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
17,827 |
|
|
$ |
12,977 |
|
Pension and retirement plans |
|
|
4,097 |
|
|
|
6,471 |
|
Operating lease liabilities |
|
|
821 |
|
|
|
1,390 |
|
Notes Payable |
|
|
876 |
|
|
|
2,485 |
|
Other non-current liabilities |
|
|
5,307 |
|
|
|
788 |
|
Shareholders’ equity |
|
|
34,046 |
|
|
|
29,534 |
|
Total liabilities and shareholders’ equity |
|
$ |
62,974 |
|
|
$ |
53,645 |
|
|
|
|
|
|
|
|
|
|
CSP INC. AND SUBSIDIARIES |
AUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Amounts in thousands, except per share data
) |
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Three months ended |
|
Twelve months ended |
|
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September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
5,700 |
|
|
$ |
10,885 |
|
|
$ |
35,226 |
|
|
$ |
47,989 |
|
Services |
|
|
4,311 |
|
|
|
3,387 |
|
|
|
13,982 |
|
|
|
13,804 |
|
Total sales |
|
|
10,011 |
|
|
|
14,272 |
|
|
|
49,208 |
|
|
|
61,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
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Product |
|
|
4,346 |
|
|
|
8,670 |
|
|
|
28,024 |
|
|
|
39,907 |
|
Services |
|
|
1,491 |
|
|
|
1,173 |
|
|
|
5,035 |
|
|
|
4,719 |
|
Total cost of sales |
|
|
5,837 |
|
|
|
9,843 |
|
|
|
33,059 |
|
|
|
44,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
4,174 |
|
|
|
4,429 |
|
|
|
16,149 |
|
|
|
17,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Engineering and development |
|
|
696 |
|
|
|
717 |
|
|
|
2,887 |
|
|
|
2,798 |
|
Selling, general and administrative |
|
|
3,825 |
|
|
|
4,198 |
|
|
|
14,624 |
|
|
|
15,793 |
|
Total operating expenses |
|
|
4,521 |
|
|
|
4,915 |
|
|
|
17,511 |
|
|
|
18,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(347 |
) |
|
|
(486 |
) |
|
|
(1,362 |
) |
|
|
(1,424 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
|
276 |
|
|
|
(203 |
) |
|
|
2,040 |
|
|
|
362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(71 |
) |
|
|
(689 |
) |
|
|
678 |
|
|
|
(1,062 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(424 |
) |
|
|
(725 |
) |
|
|
444 |
|
|
|
384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
|
$ |
353 |
|
|
$ |
36 |
|
|
$ |
234 |
|
|
$ |
(1,446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Gain from sale of discontinued operations |
|
$ |
465 |
|
|
$ |
— |
|
|
$ |
465 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
818 |
|
|
$ |
36 |
|
|
$ |
699 |
|
|
$ |
(1,446 |
) |
Net income (loss) attributable to
common shareholders |
|
$ |
781 |
|
|
$ |
34 |
|
|
$ |
666 |
|
|
$ |
(1,446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share from continuing operations - basic |
|
$ |
0.08 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
(0.36 |
) |
Gain per share from sale of discontinued operations - basic |
|
$ |
0.11 |
|
|
$ |
— |
|
|
$ |
0.11 |
|
|
$ |
— |
|
Net income (loss) per share – basic |
|
$ |
0.19 |
|
|
$ |
0.01 |
|
|
$ |
0.16 |
|
|
$ |
(0.36 |
) |
Weighted average shares outstanding – basic |
|
|
4,192 |
|
|
|
4,064 |
|
|
|
4,151 |
|
|
|
4,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share from continuing operations -
diluted |
|
$ |
0.08 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
(0.36 |
) |
Gain per share from sale of discontinued operations - diluted |
|
$ |
0.11 |
|
|
$ |
— |
|
|
$ |
0.11 |
|
|
$ |
— |
|
Net income (loss) per share – diluted |
|
$ |
0.19 |
|
|
$ |
0.01 |
|
|
$ |
0.16 |
|
|
$ |
(0.36 |
) |
Weighted average shares outstanding continuing operations –
diluted |
|
|
4,214 |
|
|
|
4,148 |
|
|
|
4,220 |
|
|
|
4,028 |
|
Weighted average shares outstanding discontinued operations –
diluted |
|
|
4,214 |
|
|
|
4,148 |
|
|
|
4,220 |
|
|
|
4,028 |
|
Weighted average shares outstanding net income - diluted |
|
|
4,214 |
|
|
|
4,148 |
|
|
|
4,220 |
|
|
|
4,028 |
|
|
|
|
|
|
|
|
|
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|
Contact:Gary LevineCFO and
Secretarygary.levine@cspi.com978-954-5040
CSP (NASDAQ:CSPI)
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