BILLERICA, Mass., Feb. 12, 2014 (GLOBE NEWSWIRE) — CSP Inc. (Nasdaq:CSPI), a provider of IT solutions, systems integration services and dense cluster computing systems, today reported financial results for the first quarter of fiscal year 2014 ended December 31, 2013.
The Company also announced that its board of directors has voted to pay a quarterly dividend of $0.11 per share to shareholders of record February 27, 2014 payable March 11, 2014.
Management Comments
“We began fiscal 2014 with a solid quarter, reporting $21.3 million in revenue and $0.10 in earnings per diluted share,” said President and Chief Executive Officer Victor Dellovo. “Across both of our operating segments we are executing well on our growth strategies.”
“At our Systems segment, we reported $1.1 million in royalty revenue related to the E-2D aircraft from Lockheed Martin to support the first phase of Full-Rate Production as well as spares for Lots three and four of Low Rate Initial Production,” continued Dellovo. “We expect to receive total royalty revenues related to five planes in FY 2014. The integration of our Myricom acquisition is progressing well, and during the first quarter we announced the addition of the first of several next-generation products in that business. We continue to be enthusiastic about the growth possibilities arising from Myricom, which for the first time provides our MultiComputer business with a base of customers in commercial growth markets. Myricom also offers the possibility of cross-selling opportunities with Modcomp.”
“At our Service and Systems Integration segment we continued to make progress toward both our cross-selling and managed services strategies,” said Dellovo. “Our UK business, which doubled revenue in the quarter, benefitted from our cross-selling strategy. In addition to other cross-selling opportunities, our sales team is working on selling our managed services offerings, which provides us with higher-margin recurring revenue. We continue to gain traction in this area.”
“Looking forward, we continue to expect that our financial results in fiscal 2014 will surpass that of fiscal 2013 both on the top and bottom lines. As we continue to execute on our growth strategies, we also are sharply focused on streamlining costs in order to enhance margins and improve our earnings performance,” concluded Dellovo.
Financial Results
For the first quarter of fiscal 2014, revenue increased 2% year over year to $21.3 million. Foreign exchange had a positive effect on revenue of $300,000 for the period.
Gross margin for the first quarter was 21% compared with 20% in the first quarter of fiscal 2013, primarily due to a higher mix of MultiComputer sales, including increased royalty revenues. Net income for the first quarter increased to $346,000, or $0.10 per diluted share, from net income of $115,000, or $0.03 per diluted share, in the first quarter of fiscal 2013. The increase was primarily due to a $462,000 bargain purchase gain, which is net of income taxes, related to the Myricom asset acquisition. The bargain purchase gain resulted because of the higher fair value of the acquired assets over the acquisition consideration. The gain was recognized against operating expenses on the acquisition date.
Cash and short-term investments decreased by $4.7 million to $13.9 million from fiscal year-end. This was largely due to an increase in accounts receivable because of large orders received at the end of the quarter for which we have now been paid. CSP’s cash position may vary significantly from quarter to quarter due to the high working capital requirements needed to fund large projects at both of its segments.
Conference Call Details
CSP 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 CSP’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 cspiweb.staging.wpengine.com. Individuals may also listen to the call via telephone, by dialing (877) 407-5790 or (201) 689-8328. For interested parties unable to participate in the live call, an archived version of the webcast will be available for approximately one year on CSP’s website.
About CSP Inc.
Based in Billerica, Massachusetts and founded in 1968, CSP Inc. and its subsidiaries develop and market IT integration solutions and high-performance computer systems to meet the diverse requirements of our industrial, commercial, and defense customers worldwide.
CSP, Inc’s Systems segment includes the MultiComputer Division, which designs and manufactures commercial high-performance computer signal processing systems for a variety of complex real time applications in defense and commercial markets. The company recently acquired Myricom, a pioneer in high performance computing interconnect technology. Founded in 1970, Modcomp, Inc. is part of CSPI’s Service and Systems Integration segment, and has offices in North America and Europe. Modcomp provides solutions and services for complex IT environments including disaster recovery, mobility, managed services, security, data center management, and collaboration. More information about CSP, Inc. is available at cspiweb.staging.wpengine.com.
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, expectations that the Company will receive total royalty revenues related to five planes in FY 2014, growth prospects of Myricom and cross-selling opportunities with Modcomp, enhancing margins and improving earnings performance, and that its financial results in fiscal 2014 will surpass that of fiscal 2013 both on the top and bottom lines. 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) |
||
| December 31,
2013 |
September 30,
2013 |
|
| Assets | ||
| Current assets: | ||
| Cash and short-term investments | $13,942 | $18,619 |
| Accounts receivable, net | 16,963 | 13,529 |
| Inventories | 6,599 | 4,791 |
| Other current assets | 4,767 | 3,979 |
| Total current assets | 42,271 | 40,918 |
| Property, equipment and improvements, net | 1,510 | 1,420 |
| Other assets | 5,097 | 4,887 |
| Total assets | $48,878 | $47,225 |
| Liabilities and Shareholders’ Equity | ||
| Current liabilities | 16,396 | 15,125 |
| Pension and retirement plans | 8,714 | 8,660 |
| Non-current liabilities | 518 | 405 |
| Shareholders’ equity | 23,250 | 23,035 |
| Total liabilities and shareholders’ equity | $48,878 | $47,225 |
| CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data ) |
||
| /———Three Months Ended———-/ | ||
| December 31,
2013 |
December 31,
2012 |
|
| Sales: | ||
| Product | $14,749 | $15,305 |
| Services | 6,583 | 5,565 |
| Total sales | 21,332 | 20,870 |
| Cost of sales: | ||
| Product | 12,720 | 13,224 |
| Services | 4,079 | 3,469 |
| Total cost of sales | 16,799 | 16,693 |
| Gross Profit | 4,533 | 4,177 |
| Operating expenses: | ||
| Engineering and development | 635 | 444 |
| Selling, general & administrative | 4,020 | 3,560 |
| Total operating expenses | 4,655 | 4,004 |
| Bargain purchase gain on acquisition | 462 | — |
| Operating income | 340 | 173 |
| Other income, net | (26) | 59 |
| Income before income taxes | 314 | 232 |
| Income tax expense (benefit) | (32) | 117 |
| Net income | $346 | $115 |
| Net income attributable to common stockholders | $335 | $113 |
| Income per share – basic | $0.10 | $0.03 |
| Weighted average shares outstanding – basic | 3,431 | 3,363 |
| Income per share – diluted | $0.10 | $0.03 |
| Weighted average shares outstanding – diluted | 3,474 | 3,407 |
CONTACT: Gary Levine
Chief Financial Officer
CSP Inc.
Tel: 978.663.7598 ext. 1200
Fax: 978.663.3992