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CSPi Reports First-Quarter 2019 Financial Results

Declares Quarterly Dividend of $0.15 Per Share

LOWELL, Mass., Feb. 12, 2019 (GLOBE NEWSWIRE) -- Lowell, MA, February 12, 2019 – CSPi (CSPI), a provider of security and packet capture products, managed IT and professional services and technology solutions, today reported financial results for the first quarter ended December 31, 2018.                                                                                                                                

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 February 28, 2019, payable on March 14, 2019.
                                                       
Management Comments
“We delivered a solid start to fiscal year 2019 with revenues up 14% as strong demand for managed IT services in the US offset softer multi-computer sales and development delays for our next-generation cybersecurity products,” said Chief Executive Officer Victor Dellovo. “On the bottom line, we reported a profit of $0.01 per diluted share compared with a loss of $0.32 per share in the first quarter of 2018. Our actions to improve the cost structure of the UK business contributed to our improved bottom line performance in the first quarter.”

“In our High-Performance Products segment, we continued to develop value-added capabilities for our legacy Myricom network adaptors,” said Dellovo. “We launched the Myricom Secure Intelligent Adapter, or SIA, which allows manufacturers to accelerate security functions while reducing costs. For our ARIA next-generation cybersecurity platform, we recently received the first batch of boards from our supplier and sent out four for customer evaluations. We plan to conduct testing and evaluations in Q2 and expect to see sales ramp up in the second half of fiscal 2019.”

“In Technology Solutions, revenues were driven by strong demand for managed IT services in the US,” added Dellovo. “We continue to sign new and larger contracts for wireless installations and managed IT projects.”

“We have executed well in positioning CSPi for growth with new products and an expanded base of managed services business. In the coming quarters we will continue to invest in engineering talent as we innovate our product suite and focus on delivering improved profitability,” concluded Dellovo.

Financial Results
For the first quarter of fiscal 2019, revenue increased to $19.0 million from $16.6 million a year ago.

Gross profit for the first quarter of fiscal 2019 was $4.3 million, or 23% of sales, compared with $4.4 million, or 26% of sales, a year ago. The decrease in gross margin was primarily due to higher royalty revenue from multi-computer sales in Q1 2018.

Net income for the first quarter of fiscal 2019 was $50 thousand or $0.01 per diluted share, compared with a net loss of $1.2 million, or $0.32 per diluted share, for the first quarter of fiscal 2018. The first quarter of fiscal 2018 included a $1.2 million tax liability related to the new tax law compared with a tax liability of $2 thousand in the first quarter of 2019.

Cash and short-term investments were  $20.7 million at the end of the first quarter of fiscal 2019 compared with $25.1 million at the end of fiscal year 2018. The decrease since year-end was due to the timing of orders and a resulting increase in accounts receivable to $17.2 million at the end of Q1 fiscal 2019 from $12 million at year-end fiscal 2018.

Conference Call Details
CSPi Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W. Levine will host a conference call at 9:00 a.m. (ET) on February 13, 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 877-876-9173 or 785-424-1667.  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 (CSPI) maintains two distinct and dynamic divisions – High Performance Products division, 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 CSPi 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 our plan to conduct testing and evaluations in Q2 and expect to see sales ramp up in the second half of fiscal 2019.   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. 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)
   
             
             
             
             
    December 31,   September 30,    
    2018    2018      
             
Assets            
             
Current assets:            
  Cash and short-term investments   $   20,656   $   25,107      
  Accounts receivable, net     17,208       11,980      
  Unbilled accounts receivable       -       1,166      
  Inventories     6,790       7,558      
  Other current assets     3,052       2,604      
  Total current assets     47,706       48,415      
Property, equipment and improvements, net     979       847      
Other assets     5,910       6,013      
Total assets   $   54,595   $   55,275      
             
             
Liabilities and Shareholders' Equity            
             
Current liabilities   $   13,918   $   14,061      
Pension and retirement plans     5,999     6,168      
Non-current liabilities       1,259       1,244      
Shareholders' equity     33,419     33,802      
Total liabilities and shareholders' equity   $   54,595   $   55,275      
             
             
             
 CSP INC. AND SUBSIDIARIES
  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data )
   
             
             
             
             
    Three Months Ended
   
    December 31   December 31    
     2018     2017      
Sales:            
  Product   $15,711   $13,669      
  Service      3,269     2,961      
             
  Total sales     18,980     16,630      
             
Cost of sales:            
  Product     13,212     11,280      
  Service      1,419     987      
             
  Total cost of sales     14,631     12,267      
             
  Gross Profit     4,349     4,363      
             
Operating expenses:            
  Engineering and development      745     698      
  Selling, general & administrative     3,589     3,500      
             
  Total operating expenses     4,334     4,198      
             
Operating income     15     165      
             
Other income (expense), net     37     (7 )    
             
Net income before income taxes and discontinued operations      52     158      
             
  Income taxes expense     2     1,153      
             
  Net income (loss) from continuing operations   $50     ($995 )    
  Net loss from discontinued operations        -       (205 )    
Net income (loss)   $50     ($1,200 )    
Net income (loss) attributable to common stockholders   $48     ($1,200 )    
             
Net income (loss) from continuing operations per share - basic   $0.01     ($0.26 )    
Net income (loss) from discontinued operations per share - basic   $0.00     ($0.06 )    
Net income (loss) per share -basic   $0.01     ($0.32 )    
Weighted average shares outstanding - basic     3,868     3,768      
             
Net income (loss) from continuing operations per share - diluted   $0.01     ($0.26 )    
Net income (loss) from discontinued operations per share - diluted $0.00     ($0.06 )    
Net income (loss) per share -diluted   $0.01     ($0.32 )    
Weighted average shares outstanding - diluted     3,966     3,768      
             
             

Contact:          

Gary Levine                                                                           
Chief Financial Officer     
CSPi
Tel: 978.954.5040                               
Fax: 978.616.9065