CSPi Reports Fourth-Quarter and Full-Year Fiscal 2017 Financial Results

LOWELL, Mass., Dec. 19, 2017 (GLOBE NEWSWIRE) -- CSP Inc. (NASDAQ:CSPI), a provider of advanced security products and security services, as well as IT technology managed services for diverse applications, today reported financial results for the fourth quarter and year ended September 30, 2017.

The Company also announced that its board of directors has voted to pay its quarterly dividend of $0.11 per share to shareholders of record December 29 2017, payable on January 16, 2018.

Management Comments

“We reported another strong quarter to close out a successful year as we continue to execute on our strategy to position the company for growth and profitability for the long term,” said Chief Executive Officer Victor Dellovo. “In terms of our financial performance, sales were up 39% for the fourth quarter and 8% for the year. EPS was $0.36 in Q4 2017 versus $0.14 a year ago, and $0.63 for the full year versus $0.67 in 2016. We are proud of this financial performance but even more so of the progress we have made in executing on our growth strategy. Our cross-selling effort between our High Performance Products and Technology Solutions divisions continue to gain traction, our managed IT services pipeline is growing, and we are advancing on the development of our cyber security products within the HPP division in order to capitalize on the rapidly growing security market.

“In our High Performance Products division, we received royalties for three E-2D planes, as well as additional spares. Looking ahead, we have not been given any indication of order levels for the E-2D next year. Currently, we are receiving orders for boards for projects within the E-2D and anticipate orders for additional planes.

“During 2017 we began aggressive investment and development in our next-generation cyber security products. During the current first quarter of fiscal 2018, we announced our newest security offering – the ARIA™ Software Defined Security Platform. This software platform provides advanced cyber security protection services for critical assets, which need to be accessed by end-users and applications in both the cloud and on premises. We are moving to beta with ARIA in the next few months and expect initial shipments to occur later in fiscal 2018. Customers are excited about this brand-new approach to enterprise-wide data security and are eager to see how ARIA could reduce current security vulnerabilities exacerbated by the shift to a DevOps business model.

“In our Technology Solutions division, quarterly revenue growth was driven by strong performances in each of our geographies, particularly in the U.S. Our managed services pipeline remains robust and we continue to close deals at a greater frequency and the recurring revenue stream is increasing. We also continue to have success in wireless communication security, which has been consistently strong for us. In addition, our cross-selling initiative is bringing in new revenue across all geographies.

“We are still very much a company in the middle of exciting change. We are moving from a company focused on defense-related multicomputers to one that has significant growth opportunities from cutting-edge technology that is capitalizing on major market trends such as cyber breach prevention and detection, to the proliferation of wireless communications, and an increased desire for complete managed services of network infrastructure. At this point, we have limited visibility into next year, but our strategic efforts, including exciting new products and services, give us reason to be optimistic about fiscal 2018,” concluded Dellovo.

Financial Results

For the fourth quarter of fiscal 2017, revenue increased to $35.7 million from $25.6 million in the fourth quarter a year ago. For the year, revenue increased to $111.5 million from $103.4 million in fiscal 2016.

Gross profit for the quarter increased 35.3% to $8.5 million, or 23.9% of sales, from $6.3 million, or 24.6% of sales, a year ago. For the year, gross profit increased to $25.5 million, or 22.9% of sales, from $25.0 million, or 24.2% of sales.

Net income for the fourth quarter of fiscal 2017 increased to $1.4 million, or $0.36 per diluted share, compared with net income of $561 thousand, or $0.14 per diluted share, in the fourth quarter of fiscal 2016. For the full-year fiscal 2017, net income decreased to $2.5 million, or $0.63 per diluted share, from $2.6 million, or $0.67 per diluted share, for full-year fiscal 2016.

Cash and short-term investments increased to $13.9 million at the end of the fourth quarter of fiscal 2017 from $13.1 million at 2016 year end as a result of sales and profitability.

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 866-518-6930 or 203-518-9797. 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 (NASDAQ:CSPI) maintains two distinct and dynamic divisions - the High Performance Products (HPP), including the Cybersecurity Center of Excellence, and Technology Solutions (TS) - with a shared vision for technology excellence. CSPi’s HPP division offers advanced cybersecurity solutions, as well as extreme-performance Ethernet adapters for diverse applications, including security, financial trading, content creation/distribution, storage networking applications. CSPi’s Technology Solutions division provides innovative technology solutions for network solutions, wireless and mobility, unified communications and collaboration, data center solutions, advanced security, along with professional and managed services across those technology focus areas. CSPi Technology Solutions works with the world’s leading IT software and infrastructure companies to create solutions for the unique IT requirements of its customers. For more information, please visit www.cspi.com.

Myricom and ARIA are trademarks of CSP Inc. All other brand names, product names, or trademarks belong to their respective owners.

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, those related to beta with ARIA in the next few months and expect initial shipments to occur later in fiscal 2018. 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.

(Amounts in thousands)
September 30, September 30,
Current assets:
Cash and short-term investments$13,885 $13,103
Accounts receivable, net 28,402 19,564
Inventories 5,971 5,580
Other current assets 3,461 3,552
Total current assets 51,719 41,799
Property, equipment and improvements, net 1,508 1,680
Other assets 5,701 5,228
Total assets$58,928 $48,707
Liabilities and Shareholders' Equity
Current liabilities$26,023 $17,383
Pension and retirement plans 11,818 13,441
Non-current liabilities 86 228
Shareholders' equity 21,001 17,655
Total liabilities and shareholders' equity$58,928 $48,707
(Amounts in thousands, except per share data )
/-----Three Months Ended-----/
/-----Twelve Months Ended-----/
September 30, September 30, September 30, September 30,
2017 2016 2017 2016
Product$27,842 $19,515 $84,675 $77,835
Service 7,877 6,125 26,807 25,532
Total sales 35,719 25,640 111,482 103,367
Cost of sales:
Product 23,266 15,789 71,302 63,539
Service 3,911 3,538 14,690 14,787
Total cost of sales 27,177 19,327 85,992 78,326
Gross Profit 8,542 6,313 25,490 25,041
Operating expenses:
Engineering and development 615 616 2,362 2,984
Selling, general & administrative 5,735 4,970 19,356 18,256
Total operating expenses 6,350 5,586 21,718 21,240
Operating income 2,192 727 3,772 3,801
Other income (expense), net (13) (36) 21 (201)
Income before income taxes 2,179 691 3,793 3,600
Income taxes expense 754 130 1,287 996
Net income $1,425 $561 $2,506 $2,604
Net income attributable to common stockholders$1,360 $536 $2,398 $2,495
Net income per share - basic$0.36 $0.15 $0.64 $0.69
Weighted average shares outstanding - basic 3,752 3,638 3,723 3,609
Net income per share - diluted$0.36 $0.14 $0.63 $0.67
Weighted average shares outstanding - diluted 3,828 3,763 3,817 3,734

Gary Levine
Chief Financial Officer
CSP Inc.
Tel: 978.954.5040
Fax: 978.455.3251

Source:CSP Inc.