CSP Inc. Reports Improved Fiscal First Quarter Financial Results
09 Février 2022 - 2:30PM
CSP Inc. (NASDAQ: CSPI), an award-winning provider of security and
packet capture products, managed IT and professional services and
technology solutions, reported improved financial and operating
results for the fiscal 2022 first quarter ended December 31, 2021,
and provided a business update.
First Quarter Operating Highlights and
Recent Achievements
- Total revenue increased 9% year
over year and 24% compared to Q4 fiscal 2021 driven by higher
services revenue
- Services revenue grew 22% compared
to the year-ago first quarter
- Continued focus on higher margin
products and services lead to overall gross margin of 29.2%
“The business momentum we generated during
fiscal 2021 Q4 propelled our fiscal 2022 Q1 performance,” commented
Victor Dellovo, Chief Executive Officer. “We reported a 24%
sequential increase in revenue comparing Q4 fiscal due in part to
pent-up demand for our products and services, which increased 9% as
we continue driving that element of our business to achieve our
goals.”
We again leaned heavily on the Technology
Solutions (TS) business to lead the way, especially the Managed
Services Practice (MSP) which is adding new customers at a brisk
rate as the team is leveraging the talent drain at smaller
companies to generate sales. Our Unified Communication-as-a
-Service (UCaaS) continues to show further signs of progress, the
supply chain issues which has delayed many customer’s orders, and
with our backlog increasing to over $15 million, under a normal
environment we would have seen a significant profit for the
quarter. We have witnessed a higher level of activity in the cruise
business, and currently, we have teams deployed on several ships
and we’re optimistic of receiving additional ships in the second
half of the year if current operating conditions remain the
same.
We are equally bullish on ARIA as we signed two
new customers during the fiscal first quarter and believe ARIA is
going to be a game changer for our High-Performance Products (HPP)
business. Despite continuing to face supply chain issues that
inhibit our ability to fulfill customer purchase orders, we have
had a strong start to the year. Our team continues to manage the
business, and our balance sheet, so that we can quickly execute on
the opportunities that strengthen our long-term growth and profit
ambitions.
Fiscal Year 2022 First Quarter
Results
Revenue for the fiscal 2022 first quarter was
$12.4 million, a nine percent increase compared to $11.4 million in
the year-ago fiscal first 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 first quarter was
$3.6 million, or 29.2% of sales, compared with $3.4 million, or
29.7% of sales, in the year-ago fiscal first quarter. The Company
reported a net loss of $(366,000) in the fiscal first quarter, or
$(0.09) per diluted share, compared with a net income of $1.2
million, or $0.26 per diluted share for the fiscal first quarter of
fiscal 2021. The 2021 fiscal first quarter included a gain on debt
extinguishment of the Paycheck Protection Plan SBA Loans at the TS
and HPP segments totaling $2.2 million, which was established as
part of the CARES Act loan. Excluding the gain on debt
extinguishment, the Company reported a net loss of $1 million or
$(0.26) per diluted share for the first quarter of fiscal 2021.
The Company had cash and cash equivalents of
$19.3. million as of December 31, 2021. Due to the Company’s
prudent expense management and emergence and continued acceptance
of new products and services provided, management believes it has
the resources to execute the multi-year growth strategy of
transforming to a cybersecurity, wireless and managed services
company
Stock Repurchase
Authorization
The Company re-activated the stock repurchase
program on December 29, 2021 with authorization to buy up to
194,000 shares of the Company’s common stock. The Company did not
purchase any shares in the fiscal first quarter ended December 31,
2021.
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 and
use the Conference ID: CSPQ122 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, our backlog
increasing to over $15 million, under a normal environment we would
have seen a significant profit for the quarter, we’re optimistic of
receiving additional ships in the second half of the year if
current operating conditions remain the same and believe ARIA is
going to be a game changer for our High-Performance Products (HPP)
business. 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.
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CSP INC. AND
SUBSIDIARIES |
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
|
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
September 30, 2021 |
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and short-term investments |
|
$ |
19,295 |
|
$ |
20,007 |
Accounts receivable, net |
|
|
19,134 |
|
|
18,698 |
Inventories |
|
|
4,187 |
|
|
3,989 |
Other current assets |
|
|
7,195 |
|
|
6,340 |
Total current assets |
|
|
49,811 |
|
|
49,034 |
Property,
equipment and improvements, net |
|
|
809 |
|
|
764 |
Operating
lease right-of-use assets |
|
|
1,192 |
|
|
1,358 |
Long-term
receivable |
|
|
5,598 |
|
|
7,522 |
Other
assets |
|
|
4,377 |
|
|
4,296 |
Total
assets |
|
$ |
61,787 |
|
$ |
62,974 |
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
Current liabilities |
|
$ |
17,603 |
|
$ |
17,827 |
Pension and
retirement plans |
|
|
3,808 |
|
|
4,097 |
Operating
lease liabilities |
|
|
703 |
|
|
821 |
Notes
Payable |
|
|
432 |
|
|
876 |
Other
non-current liabilities |
|
|
5,307 |
|
|
5,307 |
Shareholders’ equity |
|
|
33,933 |
|
|
34,046 |
Total
liabilities and shareholders’ equity |
|
$ |
61,787 |
|
$ |
62,974 |
CSP INC. AND
SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Amounts in
thousands, except per share data ) |
|
|
|
|
|
|
|
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Three months ended |
|
|
December 31, |
|
December 31, |
|
|
2021 |
|
2020 |
Sales: |
|
|
|
|
|
|
Product |
|
$ |
8,720 |
|
|
$ |
8,408 |
|
Services |
|
|
3,649 |
|
|
|
2,980 |
|
Total sales |
|
|
12,369 |
|
|
|
11,388 |
|
|
|
|
|
|
|
|
Cost
of sales: |
|
|
|
|
|
|
Product |
|
|
7,277 |
|
|
|
6,949 |
|
Services |
|
|
1,478 |
|
|
|
1,061 |
|
Total cost of sales |
|
|
8,755 |
|
|
|
8,010 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
3,614 |
|
|
|
3,378 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Engineering and development |
|
|
627 |
|
|
|
729 |
|
Selling, general and administrative |
|
|
3,383 |
|
|
|
3,186 |
|
Total operating expenses |
|
|
4,010 |
|
|
|
3,915 |
|
|
|
|
|
|
|
|
Operating loss |
|
|
(396 |
) |
|
|
(537 |
) |
|
|
|
|
|
|
|
Other income (expense), net |
|
|
42 |
|
|
|
1,798 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(354 |
) |
|
|
1,261 |
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
12 |
|
|
|
110 |
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(366 |
) |
|
|
1,151 |
|
Net income (loss) attributable to common stockholders |
|
$ |
(366 |
) |
|
$ |
1,097 |
|
|
|
|
|
|
|
|
Net income (loss) per share – basic |
|
$ |
(0.09 |
) |
|
$ |
0.27 |
|
Weighted average shares outstanding – basic |
|
|
4,200 |
|
|
|
4,074 |
|
|
|
|
|
|
|
|
Net income (loss) per share – diluted |
|
$ |
(0.09 |
) |
|
$ |
0.26 |
|
Weighted average shares outstanding – diluted |
|
|
4,200 |
|
|
|
4,172 |
|
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