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CSP Inc. Reports Fourth-Quarter and Year-End Fiscal 2012 Financial Results

Thursday, December 13, 2012 8:30 AM


BILLERICA, Mass., Dec. 13, 2012 (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 fourth quarter and fiscal year 2012 ended September 30, 2012.

Fourth-Quarter and Fiscal 2012 Financial Highlights

  • Revenue increases 35% to $22.3 million for Q4 and grows 15% to $84.8 million for fiscal 2012
  • Gross margin increases to 25% for Q4 2012 from 24% for Q4 2011; Climbs to 24% for fiscal 2012 from 22% in fiscal 2011
  • Tax benefit of $2.6 million for Q4 due primarily to the reversal of $3.0 million of valuation allowance for the deferred tax asset 
  • Net income at $4.9 million for Q4 2012 compared with net loss of $92 thousand a year ago; Full year net income increases 1690% to $6.6 million from $369 thousand in fiscal 2011
  • Cash increases by $4.6 million from year-end 2011 to $20.5 million
  • Company declares special annual dividend of $0.20 per share

Management Comments

"We concluded an excellent fiscal year with strong results in the fourth quarter," said CSP President & Chief Executive Officer Victor Dellovo. "We increased revenue at both of our segments, and generated strong gross margins and significantly improved earnings per share."

"At our Systems segment, we benefited from royalty revenues related to two E-2D Hawkeye aircraft," said Dellovo. "We expect to record revenue for the final plane on the E-2D purchase order in the first quarter of fiscal 2013. At our Service and Systems Integration segment, the strong sales growth was driven by continued demand from hosting customers as well as new customer relationships in the banking and hospital markets. All three of our subsidiaries in this segment reported year-over-year sales growth in the quarter."

"We are executing on a new strategy to capitalize on many opportunities that we see in our markets," said Dellovo. "This strategy includes cross selling our Systems segment multicomputers with our Services and Systems Integration software and services to become more of an end-to-end supplier; becoming a global partner to our customers by cross selling between our three Modcomp geographic locations; focusing on winning higher-margin consulting as well as managed services business; leveraging an increasing number of partnerships across both segments; and maintaining a vigilant focus on cost control. To implement this strategy and position CSP for its next stage of growth, we are making the necessary investments in sales and engineering talent."

"Looking ahead, we expect that the recording of royalties for nine E-2D planes in 2012 versus only five that we had expected for fiscal 2012 will create a difficult year-over-year comparison in fiscal 2013," said Dellovo. "While we anticipate continued growth from our Service and Systems Integration segment, the timing of programs will most likely result in a loss at our Systems segment. Fiscal 2013 will mark an important transition year for us as we execute on our new strategy that we expect will reduce the year-to-year volatility in our sales, and position the company for sustained, long-term growth and profitability."

Financial Results

For the fourth quarter of fiscal 2012, total sales increased 35% to $22.3 million from $16.6 million for the fourth quarter of fiscal 2011. For the full year, sales grew 15% to $84.8 million from $73.6 million in the prior year.

Gross margin for the fourth quarter of fiscal 2012 increased to 25% compared with 24% in the fourth quarter a year ago. The increase in margin during the quarter was the result of higher sales volume as well as royalty revenue that did not occur in the prior-year period. For the full year, gross margin increased to 24% from 22% in fiscal 2011. 

Net income for the fourth quarter of fiscal 2012 increased to $4.9 million, or $1.43 per diluted share, compared with a net loss of $92 thousand, or $0.03 per share, in the fourth quarter of fiscal 2011.  For the full year, net income grew to $6.6 million, or $1.91 per diluted share, from $369 thousand, or $0.10 per diluted share, in fiscal 2011. 

For the year ended September 30, 2012, the company realized a tax benefit of $1.7 million related to a reversal of its previously disclosed valuation allowance on deferred tax assets. This reversal reflected the company's belief that it will have sufficient future taxable income to utilize its existing deferred tax assets, based on its assessment of positive evidence in its U.S operations, as well as the likelihood of continued royalty income and expectation that its Service and Systems Integration segment will continue to be profitable in future years.

Cash and short-term investments increased to $20.5 million compared with $15.9 million at year end fiscal 2011. The increase was primarily due to strong cash from operations during the year. 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 its Systems and its Services and Systems Integration segments. 

Special Annual Dividend

On December 10, 2012, the Board of Directors approved a special dividend of $0.20 per share, payable on December 28, 2012 to shareholders of record as of December 20, 2012. The board carefully evaluated the company's current cash position, considered alternatives for deploying cash, and determined that paying another dividend was a prudent way to generate shareholder value. The Board intends to review CSP's financial performance, balance sheet and working capital requirements to determine any future dividends.

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 www.cspi.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'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's MODCOMP Inc. subsidiary, also part of its Service and Systems Integration segment was founded in 1970, and has offices in the U.S., U.K. and Germany. Modcomp provides solutions and services for complex IT environments including storage and servers, unified communications solutions, IT security solutions and consulting services. More information about CSP is available on the company's website at www.cspi.com. 

To learn more about MODCOMP, Inc., consult www.modcomp.com.

The CSP, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=14484

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, royalty revenues related to E-2D Hawkeye aircraft, strong sales growth was driven by continued demand from hosting customers and reversal of $3.0 million of valuation allowance for the deferred tax asset. 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.

PRESS RELEASE
     
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
     
     
  September 30,
2012
September 30,
2011
     
Assets    
     
Current assets:    
 Cash and short-term investments  $ 20,493  $ 15,874
 Accounts receivable, net 12,145 13,148
 Officer life insurance settlement receivable 2,172  --
 Inventories 6,276 6,777
 Other current assets 3,620 2,079
     
 Total current assets 44,706 37,878
Property, equipment and improvements, net 991 833
Other assets 5,369 4,397
     
Total assets  $ 51,066  $ 43,108
     
     
Liabilities and Shareholders' Equity    
     
Current liabilities  $ 18,168  $ 15,870
Pension and retirement plans 9,431 9,056
Non-current liabilities 426 286
     
Shareholders' equity 23,041 17,896
     
Total liabilities and shareholders' equity  $ 51,066  $ 43,108
 
 
PRESS RELEASE
         
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data )
         
         
  /---------Three Months Ended------/ /---------Twelve Months Ended----/
  September 30 2012 September 30 2011 September 30 2012 September 30 2011
Sales:        
 Product $15,976 $11,950 $59,583 $54,734
 Service  6,355 4,650 25,224 18,911
         
 Total sales 22,331 16,600 84,807 73,645
         
Cost of sales:        
 Product 12,952 9,179 50,226 44,810
 Service  3,725 3,450 14,160 12,466
         
 Total cost of sales 16,677 12,629 64,386 57,276
         
 Gross Profit 5,654 3,971 20,421 16,369
         
Operating expenses:        
 Engineering and development  419 325 1,720 1,785
 Selling, general & administrative 5,019 3,640 15,847 13,775
         
 Total operating expenses 5,438 3,965 17,567 15,560
Proceeds from officer life insurance settlement 2,115  -- 2,115  --
         
Operating income 2,331 6 4,969 809
         
         
Other income (expense), net 2 (39) (100) (94)
         
Income (loss) before income taxes 2,333 (33) 4,869 715
         
 Income taxes expense (benefit) (2,600) 59 (1,740) 346
         
Net income (loss)  $4,933 ($92) $6,609 $369
         
         
Net income (loss) per share - basic $1.44 ($0.03) $1.93 $0.11
         
Weighted average shares outstanding - basic 3,363 3,407 3,362 3,439
         
Net income (loss) per share - diluted $1.43 ($0.03) $1.91 $0.10
         
Weighted average shares outstanding - diluted 3,405 3,407 3,405 3,482
CONTACT: Gary Levine
         Chief Financial Officer
         CSP Inc.
         Tel:  978.663.7598 ext. 1200
         Fax: 978.663.0150

CSP Inc. Logo

(Source: PrimeZone )
(Source: Quotemedia)

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