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CSP Inc. Reports First-Quarter Fiscal 2013 Financial Results



CSP Inc. Reports First-Quarter Fiscal 2013 Financial Results

BILLERICA, Mass., Feb. 11, 2013 (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 2013 ended December 31, 2012.

Management Comments

"Our first-quarter results were within our expectations," said CSP President &
Chief Executive Officer Victor Dellovo. "Revenue was flat with the first
quarter of last year, excluding the negative effect of foreign currency.
Growth at the Service and Systems Integration segment offset a decline in
revenues at the Systems segment. We reported a three cent profit, which was
down from last year due primarily to a lower mix of sales from the Systems
business."  

"At our Systems segment, we recorded royalty revenue for the final plane on
the purchase order for phases 3 and 4 of the low rate initial production phase
of the E-2D advanced Hawkeye intelligence, surveillance and reconnaissance
aircraft," said Dellovo. "We are now starting to see activity related to Lot 1
of full-rate production and we have received a request for quotes for parts.
We expect to ship parts for five planes in the current fiscal year and receive
royalties in fiscal 2014. At our Service and Systems Integration segment,
sales growth was driven by new customer acquisition at our U.S. subsidiary. We
have been successful in generating new customers in the medical segment. This
new business is incremental to the strength we are seeing with our hosting
customers."

"During the quarter, we made progress in executing on our new growth
strategy," said Dellovo. "A key element of this strategy is to cross sell our
Systems segment multicomputers with our Services and Systems Integration
software and services to become more of an end-to-end supplier to our legacy
customers as well as to new customers in new markets. We have recently met
with major multicomputer customers, and they are positive about the cost and
time savings as well as the domain expertise that we can provide. With this
validation from our customers, we are hopeful that we will see results from
this initiative following the resolution of the many issues surrounding the
Federal military budget. We also were successful in cross-selling across our
Modcomp subsidiaries as our UK operation is now beginning to service U.S.
subsidiary customers."

"Looking ahead, we expect improved performance from our Systems segment in the
second quarter as a result of increased sales to international customers,
although we will still face a difficult year-over-year comparison in fiscal
2013 due to the E-2D royalties recorded in fiscal 2012. We expect that our
Service and Systems Integration segment will continue to report growth for the
remainder of the year. Longer term, we are confident that our new strategy
will lead to sustainable long-term growth and profitability, as well as
enhanced shareholder value," concluded Dellovo. 

Financial Results

For the first quarter of fiscal 2013, revenue declined 1% year over year to
$20.9 million. Excluding the negative effect of foreign exchange, sales were
essentially flat.

Gross margin for the first quarter decreased to 20% from 23% in the first
quarter of fiscal 2012, primarily due to a lower mix of sales from the Systems
business, including lower royalty revenues, as well as sales mix in Germany. 

Net income for the first quarter was $115,000 million, or $0.03 per diluted
share, compared with net income of $461,000, or $0.14 per share, in the first
quarter of fiscal 2012. 

Cash and short-term investments decreased from $20.5 million at September 30,
2012 to $17.7 million at the end of the first quarter, due primarily to an
increase in accounts receivable. The increase of approximately $4.3 million
was due primarily to a large volume of sales to a significant customer who is
granted extended payment terms and timing of shipments near the end of the
quarter.  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. 

Conference Call Details

CSP Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W.
Levine will host a conference call at 5:00 p.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, activity related to E2D Lot 1
of full-rate production and we have received a request for quotes for parts.
We expect to ship parts for five planes in the current fiscal year and receive
royalties in fiscal 2014. 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,  September 30,
                                                2012        2012
Assets                                                       
                                                             
Current assets:                                              
Cash and short-term investments                 $ 17,715     $ 20,493
Accounts receivable, net                       16,438       12,145
Inventories                                    5,710        6,276
Other current assets                           4,635        5,792
                                                             
Total current assets                           44,498       44,706
Property, equipment and improvements, net      1,036        991
Other assets                                   5,280        5,369
                                                             
Total assets                                    $ 50,814     $ 51,066
                                                             
                                                             
Liabilities and Shareholders' Equity                         
                                                             
Current liabilities                             $ 18,335     $ 18,168
                                                             
Pension and retirement plans                   9,489        9,431
Non-current liabilities                        437          426
                                                             
Shareholders' equity                           22,553       23,041
                                                             
Total liabilities and shareholders' equity      $ 50,814     $ 51,066
                                                             
                                                             
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data )
                                                             
                                               Three Months Ended
                                               December 31, December 31,
                                               2012         2011
Sales:                                                       
Product                                        $15,305      $15,154
Services                                       5,565        5,939
                                                             
Total sales                                    20,870       21,093
                                                             
Cost of sales:                                               
Product                                        13,224       12,766
Services                                       3,469        3,504
                                                             
Total cost of sales                            16,693       16,270
                                                             
Gross Profit                                   4,177        4,823
                                                             
Operating expenses:                                          
Engineering and development                    444          383
Selling, general & administrative              3,560        3,676
                                                             
Total operating expenses                       4,004        4,059
                                                             
Operating income                               173          764
                                                             
Other income, net                              59           (34)
                                                             
Income before income taxes                     232          730
                                                             
Provision for income taxes                     117          269
                                                             
Net income                                     $115         $461
                                                             
Net income attributable to common stockholders $113         $454
                                                             
Net income per share - basic                   $0.03        $0.14
                                                             
Weighted average shares outstanding - basic    3,363        3,357
                                                             
Net income per share - diluted                 $0.03        $0.13
                                                             
Weighted average shares outstanding - diluted  3,407        3,395

CONTACT: Gary Levine
         Chief Financial Officer
         CSP Inc.
         Tel: 978.663.7598 ext. 1200
         Fax: 978.663.0150

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