CSP Inc. : Reports Second-Quarter Fiscal 2012 Financial Results
05/09/2012| 08:45am US/Eastern
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CSP
Inc. (NASDAQ: CSPI), a provider of IT solutions, systems integration
services and dense cluster computing systems, today reported financial
results for the second quarter of fiscal 2012 ended March 31, 2012.
For the second quarter of fiscal 2012, total sales increased 8% to $19.0
million from $17.6 million for the second quarter of 2011. For the
six-month period, sales grew 5% to $40.1 million from $38.3 million in
the year-earlier period.
Gross margin for the second quarter of fiscal 2012 increased to 24.8%
compared with 24.1% in the second quarter a year ago. The year-over-year
increase in gross margin was the result of greater Systems segment
royalty revenue. Gross margin increased to 23.8% in the first six months
of fiscal 2012 from 22.9% in the same period of fiscal 2011.
Net income for the second quarter of fiscal 2012 increased to $442
thousand, or $0.13 per diluted share, compared with net income of $286
thousand, or $0.08 per diluted share, in the second quarter of fiscal
2011. For the six-month period, net income grew 34% to $903,000, or
$0.26 per diluted share, from $675,000, or $0.19 per diluted share, in
the same period in fiscal 2011.
Cash and short-term investments decreased to $14.8 million compared with
$15.9 million at year end fiscal 2011. The decline was primarily the
result of a decrease in accounts payable and accrued expenses, an
increase in other assets and prepaid items, an increase in accounts
receivable, and the payment of the annual dividend. These items were
partially offset by an increase in deferred revenue, higher net income
and a decrease in inventories. 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.
Management Comments
"We reported another quarter of solid financial results as we leveraged
8% growth in sales for the second quarter into a 55% increase in net
income," said CSP Chairman and Chief Executive Officer Alexander R.
Lupinetti. "Our gross margins continued to be strong at 24.8% in the
quarter, driven by greater Systems
segment royalty revenue."
"At our Systems segment, we recorded $2.0 million in royalties from
Lockheed Martin for three E2D Advanced Hawkeye aircraft as part of
phases 3 and 4 of the Low Rate Initial Production Phase," said
Lupinetti. "We have received royalty revenue for four planes thus far
under the purchase order for a total of 10 planes. We now expect that we
could receive royalty revenue for between six and 10 planes in fiscal
2012. Shortly after the close of the quarter, we introduced the TeraXP
Embedded Server for OpenVPX with Intel Xeon processors that uses fiber
optic interconnects to enable customers to seamlessly upgrade to higher
processing or switching speeds. These new servers are ideal for a broad
range of radar, sonar, ISR and EW applications."
"Service
and Systems Integration segment revenue increased 9% for the
quarter, driven by sales growth at both our Germany and UK businesses,"
said Lupinetti. "A year-over-year sales decline in the US was the result
of lower sales from our large hosting customer. Sales to this customer
are inherently lumpy. Growth in Germany was again driven by revenue from
the build-out of a Global Security Operations Center for one of the
largest mobile telecommunications network companies in the world. We are
encouraged by the robust sales pipelines across all three Service and
Systems Integration locations."
"Given our expectations for Systems royalty revenues in the second half
of the year as well as a solid pipeline of opportunities in the Service
and Systems Integration segment, we are increasingly optimistic that
fiscal 2012 will shape up to be a strong year," concluded Lupinetti.
Conference Call Details
CSP Chairman and Chief Executive Officer Alexander R. Lupinetti, 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)
709-8155 or (201) 689-8881. 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.
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
relating to the expectation that CSP could receive royalty for between
six and ten planes, sales decline in US was the result of lower sales
from our large hosting customer and the robust sales pipelines across
all three Service and Systems Integration locations. 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)
March 31,
September 30,
2012
2011
Assets
Current assets:
Cash and short-term investments
$
14,833
$
15,874
Accounts receivable, net
14,215
13,148
Inventories
5,960
6,777
Other current assets
3,086
2,079
Total current assets
38,094
37,878
Property, equipment and improvements, net
947
833
Other assets
4,489
4,397
Total assets
$
43,530
$
43,108
Liabilities and Shareholders' Equity
Current liabilities
15,771
15,870
Pension and retirement plans
9,085
9,056
Non-current liabilities
299
286
Shareholders' equity
18,375
17,896
Total liabilities and shareholders' equity
$
43,530
$
43,108
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data )
/-----Three Months Ended-----/
/-----Six Months Ended-----/
March 31
March 31
March 31
March 31
2012
2011
2012
2011
Sales:
Product
$
12,125
$
12,767
$
27,279
$
28,058
Service
6,904
4,862
12,843
10,198
Total sales
19,029
17,629
40,122
38,256
Cost of sales:
Product
10,609
9,961
23,375
23,376
Service
3,705
3,419
7,209
6,103
Total cost of sales
14,314
13,380
30,584
29,479
Gross Profit
4,715
4,249
9,538
8,777
Operating expenses:
Engineering and development
474
508
857
1,018
Selling, general & administrative
3,572
3,310
7,248
6,685
Total operating expenses
4,046
3,818
8,105
7,703
Operating income
669
431
1,433
1,074
Other income (loss), net
(36
)
(1
)
(70
)
(22
)
Income before income taxes
633
430
1,363
1,052
Provision (benefit) for income taxes
191
144
460
377
Net income
$
442
$
286
$
903
$
675
Net income attributable to common stockholders
$
434
$
282
$
888
$
666
Net income per share - basic
$
0.13
$
0.08
$
0.26
$
0.19
Weighted average shares outstanding - basic
3,363
3,437
3,360
3,455
Net income per share - diluted
$
0.13
$
0.08
$
0.26
$
0.19
Weighted average shares outstanding - diluted
3,401
3,471
3,398
3,491
CSP Inc. Gary Levine, 978-663-7598 ext. 1200 Chief Financial
Officer Fax: 978-663-0150
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