OREANDA-NEWS. CSP Inc. (NASDAQ:CSPI), a provider of IT solutions and high-performance Ethernet products for diverse applications, today reported financial results for the second quarter of fiscal 2016 ended March 31, 2016.

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 May 27, 2016 payable June 10, 2016.

Management Comments

“We performed well financially in the second quarter as we continued to make good progress on executing our growth strategy,” said President and Chief Executive Officer Victor Dellovo. “Sales were up 44% in the second quarter, and we reported EPS of $0.13 versus a loss of $0.19 a year ago.”

“In the High Performance Products Division, we launched our new next-generation FPGA network adapter product for the packet capture and financial services markets,” said Dellovo. “The product, branded “Class E,” is currently in production at multiple customer sites. We also secured our first major engagement for the packet capture market by shipping a large order to our first hyperscale data center end user. This shipment was a key contributor to our strong revenue growth this quarter. Customer interest in our packet capture product has been very positive, and we have a robust pipeline in place. We also are building momentum with our product for the financial services market, and have brought our first few customers into production.” 

“At our Technology Solutions Division, our core strategy continues to be increasing higher-margin revenues from managed services,” said Dellovo. “Our managed services pipeline is building and we continue to take actions to further increase this revenue stream. Our cross-selling strategy is also proving successful as we recorded sales between locations at our Technology Solutions Division, as well as between the Technology Solutions and High Performance Products divisions. The performance of our UK operation, which has now been fully integrated into our Germany operation, has improved significantly and turned its first profit in several quarters.”

“Looking ahead, we continue to be encouraged by the progress we are making in executing on our strategy across our businesses. Our past work is now beginning to yield results and we are excited by the great potential before us,” concluded Dellovo.

Financial Results

For the second quarter of fiscal 2016, revenue was $27.1 million compared with $18.9 million in the second quarter a year ago.

Gross margin for the second quarter of fiscal 2016 grew to 23.3% from 21.4% for the prior-year period due to leverage on higher volumes.

Net income for the second quarter of fiscal 2016 was $503,000, or $0.13 per diluted share, compared with a net loss of $675,000, or $0.19 per share, in the second quarter of fiscal 2015.

Cash and short-term investments decreased to $10.0 million at the end of the second quarter of fiscal 2016 from $11.2 million at year end 2015.  The decrease was the result of the payment of the quarterly dividends and purchase of capital equipment, partially offset by cash from operations.  

About CSP Inc.

CSPi (NASDAQ:CSPI) maintains two distinct and dynamic divisions – High Performance Products and Technology Solutions – with a shared vision for technology excellence. CSPi’s High Performance Products division offers extreme-performance Ethernet products for diverse applications, including cybersecurity, financial trading, content creation/distribution, storage networking applications, as well computer signal processing systems. CSPi’s Technology Solutions division provides innovative technology solutions for network solutions, wireless & mobility, unified communications & 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.

CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
       
       
  March 31,   September 30,
    2016       2015  
       
Assets      
       
Current assets:      
Cash and short-term investments $ 10,020     $ 11,181  
Accounts receivable, net   22,780       19,888  
Inventories   4,807       5,749  
Other current assets   3,547       3,264  
       
Total current assets   41,154       40,082  
Property, equipment and improvements, net   1,631       1,564  
Other assets   5,463       5,350  
       
Total assets $ 48,248     $ 46,996  
       
       
Liabilities and Shareholders' Equity      
       
       
Current liabilities   18,609       17,382  
       
Pension and retirement plans   9,700       10,009  
Non-current liabilities   18       15  
       
Shareholders' equity   19,921       19,590  
       
Total liabilities and shareholders' equity $ 48,248     $ 46,996  
       
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,
    2016       2015       2016       2015  
Sales:              
Product $ 20,972     $ 14,195     $ 37,975     $ 29,848  
Services   6,167       4,682       12,840       9,459  
               
Total sales   27,139       18,877       50,815       39,307  
               
Cost of sales:              
Product   17,054       11,380       31,290       24,513  
Services   3,752       3,454       8,002       6,796  
               
Total cost of sales   20,806       14,834       39,292       31,309  
               
Gross Profit   6,333       4,043       11,523       7,998  
               
Operating expenses:              
Engineering and development   790       826       1,589       1,679  
Selling, general & administrative   4,665       3,856       8,713       7,879  
Total operating expenses   5,455       4,682       10,302       9,558  
               
               
Operating income (loss)   878       (639 )     1,221       (1,560 )
               
               
Other expense, net   (117 )     (129 )     (89 )     (162 )
               
Income (loss) before income taxes   761       (768 )     1,132       (1,722 )
               
Income tax expense (benefit)   258       (93 )     346       (610 )
               
Net income (loss) $ 503     $ (675 )   $ 786     $ (1,112 )
               
Net income (loss) attributable to common stockholders $ 480     $ (649 )   $ 756     $ (1,072 )
               
Income (loss) per share - basic $ 0.13     $ (0.19 )   $ 0.21     $ (0.31 )
               
Weighted average shares outstanding - basic   3,609       3,525       3,589       3,507  
               
Income (loss) per share  - diluted $ 0.13     $ (0.19 )   $ 0.20     $ (0.31 )
               
Weighted average shares outstanding - diluted   3,730       3,525       3,728       3,507