Board Votes to Increase Quarterly Dividend by 10% Beginning in Q1 FY 2014
Reports on Strategic Progress
BILLERICA, Mass., Dec. 17, 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 fourth quarter and year end fiscal 2013 ended September 30, 2013.
The Company also announced that its board of directors has voted to pay its quarterly dividend of $0.10 per share to shareholders of record December 27, 2013 payable January7, 2014. In addition, the board has voted to increase the quarterly dividend by 10%, beginning in the first quarter of fiscal 2014, to $0.11 per share.
Management Comments
"Fiscal 2013 turned out to be successful for CSP on the strength of the Service and Systems Integration business even though the year initially looked to be challenging due to the tough year-over-year comparisons at our Systems business," said President and Chief Executive Officer Victor Dellovo. "We also distributed $1.4 million in dividends in fiscal 2013, and raised the quarterly dividend from $0.03 per share to $0.10 per share during the year. The board continued to demonstrate its commitment to enhancing shareholder value and its belief in our strategic direction by recently voting to raise the quarterly dividend again beginning in the first quarter of fiscal 2014 by 10% from $0.10 to $0.11.
"The year-over-year comparison for the fourth quarter was challenging from both a top- and bottom-line standpoint due to the lack of royalties from the E-2D. However, in the fourth quarter we received an order and began to ship parts in support of production beyond Lot 1, and we believe that fiscal 2014 will include royalty payments for five E-2D planes.
"Throughout the fiscal year we made progress in the execution of our growth strategy, and the fourth quarter was no exception," said Dellovo. "At our Systems segment, the recent Myricom acquisition gives us ownership of the interconnect technology that is critical to our latest generation MultiComputer products and protects our ability to support our military and aerospace customers going forward. It also gives us a strong base of new customers in commercial growth markets, reinforcing our strategy to develop products in the Systems segment that are synergistic with the Service and Systems Integration segment. In line with that strategy, during the quarter the Systems business introduced the KeyDSP product line for energy efficient computing and signal processing that addresses commercial opportunities.
"At our Service and Systems Integration segment, we made excellent progress on our strategy to increase our margin profile by growing sales of managed services," added Dellovo. "During the quarter we closed on 11 new managed services customers and the level of recurring revenue in our pipeline is increasing quickly. As we grow this business, we expect to sell additional products to our managed services customers. We also made progress in our strategy to cross-sell between Modcomp's geographic locations. In fact, about half of the revenue at the UK business came through our US operation in the fourth quarter.
"Looking forward to fiscal 2014, we expect that that next year will be better than fiscal 2013 on both the top and bottom lines. We continue to see significant growth potential for CSP and we believe we have the right strategy to unlock the value in our Company," concluded Dellovo.
Financial Results
For the fourth quarter of fiscal 2013, revenue declined 2% year over year to $21.9 million. For full-year fiscal 2013, revenue increased 3% year over year to $87.6 million.
Gross margin for the fourth quarter was 22% compared with 25% in the fourth quarter of fiscal 2012, primarily due to a lower mix of sales from the Systems business, including reduced royalty revenues. Gross margin for fiscal 2013 was 21% compared with 24% in the prior-year period.
Net loss for the fourth quarter was $8,000, or $0.00 per share, compared with net income of $4.9 million, or $1.43 per diluted share, in the fourth quarter of fiscal 2012. Net income for full year fiscal 2013 was $368,000, or $0.10 per diluted share, compared with $6.6 million or $1.91 per diluted share in fiscal 2012. The decline was again due to the lower royalty revenues in fiscal 2013 and no proceeds from officer life insurance settlement and tax benefit for reversal of valuation allowance for the deferred tax asset as recorded in the previous fiscal year.
Cash and short-term investments decreased from $20.5 million at fiscal year-end 2012 to $18.6 million at the end of fiscal 2013. The Company paid out approximately $1.4 million in dividends during the fiscal 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.
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.
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, we believe that fiscal 2014 will include royalty payments for five E-2D planes and looking forward to fiscal 2014, we expect that that next year will be better than fiscal 2013 on both the top and bottom lines. 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) | ||
| September 30, | September 30, | |
| 2013 | 2012 | |
| Assets | ||
| Current assets: | ||
| Cash and short-term investments | $ 18,619 | $ 20,493 |
| Accounts receivable, net | 13,529 | 12,145 |
| Officer life insurance settlement receivable | -- | 2,172 |
| Inventories | 4,791 | 6,276 |
| Other current assets | 3,979 | 3,620 |
| Total current assets | 40,918 | 44,706 |
| Property, equipment and improvements, net | 1,420 | 991 |
| Other assets | 5,155 | 5,369 |
| Total assets | $ 47,493 | $ 51,066 |
| Liabilities and Shareholders' Equity | ||
| Current liabilities | $ 15,125 | $ 18,168 |
| Pension and retirement plans | 8,660 | 9,431 |
| Non-current liabilities | 673 | 426 |
| Shareholders' equity | 23,035 | 23,041 |
| Total liabilities and shareholders' equity | $ 47,493 | $ 51,066 |
| 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 | September 30 | September 30 | September 30 | |
| 2013 | 2012 | 2013 | 2012 | |
| Sales: | ||||
| Product | $16,219 | $15,976 | $65,844 | $59,583 |
| Service | 5,674 | 6,355 | 21,775 | 25,224 |
| Total sales | 21,893 | 22,331 | 87,619 | 84,807 |
| Cost of sales: | ||||
| Product | 12,838 | 12,952 | 54,023 | 50,226 |
| Service | 4,251 | 3,725 | 15,013 | 14,160 |
| Total cost of sales | 17,089 | 16,677 | 69,036 | 64,386 |
| Gross Profit | 4,804 | 5,654 | 18,583 | 20,421 |
| Operating expenses: | ||||
| Engineering and development | 596 | 419 | 1,857 | 1,720 |
| Selling, general & administrative | 4,234 | 5,019 | 16,025 | 15,847 |
| Total operating expenses | 4,830 | 5,438 | 17,882 | 17,567 |
| Proceeds from officer life insurance settlement | -- | 2,115 | -- | 2,115 |
| Operating income (loss) | (26) | 2,331 | 701 | 4,969 |
| Other income (expense), net | (48) | 2 | (12) | (100) |
| Income (loss) before income taxes | (74) | 2,333 | 689 | 4,869 |
| Income taxes expense (benefit) | (66) | (2,600) | 321 | (1,740) |
| Net income (loss) | ($8) | $4,933 | $368 | $6,609 |
| Net income (loss) per share - basic | ($0.00) | $1.44 | $0.11 | $1.93 |
| Weighted average shares outstanding - basic | 3,422 | 3,362 | 3,389 | 3,362 |
| Net income (loss) per share - diluted | ($0.00) | $1.43 | $0.10 | $1.91 |
| Weighted average shares outstanding - diluted | 3,422 | 3,405 | 3,441 | 3,405 |
| ` | ||||