CSPI...NICE! NICE! NICE!...CSP Inc. Reports Fiscal Third Quarter Results; Record Gross Backlog Reaches $23.8 Million and Gross Margin Continues Expansion
LOWELL, MA / ACCESSWIRE / August 10, 2022 / CSP Inc. (NASDAQ: CSPI), an award-winning provider of security and packet capture products, managed IT and professional services and technology solutions, reported improved financial and operating results for the fiscal 2022 third quarter ended June 30, 2022, and provided a business update. The Company also announced that its Board of Directors has reinstated and declared a quarterly dividend of $0.03 per share, payable on September 9, 2022, to CSPi shareholders of record on the close of business on August 22, 2022
Third Quarter Operating Highlights and Recent Achievements
Services revenue grew 37% compared to the year-ago third quarter as the MSP business continued to attract new customers and expand existing customer relationships
Higher margin products and services lead to record gross margin of 37%, an increase of more than six percentage points over the year ago period
Gross backlog (backlog) as of June 30, 2022, was a record $23.8 million and $17.3 million on March 31, 2022
"The business momentum established over the past few quarters for our high margin products and services has continued in fiscal Q3. We have a record backlog of $23.8 million for products and services," said Victor Dellovo, Chief Executive Officer. "Despite the Technology Solutions (TS) business converting some of its older backlog into revenue, we still expanded overall backlog by $6.5 million from the fiscal second quarter. Within the TS business, we successfully transitioned sales leads into orders so the TS backlog grew by $5.8 million and now represents $19.8 million as of June 30, 2022. Our Managed Services Practice (MSP), which has not been hindered by the supply chain issues impacting our other revenue streams, is generating significant growth and remains a reliable source of recurring revenue from both new and existing customers. The High-Performance Products (HPP) business, which reported modest revenue in fiscal Q3 and will likely report similar results in fiscal Q4, is nonetheless positioned for success during fiscal 2023 and the ARIA opportunity pipeline strengthens from quarter to quarter. We also believe the HPP backlog of $4 million, when converted to revenue, is going to be a disproportionate contributor to our bottom-line during the next fiscal year.
The supply chain and inflationary issues constraining our business growth are not expected to change in the near-term, so our goal is to maximize the performance of our services segment while we continue to grow our backlog for our products' segments. With the Board feeling more confident we have the resources to execute our strategy, we reinstated the quarterly dividend to return cash to CSPi's shareholders.
Fiscal Year 2022 Third Quarter Results
Revenue for the fiscal 2022 third quarter was $13.3 million compared to $13.7 million in the year-ago quarter as the Company continued to operate in a challenging business environment. The supply chain issues impacting many global businesses continues to limit the Company's ability to receive needed components impacting the Company's ability to deliver finished products to the customer. Gross profit for the fiscal third quarter was $5.0 million, or 37.3% of sales, compared with $4.2 million, or 30.8% of sales, in the year-ago fiscal third quarter. The Company reported net income of $0.7 million in the fiscal 2022 third quarter, or $0.15 per diluted common share compared with a net loss of $(0.4) million, or $(0.10) loss per common share for the fiscal third quarter of fiscal 2021. The 2022 third quarter results reflect a $0.6 million gain from the impact of foreign currency exchange rates.
Fiscal Year 2022 Nine Month Results
Revenue for the fiscal nine months ended June 30, 2022, was $37.7 million compared with revenue of $39.2 million for the same prior year period. Gross profit for the fiscal nine months ended June 30, 2022, was $12.8 million, or 33.9% of sales, compared with $12.0 million, or 30.6% of sales, reflecting a more favorable product mix. The Company reported net income of $0.5 million in the fiscal nine months ended June 30, 2022, or $0.11 income per diluted common share compared with a net loss of $(0.1) million, or $(0.03) loss per common share for the fiscal nine months ended June 30, 2021. The 2021 nine-month results include a gain on forgiveness of debt of the Paycheck Protection Plan SBA Loans at the TS and HPP segment totaling $2.2 million, which was established as part of the CARES Act loan and recognized in fiscal 2021 first quarter.
The Company had cash and cash equivalents of $21.4 million as of June 30, 2022, which was an increase of $1.4 million from September 30, 2021. During the fiscal third quarter ended June 30, 2022, the Company utilized the stock repurchase program and repurchased approximately 7,000 shares of its common stock.
