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CSP Inc. Reports Operating Results (10-Q)

February 16, 2010 | About:
10qk

10qk

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CSP Inc. (CSPI) filed Quarterly Report for the period ended 2009-12-31.

Csp Inc. has a market cap of $13.13 million; its shares were traded at around $3.66 with and P/S ratio of 0.16. CSPI is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., John Rogers of ARIEL CAPITAL MANAGEMENT LLC.

Highlight of Business Operations:

As shown above, total revenues decreased by approximately $5.4 million, or 22%, for the quarter ended December 31, 2009 compared to the same period of fiscal year 2009. Revenue in the Systems segment decreased in the current year quarter versus the prior year quarter by approximately $1.3 million, while revenues in the Service and System Integration segment decreased by approximately $4.1 million, resulting in the overall decrease of $5.4 million.

Product revenues decreased by approximately $3.2 million, or 17% for the quarter ended December 31, 2009 compared to the comparable period of fiscal 2009. This change in product revenues was made up of an increase in product revenues in the Systems segment of approximately $134 thousand over the prior year quarter, and a decrease in product revenues in the Service and System Integration segment of approximately $3.3 million versus the prior year quarter.

The decrease in the Service and System Integration segment product sales of approximately $3.3 million was due to decreased product sales in the US division of the segment of approximately $2.2 million, and a decrease of approximately $1.0 million in the segment s German division. The decrease in the US was primarily attributable to the loss of a major customer, which filed for bankruptcy protection during the prior fiscal year. Product sales to this customer for the fiscal quarter ended December 31, 2008 were $2.6 million. The decrease in Germany was from lower sales volume of approximately $1.4 million in constant dollars, offset by a favorable exchange rate fluctuation of the stronger Euro versus the US Dollar of $400 thousand. The decrease in product sales volume from the German division was due to the overall economic and technology sector slowdown which is continuing to put downward pressure on sales volume.

As shown in the table above, service revenues decreased by approximately $2.2 million, or 40% for the quarter ended December 31, 2009 compared to the comparable quarter of fiscal 2009. Service revenue in the Systems segment decreased by approximately $1.4 million, while service revenue in the Service and System Integration segment decreased by approximately $833 thousand, as shown in the table above.

The decrease in the Service and System Integration segment service revenue was driven by lower service revenues from the segment s US and UK divisions which decreased by approximately $619 thousand and approximately $228 thousand, respectively. The decrease from the US division was due in large part to the loss of the same customer as described above due to bankruptcy, which accounted for approximately $312 thousand of the decrease. We attribute the remainder of the decrease to the unfavorable economic conditions which resulted in decreased spending by our customers and potential customers on information technology projects. The decrease in service revenue from the UK was also attributed to the unfavorable economic conditions which negatively impacted the UK division s revenue performance similarly.

The decrease in Americas revenue for the quarter ended December, 31 2009 versus the quarter ended December, 31, 2008 was the result of the decrease in Systems segment sales to US customers (primarily Lockheed Martin) which accounted for approximately $1.6 million plus the decrease in revenues of the US division of the Service and System Integration segment to customers in the Americas of approximately $2.8 million. The decrease in sales in Europe was primarily the result of lower sales from the German and UK divisions of the Service and System Integration segment, where sales in Europe decreased by approximately $941 thousand and $400 thousand, respectively. The impact of the stronger Euro versus the US dollar in the quarter ended December 31, 2009 versus the quarter ended December 31, 2008 had a favorable impact on European sales, when comparing to the prior year quarter, of approximately $700 thousand. Therefore the decrease in sales volume in constant US dollars for the fiscal quarter ended December 31, 2009 versus the same quarter in 2008 was approximately $2.0 million, due to the reasons described above. The increased Asia sales were primarily the result of the increase in sales to KBK from the Systems segment of approximately $342 thousand described above.

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