0000356037false00003560372024-05-082024-05-08

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2024

CSP Inc.

(Exact name of the registrant as specified in its charter)

Massachusetts

(State or other jurisdiction of incorporation)

000-10843

04-2441294

(Commission File Number)

(IRS Employer Identification No.)

175 Cabot Street - Suite 210, Lowell, MA

01854

(Address of principal executive offices)

(Zip Code)

(978) 954-5038

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

CSPI

Nasdaq Global Market

Item 2.02 Results of Operations and Financial Condition.

On May 8, 2024 CSP Inc. (the “Company”) issued a press release announcing its financial results for the second quarter of fiscal year 2024, which ended on March 31, 2024. A copy of the press release relating to such announcement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information set forth in this Form 8-K, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. The information in this Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d)Exhibits

99.1Press Release Dated May 8, 2024

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CSP INC.

Date: May 8, 2024

By: /s/Gary W. Levine

Gary W. Levine

Chief Financial Officer

Exhibit 99.1

CSP Inc. Reports Fiscal Second Quarter 2024 Operating Results; 23% Growth in Services Revenue Drives Gross Margin Percentage Expansion to 47% and Nearly Five-Fold Increase in Net Income

ARIA Zero Trust PROTECT (“AZT PROTECT™” or “AZT”) Launch Broadens to Address Mid-Market Opportunity While Fortune 500 Pipeline Increases; Global Pharmaceutical Company Signs Multi-Million Dollar AZT Contract

LOWELL, Mass., May 8, 2024CSP Inc. (NASDAQ: CSPI), an award-winning provider of cybersecurity AI-driven solutions (AZT), security and packet capture products, managed IT and professional / cloud services and technology solutions, today announced results for the fiscal second quarter ended March 31, 2024. The Company also announced that the Board of Directors declared a quarterly dividend of $0.03 per share payable June 12, 2024, to shareholders of record on the close of business on May 24, 2024.

Recent Achievements and Operating Highlights

Services revenue and high margin AZT sale contributes to the expanded gross margin and net income of $1.6 million for the fiscal second quarter
Recently published case study of AZT PROTECT in The Journal, an award-winning publication from Rockwell Automation and Our PartnerNetwork™, reached a subscriber base of over 50,000. The Journal educates the industrial automation market on leading-edge methods, trends, and technologies
CRN®, a brand of The Channel Company, named CSPi Technology Solutions to its Managed Service Provider (MSP) 500 list in the Security 100 category for 2024.
Continued strong balance sheet allows the company to rapidly invest in AZT PROTECT market development initiatives
ARIA Cybersecurity Wins Global Infosec Cybersecurity Product Award for AZT PROTECT at RSA
ARIA Cybersecurity Wins Prestigious Globee Cybersecurity Product Award for AZT PROTECT

"Our business continued to operate at a high level during the quarter, and across the board we are building a pipeline that is in line with, or well above our internal plans. As a result, we continue to execute a strategy designed to generate sustained long-term growth and profitability,” commented Victor Dellovo, Chief Executive Officer. “The consistent performance of our Technology Solutions (TS) business and robust balance sheet is enabling investment in certain sales and marketing initiatives to generate the desired growth outcomes for the High Performance Products (HPP) business, mainly with the AZT offering.”

“We believe our multi-pronged market awareness strategy for the AZT offering is demonstrating the need and attractiveness to large Fortune 500 global brands. The effort has resulted in landing a major AZT customer – a global pharmaceutical company. With a dedicated sales team focused on this enterprise segment, we recently added three sales representatives to target mid-market companies while we build partnerships with organizations addressing both markets. Earlier this month, we also achieved another significant milestone with our partner Rockwell, and the publication of an AZT PROTECT deployment case study within a Fortune 500 company. This article published in The Journal is distributed to over 50,000 subscribers – readers that heavily rely on knowing the latest and best solutions to meet today’s cybersecurity threats and challenges.

As we move forward, we believe the focus of our direct sales team and leveraging our new and expanding partnerships is going to significantly raise the profile of the AZT offering. Despite being less than a year removed from the launch, we are building traction in the market and the level of enthusiasm remains high, as does the new business lead pipeline. We are optimistic about the opportunities we have with AZT and look forward to the second half of our fiscal year.”

Fiscal 2024 Second Quarter Results

Revenue for the fiscal second quarter ended March 31, 2024, was up slightly to $13.7 million compared to revenue of $13.3 million for the fiscal second quarter ended March 31, 2023. Services revenue constituted $5.2 million of overall sales, an increase of 23% compared to services revenue of $4.3 million in the year-ago fiscal



Exhibit 99.1

second quarter. Gross profit for the three months ended March 31, 2024, was $6.5 million, or 47% of sales, compared to $5.0 million, or 38% of sales, representing a 9% improvement as higher margin services revenue along with the high margin AZT sale fueled the growth. The Company reported net income of $1.6 million, or $0.16 per diluted common share for the fiscal second quarter ended March 31, 2024, compared to net income of $0.3 million, or $0.03 per diluted common share for the fiscal second quarter ended March 31, 2023. Earnings per diluted common share are retroactively adjusted for the effects of a stock split effected in the form of a 100% stock dividend which occurred during the second fiscal quarter of 2024.

The Company had cash and cash equivalents of $27.1 million as of March 31, 2024, providing it with the resources to invest in market awareness and growth initiatives for its products and services, including the transformative AZT offering.

Fiscal Year 2024 Six Month Results

Revenue for the fiscal six months ended March 31, 2024, was $29.1 million compared with revenue of $31.6 million in same prior year period. Gross profit for the fiscal six months ended March 31, 2023, was $10.6 million, or 36% of sales compared with $10.8 million, or 34% of sales, reflecting a more favorable product mix and benefiting from the higher margin services revenue in the 2024 fiscal second quarter. The Company reported net income of $1.5 million, or $0.16 per diluted common share in the fiscal six months ended March 31, 2024 compared with net income of $1.3 million, or $0.14 per diluted common share for the fiscal six months ended March 31, 2023.

Conference Call Details

CSPi Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W. Levine will host a conference call at 10:00 a.m. (ET) today, May 8, 2024, to review CSPi’s financial results and provide a business update. To listen to a live webcast of the call, the event link is https://www.webcaster4.com/Webcast/Page/2912/50580. Individuals also may listen to the call via telephone, by dialing 77-545-0523 or 973-528-0016 and use the Participant Access Code: 533105 when greeted by the live operator. For interested parties unable to participate in the live call, an archived version of the webcast will be available for approximately one year on CSPi’s website.

About CSPi

CSPi (NASDAQ:CSPI) operates two divisions, each with unique expertise in designing and implementing technology solutions to help their customers use technology to success. The High Performance Product division, including ARIA Cybersecurity Solutions, recognizes that better, stronger, more effective cybersecurity starts with a smarter approach. ARIA's solutions provide new ways for organizations to protect their most critical assets—they can shield their critical applications from attack with our AZT solution, while monitoring internal traffic, device-level logs, and alert output with our ARIA ADR solution to substantially improve threat detection and surgically disrupt cyberattacks and data exfiltration. Rounding out the portfolio, Aria's AZT Gateway Software allows us to interrogate network packets at 100mbps line-rate to enforce forwarding and capture policies on the fly. Customers in a range of industries rely on our solutions to accelerate incident response, automate breach detection, and protect their most critical assets and applications—no matter where they are stored, used, or accessed. CSPi's Technology Solutions division helps clients achieve their business goals and accelerate time to market through innovative IT solutions and professional services by partnering with best-in-class technology providers. For organizations that want the benefits of an IT department without the cost, we offer a robust catalog of Managed IT Services providing 24×365 proactive support. Our team of engineers have expertise across major industries supporting five key technology areas: Advanced Security; Communication and Collaboration; Data Center; Networking; and Wireless & Mobility.

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



Exhibit 99.1

forward-looking statements may include but are not limited to, we are building a pipeline that is in line with, or well above our internal plans. As a result, we continue to execute a strategy designed to generate sustained long-term growth and profitability and we are optimistic about our opportunities to sign additional AZT customers during the second half of our fiscal year.

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 Securities and Exchange Commission (“SEC”). Please refer to the section on forward looking statements included in the Company's filings with the SEC.



Exhibit 99.1

CSP INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

    

March 31, 2024

    

September 30, 2023

Assets

 

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

27,119

$

25,217

Accounts receivable, net

 

12,780

 

12,955

Financing receivables, net

7,625

7,171

Inventories

 

1,478

 

2,542

Other current assets

 

1,860

 

2,479

Total current assets

 

50,862

 

50,364

Financing receivables due after one year, net

 

2,178

 

4,224

Cash surrender value of life insurance

5,477

5,356

Other assets

 

5,683

 

5,960

Total assets

$

64,200

$

65,904

Liabilities and Shareholders’ Equity

 

  

 

  

Current liabilities

$

12,535

$

15,659

Pension and retirement plans

 

1,203

 

1,251

Other non-current liabilities

 

2,215

 

2,846

Shareholders’ equity

 

48,247

 

46,148

Total liabilities and shareholders’ equity

$

64,200

$

65,904



Exhibit 99.1

CSP INC. AND SUBSIDIARIES
CONDENSED UNAUDITED 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,

2024

2023

2024

2023

Sales:

 

  

 

  

  

 

  

Product

$

8,458

$

8,988

$

19,865

$

23,209

Services

 

5,248

 

4,281

 

9,216

 

8,404

Total sales

 

13,706

 

13,269

 

29,081

 

31,613

Cost of sales:

 

  

 

  

 

  

 

  

Product

 

5,416

 

6,580

 

14,644

 

17,351

Services

 

1,812

 

1,699

 

3,864

 

3,455

Total cost of sales

 

7,228

 

8,279

 

18,508

 

20,806

Gross profit

 

6,478

 

4,990

 

10,573

 

10,807

Operating expenses:

 

  

 

  

 

  

 

  

Engineering and development

 

726

 

858

 

1,426

 

1,694

Selling, general and administrative

 

4,518

 

3,895

 

8,256

 

7,512

Total operating expenses

 

5,244

 

4,753

 

9,682

 

9,206

Operating income

 

1,234

 

237

 

891

 

1,601

Other income (expense), net

 

489

 

155

 

772

 

(115)

Income before income taxes

1,723

 

392

1,663

 

1,486

Income tax expense

135

 

71

148

 

204

Net income

$

1,588

$

321

$

1,515

$

1,282

Net income attributable to common shareholders

$

1,482

$

302

$

1,417

$

1,205

Net income per common share - basic

$

0.16

$

0.03

$

0.16

$

0.14

Weighted average shares outstanding – basic

 

9,070

 

8,782

 

8,967

 

8,683

Net income per common share - diluted

$

0.16

$

0.03

$

0.15

$

0.14

Weighted average shares outstanding net income - diluted

 

9,455

 

8,924

 

9,366

 

8,789



v3.24.1.u1
Document and Entity Information
May 08, 2024
Document and Entity Information [Abstract]  
Document Type 8-K
Document Period End Date May 08, 2024
Securities Act File Number 000-10843
Entity Registrant Name CSP Inc.
Entity Incorporation, State or Country Code MA
Entity Tax Identification Number 04-2441294
Entity Address, Address Line One 175 Cabot Street
Entity Address, Address Line Two Suite 210
Entity Address, City or Town Lowell
Entity Address, State or Province MA
Entity Address, Postal Zip Code 01854
City Area Code 978
Local Phone Number 954-5038
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol CSPI
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0000356037
Amendment Flag false

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