CSP (CSPI) 13 Feb 192019 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to CSPi's First Quarter Fiscal 2019 Conference Call. My name is Aaron, and I will be your conference coordinator today. [Operator Instructions]. I would now like to turn the call over to CSPi Chief Financial Officer, Gary Levine. Please proceed, sir.

thank joining and everyone, morning, you us. for Good today Dellovo, CSPi's me on Executive Victor call the With Chief is Officer.

forward-looking company the will Before to we made Reform actual pricing SEC. under factors, the Exchange that and could advantage Act we by to filings from with Securities be forward-looking others Such may materially remind like on factors provisions include general The market of with company. take Please Commission. in cause differ conditions, risks the statements you that company's section with of competitive the the begin, forward-looking during cautions today's Litigation to results the I Private the numerous statements to safe company's filings harbor described would pressures statements be that respect Securities the refer to the economic included of XXXX and call, factors act. and deemed in

first I'll turn after call, on segments today's During strategic I'll for and to an we'll it to your on that, back progress, the Victor. up our Victor Victor With questions. update business open our over an introduction, will come then on and it discuss quarter provides financials.

development Gary. and revenues delays Thanks, year softer for in services a next-generation demand to for IT sales XXXX start our up products. fiscal delivered We solid with managed Strong offset XX%. the multicomputer cybersecurity U.S.

customer have for the and QX legacy our our IT and develop of network larger I'll Technology achievements our net ARIA Gary? for come and by reviews with results practice. for our our or now U.S. and Products capabilities share. a new wireless On quarter, of per progress reported from review to our cybersecurity segment. we operations our solutions benefit Solution, Gary next-generation income $XX,XXX After managed segment, back value-added the line, detailed advanced In financial services Myricom the SDS to bottom we evaluation stage. our adapters projects High-Performance In in $X.XX continued diluted

Victor. Thank you,

revenues to of $XX quarter a first compared to increased year fiscal million the million For XXXX, ago. $XX.X

Our volume. was $XX.X million total sales year due higher for quarter, million cost in the Gross higher in year $XX.X of the million, year a from sales multicomputer with QX profit ago. primarily to line flat the from the ago, XX.X% quarter increased of of from prior margin $X.X Gross XXXX. decreased to royalty revenue a XX.X% in from sales

our investment development engineering $XXX,XXX the development up expenses of solutions. First year in $XXX,XXX, quarter next-generation from our a reflecting were cybersecurity continued and ago,

and million with compared from a XX.X% of or from the was $XX year fiscal to from The expenses a X.X%, QX or was close the the at end to tax $XX.X the of XXXX. result the $X.XX $XX.X $X,XXX of receivable share or of XXXX. increase at $X.X the $X.X liability year. due of XXX% due liability $XX,XXX the of the decrease at loss year year-end first million end a sales, The compared As $X.X prior tax to net of year. share the with accounts Cash was We million timing million rate short-term million quarter $X.XX income quarter, tax fiscal per $X.X million investments of and in the million and a law. of at or of down of Net year XX% effects to million SG&A orders the ago. per of $XX.X to first last compared engineering percentage quarter last effective of tax X.X% year. a compared was the the for new QX down in sales from sales were had previous development expenses QX was X.X%

$X.XX of of shareholders share XX, Board our to dividend XXXX, payable per a quarterly XX, of to March Lastly, Directors XXXX. on voted February record pay

bottom improve organization. priorities to I'll Our the by quarter call to back now Victor. line turn continue level products the the in to XXXX be of second financial increasing performance containing across high-margin the and our costs of

Thanks, Gary.

into and Product review, segment each starting programs. our Let's of softer platform. foreign launch with the Multicomputer year our mainly the multicomputer last XX.X% spare million, division. move down in were $X revenues of Myricom due military products HPP High-Performance revenues cybersecurity and SDS ARIA U.S. boards the delay to for of for our sales parts from and the legacy were and

most be year. We expecting There program, XXXX, but Myricom Series reported have to to that will for half were to affected of which continue QX. E-XD to limited visibility royalties fiscal back the be factors military legacy three the sales ARC our in product related order negatively we levels of our the are related foreign in

shutdown larger we had and QX, strong First, also orders ceased government the timing of sales we the affected business the QX. a that sector into from in had some the And half sales as quarter finally, extended very on believe projects the government QX. some from of in pull-in repair sales slightly The some was as from December. we issues side repair second there

Myricom Looking at to normal we that stabilized repair expect business the but will business, get we from are levels. QX, revenues our optimistic back

integrate we for and quarter, with Series XX-gig network our continued worked into new technology adapters to to manufacturers equipment features their the legacy our software develop During ARC own.

We effort, application SIA, advanced costs and the and the manufacturers launched encryption, this base customer security Myricom demand developers or a our Intelligent of security will reduce equipment products. which accelerate and card, from we to expand packet functions data for Adapter, part As capture upload Myricom allows classifications. our believe generate onto like capabilities compression, Secure

platform, for the accessed that in on-prem. ARIA on Let's applications, our next-generation both by advanced protection ARIA. be about users assets and update to in the award-winning cybersecurity end move data capabilities need to cloud provides cybersecurity critical

applications. During the security to heavily we develop platform software quarter, to invest continued different to a support

of trading this on it capability of the network radically packet much blocked Packet recently capabilities batch customers. our in which these enterprise-wide we environments. approach to feeds, of to We with network-born data ARIA on we network. excel first By announced in from software, as result, and as XX% threats. ability enhancing came data Intelligence security recently data ARIA's streams data and middle enhances are to As capabilities, the from take focusing tools' security by boards detection ensuring data threats different impenetrability. can X new a suppliers ARIA application, and received This prevent the developing continue the to conversations, application improved occurring of a With even evaluations ARIA network detect and

and should see conducting continue and and ramp second we beginning up to fiscal in the QX early to of QX, evaluations testing half expect XXXX. sales We in

were up year-over-year, strong our now the to Turning mainly due Quarterly business. Technology to U.S. sales XX.X% revenues in Solution

reducing we headcount discussed the we the costs. As in past, and fixed by business rightsized adjusting U.K.

we this in QX as customers. our was As business multinational a profitable result, served long-term

to the Our the projects, quarter growth the we by on practice. from and U.S., XXXX. had of U.K. positive and during new an wireless team continues work excellent a IT In managed booking office we expect services contribution driven our the

bill clients are We and larger customer our base. new and rates establishing higher across adding

cruise new, book electronics, on customers we capabilities the year. we from a managed of quarter, and working company-focused defense-related completed In sign growth to area CSPi to from leveraged in to hard contracts opportunities are multicomputers new one international transform wireless on announcement large retail markets. the and with closing, in the service prompted in and customer. ships our tariffs also of of We to several on advance which benefited During the cybersecurity X a significant our the installments wireless

positioning and costs growth. controlling in our well executed business have We for

to transformation new platform keeping In turn deliver operator products, managing are invest will coming developing questions. engineering for closer cybersecurity of in products. over to applications to and the take are quarters, We progress. I'll we the our we next-generation for that, getting forward cybersecurity legacy on look costs are encouraged you it our We while With launch the our continue to to your we up-to-date talent profitability. that to

will Investments. Instructions]. take [Operator first Nerges Segren with And Joseph we from question our

That first you small my there revenues the that boards. question, Is to very little Very and Just quarter. that I is revenue? program just right? already E-XD think first was were what you on the said? in answered no announced,

boards spare some and few parts. A

Okay. I those thought U.K. -- you equivalents about and had remaining the cash million that's assume, where shifted that's, read. to some see least of operations, the XX-K, are over In in And what $X At I German I I in cash was sale the and the of the U.K. from

subject do and States United taxes cash we we repatriation associated it? back to have that with of -- to, obviously, are So the the a

cash U.K. that went -- the first, they owned the U.K. of is Well, German all that the into the the company so one

Okay.

law the taken expense. U.S. the into back so did And that we already the cash of the XXXX. cash the under repatriate tax that we because tax guilt came of some had fiscal And during new

So that came back tax-free.

remaining cash over the are subject... still I And that's assume there,

Due certain the we we have there, the keep regulators. of with that to a have portion pension, to because the Joe, liability of that

that's bringing be requirement. got to filing but more really back, March. that we with of And will a to we haven't statutory so regulatory in the a we've do And we have -- U.K.

some we'll have that, advisers after what how back. more -- a to with see so -- And review detailed we'll our bring much

right. Okay. good. All Very

in -- contracts. in on On were service you managed XXth. you indicated of was not, December, because the recorded firstly, call of call conference first the quarter the was course working the that none wireless conference several assuming I'm on

subsequent to that. closure, there's income it's going if any be with correct? Am So quarters any I with associated

Joe. correct, That's

managed basis, $XXX,XXX, have per you how applying of If service, monthly when comes on $XX,XXX And right? month. doing contract do on it normally? recognition that you it a it revenue then a you're X-year to you're Is for

the that. the some have differ to of under obligations those standards, so at revenue requirements, look new the from Under what are new XXX we

it that But... obligation Joe. the So on what contract depends performance is, under

Okay.

the if the in a so you that, the revenue of read of new XX-K, policies. full have Portions we'll description at filing

Very Okay. All right. good.

how So what an the have of you contract. from much know sure under depending quite a if quarters, you the -- to quarter on it or standpoint the never do subsequent you operations sell on

Right.

individually. look one each We at have to

that. board Of sure just with the new released, And grateful I'm four everybody for was which all that finally Thank Sure. good. you. the shareholders our is are -- boards,

assuming that asking I of that You different they're X companies' the whatever, ARIA sorted announced value-added in for line that are testing now, categories the out the be not applicable boards would on several in beta Am -- they're out correct security, or resellers. names into managed OEMs, XX-K I'm product but in there for categories.

We people involved? or security managed with have OEMs and some resellers

were piece looking of are at it. They That's -- some key correct. the management

Some packet look inspection. at will

some multiple other So looking customers and we'll that start which particular, multiple in let capabilities are looking one what at customers are application, at just are point. the there know and for them

testing? beta for shipped be to boards more expecting we Are

batch week on next next correct. going The in is so. Yes. the That's or

-- the on approximate And number that? numbers any

Sure.

the From batch?

So it's the doing -- the they have truly customers, we're way but time is reason evaluate. actually to the easy to the do bandwidth or to boards slowly rolling out we're then ship

we kind have them of a and is they look what sit on questionnaire the accomplish a the with shelf. with have work sure all and through, expect them at to So boards making -- energy and they each what do way time of to just a customer giving the not

we're of out just more how them So little evaluation. a the bit on cautious shipping we're

it it rather and can utilize receive shipping to You're out to that people them than...

longer, and them or X which sit shelf of to for they times bandwidth a then to some organizations. on not lot have weeks large the of X evaluate and And happens just a or take a month these at Correct.

So the cycles have to sure go through that it. they making we're

are So evaluating are Am or in to we interested shipped the That correct? of out that in yet. that assume haven't -- this. then you queue people number a would that I either quite -- they're I have

That's correct.

time, [Operator Victor Instructions]. program to Mr. this back the additional no I'd over questions. there At turn to like are Dellovo.

joining all speaking you look this on to our forward us We again Thank call. next morning. for you with

you. Thank

does program. for you your participation. today's Thank This conclude

You at may any disconnect time.