CSP (CSPI) 9 Feb 222022 Q1 Earnings call transcript

00:09 Good day and welcome to the CSPi Fiscal Q1 2022 Earnings Conference Call. Currently, all phone lines are in a listen-only mode. Later, there will be an opportunity to ask questions during a question-and-answer session. [Operator Instructions] Please be advised today's program may be recorded. 00:26 It is now my pleasure to turn the program over to Michael Polyviou.

sir. begin may You

the management questions. today as Aaron. that Officer. and review company's believe, and the first are CSPI's XXXX. their Statements estimate, in Levine, we'll continue, the intend, December you, regarding Executive remarks, to CSPi's by The joining and opening today's for expect, forward-looking Victor may the statements Officer; may, quarter you and project, laws. words us call XX, Gary expressions call on me identified to first business Chief intended With open identify CSPi's Victor not forward-looking Hello, on Thank Dellovo, as facts XX:XX is thank Chief historical Financial federal well are securities everyone plan, CSPi’s for ended similar is After statements. anticipate, XX:XX will, call made then -- conclude fiscal be term as Gary

risks company's their section control, read include no future statements Forms company's XX-K projections Commission. of on a a of in current management's and uncertainties, with good the statements with and future limited otherwise, Exchange that events these that XX-Q events report of to on thereof. undertakes but With Chief may respect segment the influence Forward-looking any time other of statements are as Executive cautions the the about the are the at uncertainties which The as Dellovo, results the upon qualified the Factors to affect of ahead. or accuracy when All Vic, go statement and obligation that and are are many future in information subject guarantee to update faith which may to whether statements report and the publicly statements and the and over result Risk and available annual and quarterly or influences, statements forward-looking that, the or should based. risks, company's future by not discussed are or Factors XX:XX the results. CSPi statements on date Forms as statements, entirety, the expectations are after please you reflect call belief, number company Victor XX:XX the performance made, time information, the filed be this beyond cautionary of to not events. a new based turn revise are the the Securities I'll forward-looking Officer. Forward-looking XX:XX of performance

reported Thanks, good Michael quarter everyone. our and objectives. of as morning, achieved We XX:XX performance solid we fiscal first many

X% million For revenue increased grew Service revenue year-over-year of example, XX% XX% sequentially. $XX.X year-over-year. and

continue of profit factors million we the Florida a are in to keep to employees hardest has quarter. supply of outbreaks which internal $XX we turnover manage course, normal over one the many employees. for under had key of certain orders and during COVID the would a the to that to Then with impact Omicron options COVID-XX that issues quarter, be the a our there minimum. XX:XX at have the our through the which variety market raises U.S., for also backlog We -- significant delayed give to chain During increasing The many of is environment of down had from the during XX:XX the job Some so projects. slowed We us issue quarter. completing a variant. customer continues multiple quarter, had

MSP to companies of tight, We the to hire and open fees division. able market of also because positions, in new challenges, as our and of we resulted tune multiple $XX,XXX some labor proactively high during quarter quite of the with proud our backfill the so as backlog. to build have that well the the we recruiting well a issues, engagement single Our no we continued positions today had performance during for work generate backlog. help, through is in the as first to as and recruiting quarter, Despite the order from resolve suppliers XX:XX the team growth had were with the quarter being growth the in our customers loss

we margin compared year compared gross should QX as progress progresses. further overall our a an facing in goal the not fiscal migrating than ago our as refocus and us and of to generated be certainty. make a we XX:XX pressures comparison similar of business, XX:XX nearly Additionally, have have products as we solid to XX.X%, of margins to as a first opportunities level fiscal the year quarter, the point, been margin TS and inflationary our higher shift impacted of issues first results captured this despite able side $XX.X chain heading to services at plan. larger gross which our meaningful outstanding quickly during peers, reported the our quarter, this year-over-year plain to Our continues or gears achieved, Solution, into tougher Technology exceeded being period cost. We revenue services resources million to believe period primary has been to able by of do with Our revenue to nimbler of business that with be

internal service a the year, to so in managed the don't expect MSP a to dynamic much will spot attract or bright this we challenge is resources business continue dedicate or coming ships change to practice build talent. Our retain service I to to remains cruise is currently The line necessary -- team business. to on four of of mentioned the I in deployed call. share and is progressing as working Moving QX on portfolio our our contract XX:XX capture because market in customers. this

or retrofits. variant Omicron another is this lowered QX. set additional the the ships be of early the regarding optimism could timing later While that has awarded of [indiscernible] There quarter

hindering by business, year progresses. we CSPi sales an as than with HPP have E-XD than expected UCaaS got on growth Regarding in we provides obstacles our peers. performed attractive business approximately and High always as ability reported compared better a to business revenue the revenue revenue during the royalty business revenue or Myricom issue winning and to to our XX:XX we force smaller our we maximize royalty fiscal of this Product and expected. an million recorded I'm added than is several division, reminder, are face larger a our progress. opportunity also Regarding XX:XX offering, of new We customers related As the additional decisively quarter This encouraged recognition the this do offset with name $X.X lower of Performance that potential continued a program, XX% the was was expected QX.

recorded second in half With balance of remaining to XXXX. now fiscal the be the expected

public and a and has gateway This applications to the network Myricom ARIA bridge. already of one network designed that product While interface growth adapter secure data requiring engine ARC-C a way transfer remains as In we unidirectional allows for been business this the cloud segment. deployed primary network TxO XX:XX networks. unclassified including a operator classified the organizations, government availability large in announced between act December,

emergence does change While ARIA, demonstrate the we X:XX demand OEM in trajectory the slowdown the data path. upward and quarter. it had product this we customers Omicron don't holiday business, from timing increased Myricom of significantly create With momentum, an the to regards respond the our a of large our to to in to expect experience earlier ability to as one-way of

QX. did commenced we customers few in in current the However, a contributed from manage fiscal close these to MDR the revenue

hard continue grow we HPP we deals we today, dramatically is XX:XX transform working generating revenue of As for The and to revenue ADR contracts. sizable our will the recurring sign are landscape are the orders along in to monthly new the pursuing backlog the business. team customers and with

and now expense management prudent financial than we strategy Gary performance. ask excelled at multi-year would wireless bit his implemented has to ARIA, company. Gary? will the has and a provide execute growth strengthening a on With on first initiatives the increased implement point. which high finish have and while security pace overview years like. to opportunities as to service a team Gary sales the UCaaS long-term us growth, and and are to service these the financial cyber fiscal Although, performance, a for resources two also managed this that XX:XX to make -- the limited such focusing our that our the to products demonstrating issue, continue at summarize, unpredictable across we our XX:XX our interest and is of on continue to transforming as chain improve slower brief business I near-term over that, timing our backlog with we a progress we execute services quarter interest allowed we to to the due a and To bring line the the aim supply past maintain

XX:XX Thanks, Victor.

quarter revenue, XXXX. reported million in As quarter. XX.X% Victor compared QX or of his first increase XX% of of gross year revenue fiscal fiscal $X.X mentioned fiscal ago our sales was the sales to opening $XX.X of representing million to margin remarks, XX.X% year-over-year million We or compared and X% $X.X first an first in

goal engineering and due margin mid conditions Although, -- the gross year is development the revenue. that to we pandemic was period. personnel for first We the high-'XXs, margin level of decrease that short-term allowed tougher annual period year-over-year The Our which gross quarter are as had and a was stated our ago to an expenses $XXX,XXX comparisons to higher maintain lower related compared costs. XX:XX previously in $XXX,XXX achieved. margin disproportional of a to started us in the entering service to fiscal record near is primarily

$X.X per a Our you in first payroll for costs share the included in and share net $X.X in from increase was increased the Act. recall, part reported a year established slightly $X.X commissions XXXX. segments the diluted We net a loans of was Paycheck of compared the million. the If fiscal fiscal diluted Protection per forgiveness SG&A Plan to as of to million, segment $X.XX $X.X SBA ago income quarter on fiscal due fiscal first TS at which XXXX a totaling XX:XX the SG&A million, first gain or of loss quarter CARES loss $X.XX of million the HPP TS $XXX,XXX debt quarter expenses the and the or QX

company quarter of fiscal of first would a Excluding net buy common reported XXXX. repurchase and loss XX, XXXX. XXX,XXX as shares quarter to first program the SBA fiscal ended fiscal the CSPi in $XX.X have ended million purchase of not a loans Plan loss Paycheck cash of XX:XX for debt with of of the quarter $X.X or decrease We up the the of In share million over cash the per forgiveness diluted gain We the with to $XXX,XXX $X.XX first on December Protection reactivated late any XXXX, the did shares XX, from the XXXX, we September December December stock XXXX. XX, authorization stock. equivalents

update is a a As as on basis will executed. quarterly the we program common practice,

will management our have managed and We to continue I exercise way service a turn to execute take to XX:XX that, the resources over the wireless we to your to transforming it multi-year operator company. With questions. to growth will cybersecurity, of expense the ensure

Scott XX:XX from (ph), question [Operator And Instructions] Investor. Private is we can who a our first take Caldwell

Yes. XX:XX box-in please? traded shareholder. of you annual publicly just an cost a the Can very much. Thank morning. basis long-time company being Good on you a I'm aggregate

a have year. XX:XX about hand, numbers the right That's been don't past, it's $X.X million off but probably, in to million I $X the

potential to XX:XX any Okay. sale? company Has Board the the up put explored for

that explored the We've years. XX:XX over

We or XX at is remind that moment. number company, no year program of here at there talked the to the do to have companies a active

not the concerned as by competitors our are of some puts the you a mentioned marketplace. substantial that fact it XX:XX disadvantage that in at and I'm that severe as we

understand Yes. I Yeah. XX:XX that.

to I'd cost to XX:XX $X to like whack. of because you of seems explore be completely million Well opportunities out certainly encourage it's

you. Thank XX:XX

XX:XX we Private our is take [Operator from who Instructions] Price next Mike Investor. And a can (ph), question

Your line is open.

potential worded it's quick that have XX:XX Can you repurchase Good buy about the morning, assurance Victor, a release that press the call. the share shares? discretion at coincide not way some to manager management's just shareholders and management's the I announced discretion. management's taking question provide does of the shares was you Gary. with sale my -- Thanks for

then don't of has one XX:XX rest mean, limited a basically, I Well, but periods, you time point group of the for at see the have we this and I that very at answer large management this and at no management least selling but amounts shares. blackout period sold have can't of don't I team, point us in the

shares. XX,XXX if stock. and XX,XXX XX:XX liquid very price go or Well, obviously, to the sell going to is of I'm the the I stock affect

don't that sell not the management shares with liquidity if XX,XXX cash question? So you the to that question basically the buy shares, to have basically I you corporate decide would discretion is the that's has have

the intent sure XX:XX to so. shares shares. is buying not for they our if Well, go not out mean, I and management selling to are support buy team actively

XX:XX Okay. That's it. Thanks.

Yeah. XX:XX

XX:XX Joseph Investments. [Operator to Nerges Instructions] next with We'll go Seagram

open. line Your is

pace, I XX:XX was on Hi, my working couple guys. think star a press your on here. I being things, if A answered didn't are you? quick one of How my questions didn’t release services you were phone. smaller know versus you train guess at on talked about this in and a increasing I way talent the I stated the brisk managed quarter because the company. it had of

work so IT secured on lot outside a -- the outsourcing smaller means Am attract their I talent companies of in-house what traditional that the most the can of that their even staff. and correct that? assuming am I So,

the but again have not same just been of at us that we have factors XX:XX but they issue, it of the training we of one they're driving whatever not and but have two. of for they attract them X people long It's they're hire don't be least they know or and it higher before a the may or of that's and bonus on ground a from structure, not you in months count outside where can have start a enough zero leaving and that of they can that you times, salary at amount lot staying one some to -- process partially then then

of the XX:XX And Speakers]. considered lot becomes they in an may are times, not so they outsourcing that a considering it option and have that's obviously, past [Multiple today,

Correct. XX:XX

release of the about second the On you part press XX:XX the talked UCaaS.

referring I would think Are something a significant mentioned here? UCaaS point to have that been you specifically you that a there profit. foreign

overall. Yeah. No, XX:XX

you of sufficient UCaaS I and a deliver can't up if call a you If last but customer to assume supplied XX:XX you of can and some the could telephones conference and you required. hardware mentioned about, it in have you lot -- the that deliver can side or

obviously -- can You

-- small it's with the along XX:XX And everything. services It's It's along UCaaS, not it hardware, UCaaS for that it just that is deliver hardware the it. of overall we backlog. that but The piece the for just go to with then software was without a the could going. goes it install

this ago supply I was chain let me XX:XX no and assume. essentially there was -- there years So wasn't rephrase were my chain, if issues three question, supply this ago, three years

that are let's pretty it We much, normal, put pretty way.

saying pretty delivery we considerably the on chain schedules. supply obviously and normal normal You're two Absent two a because things, profitably have let's profitable those schedules, -- of the one, we been virus. that were issues,

XX:XX less It's historically. Yeah. million We've backlog had ever. never like or a that half than been $XX that

backlog the So XX:XX or take have the quarterly didn't obviously much the increase wouldn’t if to problem. sales supply we

So I think, no.

then and cruise On road. now, that there is down -- Is expect you are said business, you that the you orders on the working cruise more

Yeah. XX:XX

of next on ships. working are the set We

moving Just little are a things slower.

with conversations take the a longer, months uncertainty, the decisions cruise but there. little taken normally are just with think line I the the I

did we Instructions] have expecting XX:XX or some first in And more the in the [Operator quarter year. royalty later you're

XX:XX third Yeah. quarters. and the That’s probably fourth in

of XX:XX E-XD. The the remainder

somebody in and specifically it providers Myricom. is government I customers using that product new you back one using you on about user Okay. press you it that's One, guess it, and either that or transmit press the let just release way to the data or had center’s the December, in the And the agencies? -- existing diode go talked one release the cloud or me is data product

XX:XX Yeah.

has tested or it so been -- it Now, has beta XX:XX been

that's over. No, beta actually we've it. We the actually is sold been, XX:XX

XX:XX Okay.

Yeah. XX:XX

implemented on incorporated -- XX:XX -- into for OEMs, product. whether that or in or you And by any release, mentioned also that call your by you being of that they one this is not press also tested to that OEMs use them or potential Have

XX:XX We've boards a to Well, but large opportunities, can we it. of is get been the over. phase awarded the couple deliver testing

to – I going be dollar how mean question. was That XX:XX million next

we ship. actually question, XX:XX A can't dollar multi-million and

you. XX:XX got I

Okay.

So, that's great.

a a product being pending the way to So got opportunity, as opposed able OEMs. but -- the not you acknowledged and product not good in of it's by accepted having delivery if to the

about how, wise do get time So Board Myricom talking does what is it what we like on to board, months? three take that

a It's today XX:XX moving change and tomorrow. target. could you tell it I will

So three like I it already. rather you give because changed just a is delivery date not times

some pretty is course, customers, chips is, talking I of pretty re it backlog, And Board -- OEMs assume the that these the you're and type are are about so from utilizing -- companies? some sizable XX:XX key the big but

Yeah, XX:XX absolutely.

know there it only share a to give delivery know future. don't the exactly are not don't will us set but first on hoping continues. we not schedule little rollout opening moving we're I is, I rollout orders the considering, -- into what So of the that forward I'm the hesitant

XX:XX if But that considerable Board. -- you deliver you would have you volume considerable revenue, could a thought some you mentioned the

have put with XX:XX the this have up budgeted it in, to all We that share no in we but whether talking to sure the of pole, or things It's the year. just and stand orders next that it's where constantly, on to I'm we in this scheme to in year not we're in year the control you. we're where totem pushing, be of them completely honest be

Thank appreciate progress absent very control. sounds good. very It it. I making we're Well, much. we what Okay. XX:XX can you like

way. that it put Let's

Definitely. XX:XX

lot. Thanks a XX:XX

a Davidson another Investor. question. [Operator Instructions] It We do XX:XX Brett have Private from comes (ph),

is line open. Your

managed as -- looking contract? I'm start color Good about of there that may receivables any The morning. the couple just quarter-and-a-half on thing, is items. XX:XX the as to a move little that a service insight for to is show

XX:XX Well, Brett.

remember is gross, have we to some of a net Let that that gross. revenue lot receivable is booked me the just the but clarify things not

of didn't you. follow to be that Vic within interrupt So And Victor can taking a mean deceiving little let that. some on. I’ll

No, go Gary. ahead XX:XX

XX:XX No. And say within trying the those to that's what receivable there I items. was are just

from that's standpoint, Brett. us So it skews could that off

And XX:XX the add, Got whole detail as it. some can how business, you maybe ship to work. that process

guys contract. does to are months, So multi-hundred months. contracts? mean these of land take for are one you weeks, two contracts there I thousand six What complete you it out two these the and

to ships back sailing, fully that. where of -- with will and the we configuring another XX: is ship a go XX:XX needs because There's X to then go. the ship. That's get -- them them, into you Phase the could different the and the we all have guys then and all goes along all Then is it's and X. contracts we'll Aps. of and where sitemap is of we just where the metal They XX while do all Phase The world own new care that covered five set then over write sure for making delivering on APs description full individuals X be of will different everything configurations, they and of that is. a be them they up that where over they one four, Phase order all then the walls, on that actually their Any a interference be all the it. will on come And their of come back of go usually take put paperwork the wireless

weeks, to then literally is in has where for doc we'll done retrofit there a it done. just dry-dock. done in site to of all It different will hours water it on they straight everything time. wallets and and be XX the the and day be the map worked doesn't So two-week be two in they the stages has because it's And come and do happen

is is just on there do four one and do ships happen. their the the to a needs. different ship, usually there it. time different It So and things each the that the sizes is of depends more and right customer just just and it And three the ship depends bigger that get cost size to matters the at usually it

dollar thousand multi-hundred are jobs million dollar or these jobs or? And Yeah. XX:XX

XX:XX No, hundreds of thousands.

it. Got XX:XX

are each standpoint it's all billing billed separately or just till wait end being from and we phase so And the --

That's separated of XX:XX we kind how them.

and So we're because it be could now the waiting months to between. end

of kind to stages. we've them separate So try

So we can we get go. paid as

for All the the XX:XX bring in Are for limited right. the Got now? floor switch and just content I to planes? still to American E-XD any to we gears we thing. want it. Are revenue spares

the primarily they're foreign content. newer few It's to may XX:XX done shifting spares But that for over has technology. a There Americans. be the

XX:XX Got it.

stuff spare up. the drying even So is

XX:XX Yeah.

XX:XX All have right. very you guys Thank afternoon. you Got good a And yourself much. it.

Yeah. XX:XX

Brett. You to

There no additional are over remarks. [Operator additional questions I'd the time. XX:XX any Dellovo program at to Instructions] for Victor like this to turn

XX:XX Thank you.

for deliver As are remain our always, challenging executing our want results long-term to support. on however, term interest thank shareholders I near sharing as your we be Gary, and in plan we short continued times, These results in growing and committed our fiscal XXXX progress to safe. business. and well Until look and I remain May. be the to operating quarter forward then to second

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

You may any time. disconnect at