CSP (CSPI) 11 May 222022 Q2 Earnings call transcript

Good day everyone and welcome to today's CSPI Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this call may be recorded. [Operator Instructions] It is now my pleasure to turn today's program over to Mr. Michael Polyviou. Sir, please begin.

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

projection on read Forward-looking Exchange affect company's to statements statements should a accuracy statements results a upon Risk may control risks and and number in future quarterly the performance Factors that which many the future and the not are company the of company's that the be performance The or of which these uncertainties, section filed cautions based. and or about you Factors are segment influences, beyond the as the not with uncertainties results. the limited the the report Form report that discussed the XX-K other XX-Q on and events risks and subject the to, of annual are of influence expectations current may statements reflect Form company's guarantee of Securities but include are Commission. and

call or whether of future update obligation new Victor, no undertakes the in those date that, this at All belief time over statements, revise events. respect events available or Forward-looking are the as with information the a by time cautionary statements to made Victor statements result statements CEO. the to forward-looking and please forward-looking entirety and ahead. are on based after With Dellovo, turn to go good thereof. qualified of as the I'll information, CSPI are any statement management's faith the their otherwise publicly future

including Service XX% contemplated of believe a as I positive believe margins $XX during once trend of our our quarter. approach and a were everyone. fiscal second morning, sales results year reported our second long-term results revenue XX good and the of $X.X a The We in the business million for expand disciplined had to CSPI. grew indicators, quarter. across enabled compared year-ago compared million. million indicator well I performance key March team Michael to is was And Thanks, entering performed quarter $XX.X ago. we many us solid underlying than the to Backlog the better again. gross

were This of prior us major per have referenced a despite quarter, up many behind profit year a $X.XX and supply the past during prior calls such year, gross on margins challenges the We achieved and generating as these the been results share. X% of chain our diluted inflation. factor that over was wage

Let you with these the the I before share of me review results quarter.

supply is and global components finished our receive to goods ability the First, to customers. our disrupting chain deliver

by our that have for evidenced asset. our substantial undervalued We been interest backlog. products our stress demand to and want higher a services I However, believe never represents the backlog as and

and Our backlog. than to the worse before. Unfortunately, becoming team we to have is quite not it chain issue gets single is resolved lost not proud order in supply be a that quickly It point the better. fact, going signs in

scales in hottest of high-skilled are its markets the to help Florida labor the recruit to us has X.X%, market effects which, case, the rates U.S. adjust managing tilted staff a one also our are of remains new and job wages and personnel. retain to caused we of in employees. with Second, tight unemployment the

sword to leaders ease, even XX% the report either was to to And the point of investments a so IT talent, we're now we're transform recruiters X/XX/XX staff the all demand hurts to to is which continued because that from are forced technology shows growth businesses A at with adapt the necessity and pandemic, market it labor in $XXX,XXX ending emerging the meet competing new a of these the even due increase MSP continuing prior for Gartner continuing double-edged report This were implementations. environment. planned us the increase in help to on to While fill spending in quickly a an tight the their businesses investments. for months is same IT nearly pandemic the or needs business. X the this is

professionals meet in-house their CSPI customers from the bank needs. we IT also the of we to have lack because drive However, which to customers' people

the higher-margin despite have gross to successfully products higher employers the people solid report allowing office business and of along points adjusted strategy. industry been important from model revenue touch goal is goal services, pandemic, to to XX% with in the because and for pandemic are to our to with dynamics. margin customers we considerably believe second welcoming forcing migrate with a to Prior our in to is teams I to adopt were pre easing achieved. are person most primary go-to-market year-ago even say That compared work can choosing confidence the year-over-year. the post multiple and back the us employees is these the I and fiscal lower margin gross a this to our these for generating quarter, account a sales. our engaging home And pandemic Third, team conferences though highly has

internal the backlog to performance has This Our TS strong. be to proven in plans exceeded generated indicator second Approximately rate. by is the this XX% wide of or reliable million high a backlog a $XX.X Technology Solution, while of revenue revenue conversion remained business, of the the margin business which future our fiscal quarter. due

performer. MSP, a anytime reliable to expecting is not or practice, service down strong consistent, managed this slow Our and soon. We're

over threats businesses, are years to as continued future. firm technology; XXXX. of causing which talent service the and growth IT foreseeable cybersecurity accelerating around In virtual; managed fact, by the cloud experienced same The X MarketsandMarkets, went MSP global growth dynamic advanced estimates mentioned organizational shortage be drive expecting of past outsource is been $XXX have budgets IT business that to the are the I for the research growth According to large earlier; expected to reduced market a market projects. to to billion business small, and IT grow infrastructures which

being on strong, this truly All consistent under cloud our to consistently recurring pipeline. also heavily Additionally, multiyear monthly and revenue price. remains growing revenue, contracts not in MRR, stable stock the business business the and closing deals and services believe line. our and with is I MSP cloud contributes bottom the reflected professional is

believe growing Very I progress the us to demonstrating remains believe process. methodical business quarter this closer the UCaaS, a each are and Regarding closer building to getting and desired I we similar improvements is outcome. our MSP this steady practice,

been in the As prior and meet you us recall, has It offering expecting we expectations. to readjust customers to pandemic a and just took while to person. launched UCaaS our approach

these as achievements believe is coming wins an the I create in I name more broader to upswell expect believe and top our interest. added quarters belt. going the recognition wins we under team I get greater of and of on However, things is

revenue of perform well. the continues backlog High-Performance the we revenue multimillion-dollar $X.X chain million as to growth. are supply division, build HPP to issues our Regarding a Products, reported and continue hindering or Myricom

program XXXX half of pushed was However, the the business. to expected fiscal its of the to restructuring the related revenues most E-XD to out second due royalty customers

income We more generated contribution. are pipeline and enthusiasm. is long-term new sign more interest ARIA the quarter my in being experiencing on in we monthly The we and bullish and the as growing encouraging the customers remain raises

generate shortened from share. X internal To build when second looking to business fiscal compared This better-than-expected summarize, benefiting to margins higher In and plan launched ARIA, reps mid-market accounts pursue is sales to we we additional reported market we our with performance profits. quarter. initially addition a consistent to cycle are to hire a sales to

have challenges in that past success. these for position the us We the future many value-added solutions X the met years

We opportunities and markets because them tight for offer despite the we labor also attract to growth continue success. talent

a foreseeable to future. in for is are sector We the other rising many outpace expected that industries

achieve and ambitious the services goals. own have products our We to

During was healthy safe the the a our ensured and pandemic, team with succeed equipped in tools to we environment.

Gary? shares are Gary things CSPI the nearly truly and an overview feel financial $X.XX second shares potentially fiscal the in back coming the that we XX,XXX on I which the and many enabling quarter is stock quarters. is share provide to we With doing Our of performance. ask per buy positive is generating repurchased reflect can brief now execution not achieve I returns will on a cost does average to that, as undervalued

Victor. Thanks,

sales to the in of representing product million. $X.X Victor year-over-year in pleased sales was year-ago while were remarks, of the We -- in similar second ago, despite year gross fiscal was product margin slightly to gross that fiscal our service As X% ahead his year's improvement. product compared or $X.X XX% reported margin mentioned the quarter revenue. Further, a or of million million revenue we decline margin the second XX% last was gross $XX gross revenue of quarter, the opening quite

a gross out get making backlog these to every to Additionally, product-based the shipments effort customers. so more will also favorable have margin, are we

the decrease personnel for development to and the ago primarily lower The year second $XXX,XXX $XXX,XXX due in costs. engineering fiscal Our to were quarter expenses compared is period.

XX, $X.X due -- second equivalents a or to administration quarter in $X.X year-ago of of from million per slight an quarter loss second fiscal XXXX of headcount for $X.XX in compared quarter expenses of cost fiscal as $X.XX or share decrease $XXX,XXX of diluted December ended million March net and fiscal were the fiscal and second the $X $XXX,XXX of million. with the per net We income which from increase reported in was second SG&A Our SG&A We QX of XXXX. million, a $XX.X cash the the XX, share XXXX. cash sales lower the with

shares purchased million program. authorized recent During the an buy reactivated of stock believe nearly the we fiscal at levels quarter, shares We We've XXX,XXX the common represents repurchase from stock value. additional to stock. second these CSPI XX

to wireless growth our to strategy to managed questions. take company. and operator we turn expense that, we a to However, exercise it of continue to resources management prudent your the With will ensure the service I cybersecurity, will to over execute transforming have multiyear

come question with Instructions] Investments. Nerges first from Joseph [Operator Our Segren will

Congratulations.

And no the are some share Currently debt. of product of around You in to trading with situation this stock did a you all $X.XX we quarter, $X. cash estimate, trading and is the a a those XX% about our that off with need around the of for me at the let deliver start is standpoint getting a products. -- brief of around we're great position from with But quarter from tough standpoint. sales, my overview price stock currently our and our job

undervalued unbelievably -- Now, it's you undervalued absolutely looking scenario. as -- at any in we're stated,

And going so about have shares let only the through outstanding. trying me to looked directly ask you asking and of when Have you few of and thought in larger are XX,XXX I at to at in who rather X,XXX, some ever shares XX,XXX, than an markets? shares existing people file that open buy XX,XXX purchasing realize restrictions Have purchased purchases we you this; block XXG difficult you all market so the forms to execute daily it? the

no point, the take but under with advisement certainly this that. and we about Board At that speak would

Because they little thousand here, couple some thousand a -- of to they're people obviously, here, by little. of couple are liquidating trying it do a

out the larger corrections cases, sell owners And we the so block a now some or average in of a shares stock but that paid point. investors because $X.XX. that's the some be A they individual there not can't XX,XXX XX,XXX my be your in at only on it price One, couple time; $X.XX, given so of is dribbling statements. could are may

Victor think I mentioned $X.XX.

Yes, mistake. my that's

not mentioned, shares it XX,XXX And you shares, XX Gary. was that million

that repurchase? still shares for left, said that, you something we So approximately XXX,XXX it have authorized are

Yes.

X And to April in the the other end words, the subsequent purchased quarter, X, shares of since have we since to Okay. April date? current

did some shares We in... Yes.

number? You don't the have

It's very small. very many. Not

the mean, up bit picked Okay. a seems I volume stock little the but not like in -- dramatically. That has

up. necessary volume the getting difficulty having you're obviously, So

That's that's Yes, absolutely true. fair.

you call looking the wondering year some started, are return X-month current -- the looking, I treasury other to bill X.X%. the amount able is additional treasury I'm -- just -- cash position, the you have -- you're bill that before for mean, last are if but even in One cash. deploy should respect? you cash you around anything to doing I Have heavy of point. a some got that we've was I operations -- rates at almost need on be and our minor over know we

the that as we've but Yes, benefited definitely we've been a definitely. fair U.S. -- of that and in have amount the we have rates investing from it moved We're invested. up, we've got

nothing could on obviously, a environment would you with that I -- -- I rate be in jumping even increase imagine rapid, the itself. else, pretty if mean, of Well, months, interest next able current we very, to Okay. couple a short-term amount, the very might we rates fair over

Yes. Definitely.

Getting and the Or concerned. has -- Solutions you're bit what's backlogs to in pretty the is And well back on some like difficulty a still... delivery able we the there we necessary deliver. biggest division -- as anyway? been any as happened you that other getting HPP might as to are chips our have getting are idea sectors items be positive little to But we certain be faster Technology TS as said, or with still necessary far

But it. there do or a of ransom the constantly they're we're the could in situation. looked very incentives are that queue. or and and we at, either there dates We're manufacturers do the the working king's We're is Joe. distributors most with want just it's we out things the And estimated a it, and manufacturers dealing saying to that difficult to do still

Okay.

in So Almost in like not this. everybody under circumstance. same is industry the unique you're the

right. That's

right. All

basically, seems So that's to do. need like I doing you're you all have. It what

You mentioned the about UCaaS.

want the they energy if commute sales like were looking would if want expand now? increase you people line of can that to positive a added pretty that going product operate to product to home stay don't you to the seems that UCaaS people expense a Does about with that from it they And house to can at work -- more line coming why the think because area? spend UCaaS force, line Even in. place at do home? it in been help I that in helpful the prices, product has people

think at neutral I and way of It's and front at it's contract it's a home. timing think to or other in one we're of timing don't kind the them talking still to renewal. companies, or have office other. need where and up with that willing phone for issue, look it other the us they're issue I getting you too, because where for providers if based both adding hitting their they it's coming contracts customers that just UCaaS on

Okay.

royalties say second -- year and you're the fiscal then half each that these mention, of -- And is did so programs? you of with this that did you some expecting in

out We're in because comes guarantee planning on hoping but it but all there's no we're it just second half. they keep the moving things that

hardly more we're half got you've So in the -- first anything saying? is what

Yes.

Okay. a Well, Appreciate lot. it. thanks

soon, you to Joe. Talk

profitable, the going to with obviously, way We're let's able this in right put this controls, in quarter. cost direction. And stay you're it

Thanks, Joe.

Dellovo the this Instructions] in It Victor any for now [Operator remarks. we that Mr. questions or no appears at would further queue to additional the time. like turn have back I closing to program

you. Thank

you. and We to our further demand high-margin The and rising August. business environment. be is your lead XXXX and progress to our stay into this gains we as undervalued and our support. services evolve performance look and in well, remain forward As a we the results believe shareholders financial we will demand thank safe. want product to Thank Gary more operating committed interest continued to backlog a business fiscal Until normalized believe for substantial represents always, sharing I in I quarter our third asset. in then, our growing for

does we Ladies you and your thank gentlemen, program today's this conclude for and participation.

time. at disconnect any may You