CSP (CSPI) 8 May 242024 Q2 Earnings call transcript

Good morning, everyone, and welcome to CSPi's Second Quarter Fiscal Year 2024 Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Michael Polyviou.

You may begin.

Thank you, Jenny. you quarter us XX, results, thank fiscal review XXXX. and second XXXX, which everyone, for to joining CSPi's Hello, ended March Executive With Dellovo, CSPi's call the Financial Officer; Chief Chief me Levine, and is Officer. Gary on CSPi's Victor remarks, Gary call open opening questions. will then After Victor their we and conclude the for Instructions] [Operator

will, is today's The Statements facts statements forward-looking to may on the believe, identified federal business laws. call expect, term securities in made may, plan, forward-looking identify as by and CSPi's that project, company's words be as as regarding statements. continue intended management similar intend, are historical anticipate, the not are expressions estimate well

reflect should results. about the the future subject be which not events uncertainties, a as based. company's influence and performance of future statements which statements performance other are that The influences, accuracy guarantee the are beyond you or the cautions or of to of many may statements risks current control Forward-looking statements company those upon and expectations the company's read several these and projections the are that

the XX-K affect Reports Form in section company's Exchange and the XX-Q the with Factors include, on not limited but may Quarterly to uncertainties the Risk that Factors of Report the Securities Annual discussed and are the risks Form and results filed on Commission.

with a after thereof. new future entirety obligation whether update undertakes forward-looking to are of Forward-looking no this publicly qualified statements time are future information, and as forward-looking or and to management's made the statement otherwise any the statements faith CSPi based available good as or in those their information statements on revise statements, events the date respect the events. time by belief cautionary of at are All result

the ahead. With call Officer. please Dellovo, Victor, to go Executive over that, Victor Chief turn I'll

products good strategic results, we and second Thanks, high-margin demonstrates announced from shift morning, are generating our fiscal once morning, we which this return everyone. quarter our towards and Earlier services. again Michael, XXXX, the

While our grew of in broadening increased a income fivefold the fiscal launch we invest margins, to quarter. second the PROTECT, and gross net AZT realized continue XX%, compared in ago year we revenue XX% to services increase

during progress building first position year, future AZT pipeline for us the combined of of with success. the half the Our of

review I'll our is market benefiting HPP, my of the start product interest or with the high-performance AZT operations from offering. which in growing

total the the perceives million how revenue million we CSPi. compared how quarter. $X.X and the AZT During year in HPP contributed offering industry is quarter, to The ago changing $X.X operate

from Despite high remains conferences, level largest significant We interest have months and is are business and of as launch, into in lead the in we does this the pipeline. events market building generated some global the of customer new traction the attention industry and and corporations. interest only being AZT enthusiasm

crime. agreement contract operational for facilities a global platform company, terrorism our largest and in technology we global quarter, XX the from a over and multimillion nations, across cybersecurity During organized its is growing which pharmaceutical hostile signed the with manufacturing dollar of the AZT, protecting process deploying threat from and to is AZT

case for is is from that this protect a committed reach cybersecurity technologies Industrial audience and and base of leading-edge award-winning the XX,XXX, subscriber targeted an up-to-date We was segment to over a journal, attacks. a with trends Rockwell of AZT published history publication critical that keeping methods, important to the to Automation week, this begin PROTECT Early how you can't tell Automation. in

be Rockwell AV/NgAV discussing defense automatically titled from cyber-attacks. Rockwell They Our are OT is Gary purdue protect are stopping Cybersecurity how attacks. CSPi, most Cyber will Science, Digital at Automation. joining and the and not model ARIA dangerous General a be today's customers will Life the partnership Thomas Rockwell why cohosting House to we Southwell, Consulting CyberRx, tomorrow, passive with Manager as expanding webinar of

supply webinar and need. a challenging case and to about their surface meeting PROTECT needed applications, ARIA protect The attacks and in study world's discuss of Thomas PROTECT will finally organization's to ARIA combination plays attack suite AZT Rockwell's manufacturers one composition an requirements. Rockwell Gary meet set of to and into production use are of in pharmaceutical critical unique the how this automation role with hear that industrial delve AZT the chain the requirements how environment largest a of enables their unique and protect OT

to OT-focused to during This the brand show strategy, continue within our Fortune focus industries. is a we call, are our is pipeline opportunities attended of which of our height XXX focused the the presence few the to need interest season sales last We name trade approach the engage AZT believe building solutions. and the events intimate energy leveraging plants, As to building the outlined and part further for treatment PROTECT wider is slower of a we customers, with demonstrate expand our we as marketplace. companies of oil, we just more launch cycle and with are water gas, several OT on

opportunities AZT our X and strategy enterprise. implemented salespeople shorter-term middle-market hired revenue we sales increase new PROTECT, for focus to multipronged To of Phase our X

raise team offering distributors. signing the opportunities. address believe close revenue of the to is direct actively segment To our to are government-focused penetration, As depth new of part We the build exploring we dedicated this a very sales profile existing further as use We have this our to of we ones. our largest and partners' expand pathway to go-to-market the of result doubled market AZT and investment, government is ability AZT expanding one AZT team. see are of and partnerships the creation we strategy sales significantly PROTECT the a going

to million Wins ago million the that $XX.X The at We or Award quarter. ARIA year X for Globee continues Wins AZT major award product Cybersecurity of revenue AZT TS this for Cybersecurity awards total business solution $XX.X PROTECT. and also Prestigious Global RSA InfoSec Cybersecurity announced Cybersecurity and perform technology ARIA the PROTECT to contribute Protect a

we most higher of a contract first prominent the education multimillion public announced services in X-year college, the a provide institutions quarter, largest of Florida diverse nation. dollar one for During fiscal the managed and

We proactive support for security driven increased infrastructure, critical The including customers' of of will technology installation monitoring and to and by deliver success and our implementation, TS services. capabilities. be use the cloud private continues network, management training college

robust pipeline. This have added highly new TS a component business The rate more remains of above stable currently cloud XX%. running of average. The our company business is than UCaaS as as quite during has a customer achieved we quarter. record This currently a retention the we pipeline customers is

new relatively forward to looking coming did a we a business The are shipping strong remains customer, We and unchanged prior from over fostering the relationship quarters. sign years.

specializing containerized As call, the numerous ocean working the serving currently prior with are exports in I worldwide sports stated an one of global freight we operators agent extensive largest on network. with

next ships we add We over provide revenue. are XX ships each be where of our recurring the services monthly upon have -- completion, over to for expected months expect to to we'll these that order retrofitted few and in our managed for

To success. I long-term summarize, offering, growth successful the with for the positioned launch of and company have believe AZT sustained we

growing, increased and revenue Our are to and pipelines and translate will are profitability. margins the X growing we businesses

time believe will business stock X-for-X I institutional enhance split are Lastly, the and prospects. opportunities for and greater believe at we provide CSPi recent increased broadening shareholder participation liquidity it our we the shares, of the value

us now strategy. launch and in investor active AZT of growing to cybersecurity success are the threats believe engage also an We allow relations

will schedule and related participation as other you posted We keep we events. conferences,

will second performance. quarter I Gary? to that, overview financial With of now ask a provide brief Gary our fiscal

Thank you, Victor.

fiscal we March revenue ended the reported million fiscal quarter. second $XX.X to compared XX, year second ago quarter the For $XX.X million of in

Our revenue driven by a performance service XX% growth business. of was the

QX $X or million of which service revenue or higher compared to was Our the gross by XX.X% greatly of profit, $X.X revenue was million XX.X% impacted revenue.

second contractors fill $XXX,XXX and we $XXX,XXX our fiscal expenses development quarter, open the to compared was and For positions. outside elected as reduced some engineering to not

second for second team common have -- been Benefiting diluted was second costs compared offering, in AZT the $X.X margin, for million continue $X.X in to the the we quarter sales income million including XXXX per $X.XX share to Our compared ended or building the SG&A of to from were invest fiscal dedicated revenues $X.X XX, March $X.X the $X.XX the and ended per service fiscal March net retroactively or second million fiscal of ago million reflect amounts higher diluted trade participation. the quarter income conferences quarter fiscal to we share share split. XX, as restated higher net for out year recorded and stock quarter Per XXXX. X-for-X the

position which large CSPi. shares as offering AZT to and the of currently cash our March sales products have we million believe multi-prong X-for-X our have financial successful for outstanding. of service financing XX, robust the We XXXX. other The had stock the in Following us X.X and as agreements, $XX.X and and split, allows been financial cash equivalents for million past lines strategy growth highly as execute well customer company

May a record Board close of the on CSPi business Directors the XXXX, on Lastly, of dividend quarterly XXXX. of share to shareholders $X.XX per XXth, approved June XX, of payable of

it the questions. that, With I to over will to turn operator your take

of Segren from Your Instructions] first Investments. is Joseph [Operator question coming Nerges

going. everything How's

one in last -- you -- production Okay. here. follow-up, which IT line for Victor. rolling that I'm released of Is back AZT, And environment. still that of the you close cutting out going did, beta testing full because One a yet? question me mentioned question. couple and to version been hasn't where call of one as A you're that conference down the sort after we're

some have is May. needs and of But it we're additional it right out we developing now. everything We'll Correct. make to with some issues, we no already it where just but customers doing few Yes. a -- to enhancements be like rolled to where stuff have the We're sure that, should testing, be.

enhance with... have will And we what add-on we help that there? do us how already expect will What out that

it In updates to still as patching. why our patches. the space, fits product protects important, they the are OT that's space, of kind where not even and In IT in the into want without do patches it right,

for needed we allow it's or automated. whether So to that, manual

it, IT whether making came that's been the the of it that's patch where said, space, because with patch need other important OT in it's there. and that's sure So other can't there. out or side where works you that, touch just is of machines all and the enhancements kind are we've I products developing patching the allow out in in as Microsoft like We for IT, any a that the where, not really the to

to any whether just But out -- chemical oil sales And are can't the with manager plant ender be, -- mentioned really the manager's plant company, to your be hacked Well, at implemented AZT decision a we quick company, is happens the going basically, not and would here. breached. And you have comes real you career the yet Okay. that's plant manager wants sites. of a implement it's trouble, multiple mean Fortune make to decide He's the one do were last isn't be plant? imagine to I where sort time I he in approach hacked that hacked, not it, only follow-up the x they're that I PROTECT. chemical number XXX I implement to the plant would to be he now. have want you and it? the that's to think or

all common sense is sense, that thing time. not people makes that use but sometimes the Yes, the

certainly back of mind, if -- would I that put in the else. No, nothing mind their I wouldn't

do. No, always we always We do.

investor. Brett from question who's Davidson, a private a got We've

those regarding mid-market these guys salespersons that mean mid-market that they're talks locations? going at companies. it like? does Are What look targeting companies, targeting their and new does meeting Question out what exactly larger about X

companies, definitely we as where not POCs We're XXX trying at them and to able gas be really slow. could target -- the we'll When large, go huge next come lot and lot into instead hopefully, layer top the the a faster. have get to Fortune that a can but looking it's companies, faster. decision-making a of move the that talk are -- need, the mid companies -- really, huge they're

shows, trade It's So a -- of everything. of phone, it at takes. combination some combination meeting the and them whatever the visiting on calling of them locally, that's a customers

is quite a someone... AZT the right And there there Is the stuff product? it not Is sales that pipeline line? is process, it's regarding to now in

there's automation and ones where it's And a could getting going current other so clearance where try getting we've the relationships get about getting and big process, line started that Yes, That's to to lower focusing lab large they're combination gets in world companies on, the their opportunities. combination of lot yes, that and set we a and down it's can't security -- these everything we it's to paperwork, whether -- where have product, on. And it's the we're of getting staff to them. or the the currently now the testing POCs and -- a using been into other that's authorization lab lot a else players whether all what these Rockwell's labs actually a go in of but it's partners that getting mention talking a have and the sales the up, of leverage get through, large contracts, already into I they like into have. that the we their environment

a, have with out and by in to to brand that us, trying competing can So have smaller company, we -- weeks these there to that's us big companies they why players salespeople immediate the to faster long-term Palos those a they for a next able level of conversation where leveraging of that the may to get kind we're big we're a we're work relationship an and also, large brought get conversations PLC. going, us get move have within leverage the as kind years, conversation the are try that the CSPi the and in maybe with name with into that year just the security to might have take relationships able

there we're like Is like way is things? measure the that these to way of Or potential there to this dollar at of more Or like and pipeline fool's is a figure? a measure area kind at deals? selling in point a that a

internally, a we pipeline but we opportunities and against. some initial to I'm we're We at which look do the that on have not measuring we done willing share, the managing based have, have conversations

pipeline we amount talk conversations have put conversations x the the went to increased of needs dollars. And in and of organization. as the other We an the based we started seen with people actually on and estimation initial some of on other

having pipeline So that managing yes, initial a we're on putting based each every revenue and with we the we're estimation of in are that internally organization. conversations

Your from Price, investor. next is who's coming a question Mike private

haven't and of and wider want $XX that market it in AZT I have cash, seems know of distribution $XXX cap what But million X shares. those shares, authorized this calls like question there's and each lines? a room and front you have bought with paint million shareholders. I've shares. of any to Any along with the to last you you be asked having you buying the shares conference thoughts but in you

Yes.

is or the need quarter it the higher we when last this the definitely the it X, as Over stock are and was shares level, upcoming supporting we but considering see than at buying in price -- didn't currently, -- quarter.

Sergio next Hibar from Hibar of Your is Research. coming question

on the Congratulations line. on huge improvement bottom

line used at investors gave the a [indiscernible] the the in I the in think improvements to reaction looking top investors you news, are head today line. and seeing to bottom not

was wondering with products that. that color bundling area So for And with security Palo I on that if the on like, give us you're some fantastic major example, you think concentrating that's Alto. I can

side we fully option. can is than It's product other in of whoever X an business. will up they Alto it definitely see implement a was take the of world the especially players, Windows with they happy want by licenses in not supporting, that any we'll using, conjunction the definitely or some We may the to can or Palo us we or continue Palo the to be be can work love system as a over that's or if complement That any all we they it CrowdStrike running them, platform, a and an they that take the where of all XP to old the older more version. across using side. If they CrowdStrike if they're customer, the or work do

So, looking game. yes, out and at the not the major are to any of we this of replace players stage there rip

that not with the it's we're will product? but Palo area like, directly Alto example, so the Palo your for include bundled -- So Alto sold,

I to love that going. would get relationship

me know. have Please -- that help any you could If that? let context, do could

which so contact on answer decreased? have I'll asking why was question. another to talk with So and unnamed I that's the I'm think you the a about you go know Can Palo is you that. can't why company, -- I Alto, dividend because

Yes, took the looked that we we if the from standpoint have at it $X.XXX. in, it would shares really at been

So. Yes.

we So $X.XX, went to yes.

Okay. you going And are to giving... be

had Apologies, questions. you've your allotted

queue. back can join Star the If press you any you more, in have and do Sergio, X

question Paul from next is coming investor. Scolardi, Your a he is private

quick Two questions.

of on threats, utilities, we give Are warning this First getting utilities. against solution traction? a you color utilities, Have what industry? us all the that in of warning see against we aware industry? have government constantly all, we Can threats Are government news approaching the approached water we they're we the to getting are the we about? some

also as on yes, of directly us all would -- are there marketing that moments would agencies, we and mentioned all on that distributors distributor focusing done through signing because system do that to the as that to -- mentioned, the the very, -- largest have We've of water quickly the allow us we done necessary speed would process up close I with are allow these very we've contracts just it, move outreaches to them. summarize that the possible. holds business individuals government energy, treatment. To a parts. the I the ago, different to all to one out -- -- few mentioned We shows talked We've

it's way. But all the news. over Let's put it that yes,

and there, with It's focused some But had something trade it. mentioned... of we've I the -- up and show on these as see we not cannot them. folks we're You shows, definitely conversations

utilities? going out water people the your But to

we're nobody still meeting, a will still Zoom. any world not, If believe week, in it longer, a goes once to week. mostly really the over may a in We and everything is take work or They go absolutely. they twice

So those over conversations calls are happening. a lot Zoom, but are of the

then with but now these in large And haven't can you've the Okay. AZT, -- do last contracts. be do companies AZT we going the to this market some story to in now you time. to you've been -- question, this sales in closing visibility Or that may -- to a mean you longer-term is expect you expect this you Or give that with marketplace? now XXXX us start been take year closing I cycle is contracts? fiscal do be the trying think

You closed year? predict already. the and we year do to in CEO, you see but Should see some be expect fiscal expect the you signed to this in can't you're this continue AZT to contracts future,

Absolutely. say, but I what for Of absolutely. sure, magnitude, cannot contracts,

it contracts, excited we are We announcement. different levels are everyone announcements contracts are but major don't I public that gets that a signing are they could be other put we have but But and warrant XXX,XXX public don't There closing, contracts contracts, warrant when of announcement, I XX. -- XX will announce. a there know or there, out we closed that

in is millions, yes, So are closing hit it contracts and time major will different that I'll continue there the are right. And are another major one that the But levels. we are announced. yes, when ones close the then, announce to if of

Joseph from question Our of coming Segren next is Investments. Nerges

Yes.

those on the Will you webinar website? article out. we Can the follow-up put putting access you that website? mentioned Rockwell those mentioned tomorrow journal on Rockwell with and then be one you the Just on

yes. Well,

on right? we post out go the already that that's invite I join the can copy once You definitely had we'll the in. journal, webinar you -- think a of it then website can the right? you And get tomorrow, there, the

a Your investor. who's coming next private is question Davidson, Brett from

I a getting long-winded. Yes, I guess was little

millions wrap we to the you character to hundreds pipeline of up. are get of kind this to the you that want of these can or potentially size it, of didn't above? what back I deals or kind all some just give millions, thousands, of refer guys to But getting tens how So of of are talking

of millions. of and hundreds have don't Tens we thousands, the We pipeline. the in anything millions on have

Crotty, a Your is Private coming Investor. is question next from John who

importantly, was the day has it. that that, you other you you tell great awards some to want great the PR put won, really a but seeing out in really that information more I

You just on mentioned wondering the new industries we And them. a could you color get was if had little I won.

energy manufacturing. You that had well utility as pharma and had stated you as won

was that with the Now the X aware other we're manufacturing? any you type show of give what companies, of it going as to the color but are at well energy especially of as were after was you as what Houston. maybe it company and and pharma new energy company the types knew Can I utility

-- labs. of they would the like mention any and they're oil to, the trying and grid gas, of talking some together POCs and are. and into at know utilities shows the that we're are big you to and manufacturing just oil names, energy I but who They're can't The we get just met the getting and companies their the

So been a have build in to companies the and relationships really us different shows of some -- yes, front lot good to get quicker.

will we for makes do us. So sense shows the necessary to that continue

targets the after grid infrastructure, right. as that aware in were levels operational quality we talking the the of the types Because in the are pipelines, we're in be industry with, U.S. well those that they're involved electrical you're of Right. as coming

Correct.

Thank much. you very

hand for be any our closing will to remarks. appears the Vic question-and-answer back now of session. I to that over While end

Thank you.

As continued for and their always, interest I our want shareholders support. to thank

of then, and and fiscal we entering in enjoy a increased August. our are stay quarter look safe the our forward be XXXX, to period well, activity, third progress Until summer. sharing We in

you today's Thank does conference. much. very conclude This

You day. may wonderful lines for Thank time, at and you this phone disconnect your your participation. have a

Bye.

Bye.