CSP Inc.

Greetings and welcome to CSP Inc's fiscal fourth quarter and full year 2024 conference call. At this time, all participants are in a listen-only mode and a question and answer session will follow the form of presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Michael Polivio. Sir, you may begin.

Thank you, Alan. Hello, everyone, and thank you for joining us to review CSPI's fiscal fourth quarter and full year 2024 financial results, which ended September 30, 2024. With me on the call today is Victor DeLavo, CSPI's Chief Executive Officer, and Gary Levine, CSPI's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we'll then open the call for questions. During the Q&A session, we ask participants to limit themselves to one question and one follow-up question, and then re-queue if they have additional questions. Statements made by CHPI's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as the term is identified in federal securities laws. The words may, will, expect, believe, take, project, plan, intend, estimate, and continue, as well as similar expressions are intended to identify forward-looking statements. Further, the statement should not be meant as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company's future performance or events and are subject to several uncertainties, risks, and other influences, many of which are beyond the company's control, that may influence the accuracy of the statement and the projections upon which the segment and statements are based. Actors that may affect the company's results include, but are not limited, to the risks and uncertainties discussed in the risk factor section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission. Forward look at statements based on the information available at the time of those statements made and management's good faith belief as of the time with respect to future events. All forward look at statements are qualified in their entirety by this cautionary statement and CSPEI undertakes no obligation we revise or update any program statements, whether as a result of new information, future events, or otherwise after the date they're up. With that, I'll turn the call over to Victor DeLobo, Chief Executive Officer. Victor, please go ahead.

Thanks, Michael, and good morning, everyone. Our fourth quarter and four-year financial results came in pretty much as expected when we last talked with you in August. Recurring revenue, which has been an area we have committed to growing, increased 17%, of the total sales compared to less than 5% of sales just a couple years ago. Overall, we finished the year with more than $30 million in cash and cash equivalents as of September 30th, 2024. The technology solution business generated approximately $12.7 million in sales in the fourth quarter of fiscal 2024. We finished the quarter with plenty of momentum. For example, very little of our fiscal fourth quarter revenue came from our cruise ship customers. However, towards the end of the quarter and during the current fiscal first quarter, we've seen a pickup in the business, including the signing of a large order that should be executed during the next fiscal year. It was the first cruise ship order for professional services for our company in many quarters and piggybacks on the continued consistent momentum we built in the ocean Freightliner market. Our Freightliner operation customer continues to add new ships and choose to utilize our managed service offering following the retrofits which have led to increase in recurring revenue. We continue to see increased demand for our cloud clients who want to migrate the consumption of these services to our cloud group. We also have a dozen active cloud-based projects to accommodate the growth. We continue to invest in people in process to provide managed service to assist in our clients with the day-to-day operations of these environments. The pipeline remains very encouraging, so we are optimistic about our opportunities to grow the overall TS sales, especially the recurring revenue piece during the coming fiscal year. On the HPP side of the business, for the fourth quarter of fiscal 2024, we reported revenue of $0.4 million, mostly from ARIA-based customers. As we discussed in the prior conference call, we were in the process of transitioning our AZT Protect sales effort being led by Greg Fisher, an experienced 20-year OT industry sales veteran who joined us in July of 2024, has redirected the organization to maximize our relationships with Rockwell Automation and other distribution partners. In the short amount of time we've made significant progress in building the market for this year, unique product and we entered the new fiscal year with great potential from Rockwell and the other distribution partners that primarily serve the middle market OT customers, which tend to have shorter sales cycles than the larger OT organizations. Our internal team will continue to address the large individual corporate OT buyers with the sales cycles extending up to 18 months while they work closely with the distributors to build a short-term revenue from the middle market customers. An example was a deal we announced with the Fortune 500 electric energy producer that selected Aria Cybersecurity AZT Protect to protect its critical OT infrastructure from malicious cyber attacks. This was the first order of many to come, as it will be a few thousand endpoints over the next three years. We will assist with the rollout as fast as the customer will allow. We believe this approach will result in a noted upturn in AZT Protect sales in fiscal 2025 unfolds. Working with Rockwell Automation and other distribution partners, our sales team has quickly expanded the leads for AZT Protect to over 100. Many of these leads were generated from the Rockwell Automation Fair back in late November of 2024. But Gary Southwell, our Vice President and General Manager of High Performance Products presented an in-depth view of the latest attack techniques and their financial impact. Gary's presentation was one of the show's hits and was a major reason why we generate so many leads from our participation. We also had a booth at the American Petroleum Institute show for oil and natural gas in Houston, where we began a relationship with several large companies We further expanded ACD Protect's awareness in the market by attending the Industrial Control System Security Week show in Atlanta. While we work to convert the leads generated from these activities into ACD Protect sales during the fiscal 2025, we will be supporting additional regional trade shows events with our distributors throughout the year. I strongly believe the interest we are generating at the trade shows is fostering by nine major industry awards from AZT Protect has received since its launch, including the winner of the application security category at the 2024 4RS Cybersecurity Award presented by Business Intelligence Group. Our efforts to sign new distributors and gain new customers has also benefited from the July CrowdStrike update failure that exposed-to-risk continuous cloud updates can have on critical OT applications, including industrial automation industry control systems. There is a recognition from the industrial automation vendors and their distribution channels that the traditional IT-focused endpoint protection methodologies were not meeting their requirements. We believe companies using ADT-protected protection capabilities can prevent zero-day malicious code from taking critical systems down out of the box without having seen it before and then relying on cloud updates to block such attacks. We've proven this capability in the field under real-life operational circumstances. This alternative approach to protect industrial control servers is being received as a welcome news by Rockwell Distributor Partners. The Rockwell show was the mechanism needed to bring this news into the ecosystem. From there, we believe we can expand into other markets. We have one agreement already completed and three others in process with top tier US based Rockwell distributors, allowing our US team to work directly with the distributor sales teams to map out targets accounts to approach together. In summary, when we consider AZT Protect Market Momentum in the emergence of the Rockwell Partnership, the growth of the managed service business, and the pickup in the cruise lines, we have a potential to return growth during the fiscal 2025. With that, I will now ask Gary to provide a brief overview of the fiscal fourth quarter financial performance.