CSP Inc.

Greetings. Welcome to CSPI's first quarter fiscal year 2025 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal 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, Michael Poliview. Michael, you may begin.

Thank you, Paul. Hello everyone and thank you for joining us to review CSPI's fiscal 2025 first quarter financial results as well as recent operating developments. The fiscal quarter ended December 31, 2024. Today with me on the call is Victor DiLavo, 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 CSPI's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as terms identified in federal securities laws. The words may, will, expect, believe, anticipate, project, plan, intend, estimate, and continue, as well as similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be meant as a guarantee of future performance or result. The company cautions you that these statements reflect current expectations of the company's future performance or event and are subject to several uncertainties, risks, and other influences, many of which are beyond the company's control and may influence the accuracy of the statements and the projections upon which the segment and statements are based. Factors 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 and the quarterly report on Form 10Q-5 of the Securities and Exchange Commission. Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of the time with respect to future events. All forward-looking statements are qualified in entirety by this cautionary statement, and CSPI undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise after the date thereof. With that, I'll turn the call over to Victor DeLobo, Chief Executive Officer. Victor, please go ahead.

Thanks, Michael, and good morning, everyone. It has been less than two months since we last talked with you, and during the first quarter, our business maintained the momentum we described to you back in December. We generated an increase in total revenue boosted by 5%. 17% in service revenue and expanded our gross margins by a healthy 200 basis points while earning 5 cents per diluted common share. We finished the quarter with more than 30 million in cash and cash equivalent while continuing to invest in our AZT Protect product line. And the board of directors authorized another 3 cents per share quarterly cash dividend. Our technology solution business once again led the way for us during the quarter, generating approximately 15.2 million in sales. We've added a second major cruise line order to the one we mentioned back in December, and we continue to succeed in the ocean freight liner market, where we continue to add new ships whose operators are utilizing our managed service offering, following the retrofits, boosting our monthly recurring revenue. Another bright spot during the quarter was the increased demand for our cloud-based service from companies wanting to outsource these critical needs to our value-tested platform. Overall, service revenue grew 17% during the quarter and drove our gross margins up 200 basis points. We continue to introduce AZT Protect into the operation technology or OT markets where the need for enhanced solutions have never been higher. We signed up several new customers during the first quarter and in the process increased both the referenceable industries we are addressing as well as customers for whom we are providing critical cybersecurity solutions. We should also note that the large pharmaceutical company that purchased AZT Protect a year ago has renewed their annual six-figure post-contract support agreement and we are glad to report they are completely satisfied with the product and related services. An example of how we are building presence for AZT Protect in target operational technology cybersecurity markets is a partnership we announced with Unified Flow Technologies just before the end of the calendar year. UFT provides products and system integration services to water and waste treatment facilities located in 40 states. Water treatment facilities have hard hit by zero-day malware and ransomware that today's cybersecurity solutions struggle to prevent. In addition, these facilities are often targeted by nation-state-sponsored attacks that bypass today's leading protection measures. We are now working with UFT to implement AZT Protect into water treatment operations to better protect them against cyber attacks, and our first deployment included protecting one of UFT's own operational facilities technology facilities. ADT Protect uses AI-based countermeasures to stop categories of attacks as they land on the water treatment facility's most vulnerable critical production control systems. These countermeasures lock down critical applications from adulteration while stopping code-based attacks such as malware and ransomware from executing. they disrupt any nation-state effort to take control of the facility. UFT has more than 16,000 customers to sell a built-in solution for effective cyber protection, and we are quite excited about the potential for our partnership as a reference for installations are developed. AZT Protect also has the ability to drive our high-performance product business, and we expect to see increasing levels of revenue from our partnership with the likes of UFT and Rockwell Automation as a fiscal year unfolds. As we reported back in December, we had a very successful participation in the Rockwell Automation Fair back in late November 2024 with Gary Southwell, our Vice President and General Manager of a high performance presenting an in-depth review of the latest attack techniques and their financial impact. Gary's presentation as well as our participation in the American Petroleum Institute show for oil and natural gas resulted in generating approximately 100 leads. We've been following up on these leads with several already transitioning into active proposals. We are hoping to convert a growing number of these proposals to orders during the next couple quarters with the help of our Rockwell distribution partners. Along those lines, we have targeted the top U.S. Rockwell distributors, having signed up three and hoping to have two more signed by the end of this month. Our strategy with the Rockwell Distribution Channel is to focus on the middle market OT customers, which tend to have a shorter sales cycle than the larger OT organizations, and successfully executing on this strategy will be a major factor behind our performance for the remainder of fiscal 2025. With the large OT customers, our internal sales team continues to address the market, which have sales cycles up to 18 months. A typical point of entry is through a project for one operation, and then as the installation proves its worth, we are introducing to other opportunities within the corporate entity. We are actively working that expansion opportunity as many as the results from AZT Protect are certainly worthy of broader system rollout at these big customers. All of our sales and marketing efforts is supported by the nine major industry awards AZT Protect has received since its launch, including the winner of the application security category at the 2024 Fortress Cybersecurity Award presented by Business Intelligence Group. We continue to benefit from the CrowdStrike update failure of last July, with the risk that continuous cloud updates can have on an OT applications, including industrial automation industry's control systems. There is a growing recognition from the industrial automation vendors that Their distribution channels that the traditional IT-focused endpoint protection methodologies are not meeting their requirements. In summary, we are off to a solid start for fiscal 2025, and we are working to continue this momentum as the year progresses. With that, I will now ask Gary to provide a brief overview of the fiscal first quarter financial performance.