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Edited Transcript of CSPI earnings conference call or presentation 27-Dec-18 3:00pm GMT

Q4 2018 CSP Inc Earnings Call

BILLERICA Jan 14, 2019 (Thomson StreetEvents) -- Edited Transcript of CSP Inc earnings conference call or presentation Thursday, December 27, 2018 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gary W. Levine

CSP Inc. - VP of Finance, CFO. Treasurer & Secretary

* Victor J. Dellovo

CSP Inc. - CEO, President & Director

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Conference Call Participants

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* Joseph Nerges

* Brett Davidson

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to CSPi's Fourth Quarter Fiscal 2018 Conference Call. My name is Chris, and I'll be your coordinator for today. (Operator Instructions) I would now like to turn the call over to CSPi Chief Financial Officer, Gary Levine. Please proceed, sir.

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [2]

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Thank you. Good morning, everyone, and thank you for joining us. With me on the call today is Victor Dellovo, CSPi's Chief Executive Officer.

Before we begin, I'd like to remind you that during today's call, we will take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the act. The company cautions that numerous factors could cause actual results to differ materially from forward-looking statements made by the company. Such risks include general economic conditions, market factors, competitive factors, pricing pressures and others described in the company's filings with the SEC. Please refer to the section on forward-looking statements included in the company's filings with the Security and Exchange Commission (sic) [Securities and Exchange Commission].

During today's call, after Victor provides an introduction, I'll discuss our fourth quarter financials. Victor will come back for an update on our business segments and on our strategic progress, and then we'll open it up to your questions.

With that, I'll turn it over to Victor.

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [3]

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Thanks, Gary. We had a busy fourth quarter to end fiscal year of 2018. We closed on the sale of our German operation, transitioned the accounting for our U.K. office to Florida, continued to develop our next-generation cybersecurity solutions, including introducing a new cybersecurity application and recently signed 2 new partnerships to expand our reach. Financially, fourth quarter revenues were down 31%, primarily due to lower MultiComputer sales, product sales in the U.K. and in the U.S. and the delay of the launch of our ARIA Software Defined Security solution. On the bottom line, we reported net income of $16.2 million or $4.07 per diluted share, which includes a gain on the sale of our German operation of $16.8 million. In our High Performance Products segment, we continued to experience stronger-than-expected demand for our legacy Myricom network adapters and further developed our next-generation ARIA SDS cybersecurity solution. In the Technology Solutions, our U.S. operations benefited from an increased demand for our IT managed services. After Gary reviews the financial results for the quarter, I'll come back with a detailed review of our achievements and our progress in Q4 by segment. Gary?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [4]

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For the fourth quarter of fiscal 2018, revenues were $19.6 million compared to $28.4 million a year ago. Reflecting delays in launching the new ARIA SDS solution, lower MultiComputer sales in products and royalties and lower product sales in the U.S. and U.K. for the TS division. Our total cost of sales declined $14.8 million from $21.3 million in the prior year period, in line with the lower sales volume. Gross profit for the quarter was $4.8 million down from $7.1 million a year ago. Gross margin, however, at 24.7% was essentially in line with 24.9% a year ago.

Fourth quarter engineering and development expenses were $925,000, up from $615,000 a year ago. As a percentage of sales, Q4 engineering and development expenses rose to 4.7% from 2.2% last year as a result of the higher level of investment in our ARIA solution. Engineering and development expenses were in line with Q3 of 2018 on a sequential basis. We expect this level to continue through the development phase of over next-generation cybersecurity products. Q4 SG&A expenses were $5 million or 25.7% of sales compared to $4.7 million or 16.8% of sales in the previous year. The increase was primarily due to compensation, severance in the U.K. and legal expenses.

We had our fourth quarter tax benefit of $341,000 compared to a cash expense of $623,000 last year. The effective tax rate for the quarter was 32.9% compared to 37.9% in the prior year.

Net loss from continuing operations was $700,000 or $0.18 per share compared to net income of $1 million or $0.27 per diluted share a year ago. Net income from discontinued operations was $16.9 million or $4.29 per diluted share, which includes the gain of $16.8 million for the sale of our German subsidiary and includes $93,000 for the 2 months we owned the German operation in the quarter.

Cash and short-term investment were up to $25.1 million, with $14.4 million of proceeds from the sale of our German subsidiary. Lastly, our Board of Directors voted to pay a quarterly dividend of $0.15 per share to shareholders of record on January 7, 2019, payable January 22, 2019. Our financial priorities in the first quarter of 2019 continue to be to improve our bottom line performed by increasing the level of high-margin products and contain costs across the organization. I'll now turn the call back to Victor.

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [5]

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Thanks, Gary. Let's jump into our segment review, starting with the High Performance Products division. HPP revenues were $3.1 million, down 28% from last year, primarily due to the delay in the launch of our ARIA SDS product as well as lower MultiComputer revenues that Gary mentioned.

MultiComputer revenues were mainly for spare parts and boards for the E-2D and E-2D foreign military program. At this point, we have not been given details on the total order levels for 2019 for the U.S. We do anticipate revenues for the E-2D foreign military program with most royalties being recorded in the second half of the year. Demand for our legacy Myricom products was stronger-than-expected as we continued to benefit from the sales of our ARC Series 10-gig network adapters. By developing new software features and working with equipment manufacturers to integrate our Myricom technology into their own, we have been successful in stemming the anticipated decline in the product line.

On a full year basis, Myricom revenues were high -- up high single digits, clearly reversing our original downward forecast. Equipment manufacturers are now using Myricom cards for 2 different purposes. First, the cards can be used as an intelligent add on to manage multiple MIDI ports and packet capture processes. By using our cards, manufacturers increase the performance of cybersecurity application in a cost-effective way. And second, our adapters improve the speed of our financial trading, which we achieved by offloading the data from their application and processing the data at significantly higher speed. Our adapters enabled equipment manufacturers to track operations in realtime with more accuracy than expensive packet capture devices.

These value-added capabilities have enabled us to slow the decline of our legacy product as we continue to develop our next-generation cybersecurity product, including our new ARIA platform. Our ARIA solution provides advanced cybersecurity protection capabilities for critical data assets that need to be assessed by the end users in applications both in the cloud and on-premise.

During the past year, we worked on completing the ARIA platform which can support various specific security application. The first is our ARIA SDS microHSM application that offloads encryption and key management away from the host CPU. This improves application performance and reduce cost by delivering better performance than traditional hardware security modules. In August, we announced the release of our second application, which focuses on virtualized key management. Our new ARIA SDS KMS application simplifies the serving of encryption keys and certificates required to properly encrypt data. Traditionally, with self-encrypting drives, the data is protected by just 1 key for the entire system, making the information vulnerable during cyber attacks. Our ARIA KMS application serves thousands of unique key per second enables VMware and SAN encryption and provides substantial more security environment. The ARIA KMS application is unique in its stack setup, ease of use, flexible implementation options.

In addition to fitting with the customers' existing service, it is easy to integrate within encryption solutions, without the need for in-house cryptologist experts and high deployment costs.

Overall, ARIA takes a radically different approach to enterprise-wide data security by focusing on enhanced network security in ensuring applications data and penetrability. In September, ARIA was named the winner of the Enterprise Encryption Solution of the Year award from Cybersecurity Breakthrough, an independent organization that recognizes top company technologies and products in the global information security market.

This year the award attracted more than 3,000 nominations from 14 different countries around the world. We view our win as proof that the market is demanding data security solutions that are both easy to deploy and cost effective.

As you know, we have been experiencing delay in the launch of our ARIA platform due to supplier issue. We expect to be able to conduct testing and evaluations in January, and should see sales ramp-up in the second half of fiscal 2019. As we work through the supplier issues, our team has been busy establishing new partnerships to increase revenues and expand our reach.

In November, we added Chestnut Hill Technologies and Egoseal to our global network of resellers and distributors of our legacy Myricom adapters and future cybersecurity products. Based in Massachusetts, Chestnut Hill Technologies will provide our security technology consulting services and strategic IT application services, mainly serving companies on the East Coast. In response to growing demand for our security development deployment, they will now integrate our solution for enterprise looking to decrease time to incident response, improve breach investigations and notifications and cost effectively enhance network security posture.

Egoseal, based in China, has a strong expertise in database vulnerability scanning, assessment, protection, monitoring and penetration testing. Together, we will be addressing the growing need for data and network security in China and broader Asia Pacific markets, including Taiwan, Hong Kong and Singapore. We are excited to work with our new partners and look forward to expanding the reach of our security solution.

Turning now to our Technology Solutions business. Quarterly revenues were down 31% year-over-year mainly due to lower product sales in the U.S. and the U.K., partially offset by the strength in the service business in the U.S. On full year basis, the Technology Solutions business continued to deliver year-over-year growth in profitability. During the quarter, we closed on the sale of our German operations to a European IT service provider and media conglomerate Reply for EUR 10 million or about $11.7 million. As we previously shared, the increase in difficult competitive environment in Germany and lower-than-expected profitability compelled us to divest the business. The positive financial effect for the sales provided us with the resource and design to invest in higher-margin managed service opportunities. In the U.K., revenues were down for the fourth quarter as a result of reduced sales from a large multinational organization. We have rightsized the U.K. business by adjusting headcount and the team is in the process of moving offices to reduce fixed cost. We continue to serve our multinational customers with a team of engineers that work on a project basis. We expect a profitable Q1 2019 in the U.K. with our new streamlined structure.

In the U.S., the increase in our service sales was driven by growth of our managed IT services. During the quarter, we added new clients and established higher billing rates for new and existing customers. In July, we began realizing additional monthly revenue from our Broward College contract and we are now fully managing their private cloud. Separately, we continued to expand the number of managed firewalls to our other firewall partnerships. Our sales team in the U.S. continues to build our managed service pipeline with brighter and more profitable prospects. Taking all these factors into account, we are confident we will continue to deliver growth in this segment in Q1 2019 and beyond.

I would like to take a moment to thank our entire team for executing on our transformation strategy and for making our company a great place to work. We were recently named one of the Florida's best companies to work for Florida Trend magazine. Our workplace was evaluated for policies, practice, philosophy, systems and demographics and overall employee satisfaction.

In closing, we worked hard in fiscal 2018 to continue transforming CSPi from a company-focused on defense-related MultiComputers to one with significant growth opportunities in cybersecurity and wireless managed service markets. As we discussed earlier on July 31, 2018, we sold all of the stock of -- outstanding stock of Myricom GmbH for $14.4 million cash and recognized a gain of $16.8 million. The divestiture of the German operation and our increased cash position will enable us to focus time and resources on our higher-margin and greater potential growth opportunities. We are encouraged by the traction of our managed service business in the U.S. and we intend to continue to invest and focus on our new ARIA SDS cybersecurity product and to capitalize on the proliferation of our wireless service business.

We have done a good job making progress in those areas within our control. For example, we are proud of our office-developed new cybersecurity applications for our legacy products and our new-generation platforms for our cybersecurity products. We have invested in engineering talent and created new partnerships to continue our focus on innovation and to expand our market opportunities. At the same time, we are sharply focused on managing cost and improving profitability. We look forward to keeping you up-to-date on our transformation progress.

With that, I'll turn over to the operator to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Brett Davidson, who is an individual investor.

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Brett Davidson, [2]

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So I'm looking to get -- well, actually let me give you a little clarity first. I got a little bit of a writer's cramp putting my questions together this morning, so I hope you bear with me here. I'm looking for a little clarity on the E-2D. So it was just spares in the most recent quarter? And is that pretty much what's come through in Q1 and what Q2 looks like?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [3]

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Well, we've got -- yes, there's some spare parts and there was a few royalty boards not a plane or anything like that, Brett. It was very small. And we don't have really much in the second quarter, and it really looks like we'll have some stuff in the third and fourth quarter. But as Victor noted, we haven't really gotten in that much information out of Lockheed as to what the delivery schedule will be.

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Brett Davidson, [4]

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Yes, sure. And I think you indicated too that some of that was for the Japanese planes. Has that been a continuing trend?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [5]

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Well, that -- we know that they're -- at least from what's been written, that they're going to be getting planes. We haven't really been told they're -- we just anticipate. I mean, Lockheed indicated last summer that we would probably get some foreign military. They don't tell you what it's going to be.

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Brett Davidson, [6]

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Got it. So I'm looking for a little clarity regarding accounts receivable and inventories. Are the levels we're seeing on the balance sheet currently, are those like reasonable ranges for what we can expect going forward?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [7]

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Well, first of all, the inventory, a lot of it is -- a big portion of that is timing for orders. So within the TS group. So a lot of it's drop ship, so things shift. So under the revenue recognition rules, a lot of times we don't get to do it and we don't get notice, so that's a big chunk of it. And the receivables, probably, I mean, as far as there's good flow on the cash, it's just on the business side what happens. So as we get more growth, we hopefully will have bigger numbers in there in the short term.

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Brett Davidson, [8]

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Got it. So I'm just trying to get a handle from the cleaving off the German subsidiary, whether those are reasonable levels? Or if it's further adjustment that's going to be as a result of a sale or if that's pretty much what we could normally expect?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [9]

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Yes. With the TS business, it's just difficult because the business, as Victor can tell you, comes in chunks. We get some big orders and it's the timing of them from an inventory standpoint or a receivable standpoint. And as in many businesses, the end of the quarters, there's a big rush to get things out. So you tend to have higher receivables.

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Brett Davidson, [10]

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There's no further adjustments due to the German subsidiary sale?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [11]

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No, no.

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Brett Davidson, [12]

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So -- got it. Maybe if you guys could just clarify, there's the statement in the press release that talks about growing our managed IT pipeline with larger, more profitable prospects. So has that come to fruition in the -- in Q1 and looking good for Q2? Or is that something you anticipate a little further out? Or how exactly does that shake out?

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [13]

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Well, see a lot of the pipeline that we're looking at right now with larger organizations, multi-billion organizations where we're -- our managed wireless practice, as I mentioned in the past, has been doing really, really well. And that's one of the areas that a lot of companies -- sometimes when you look at managed services, they may not be as interested as taking over their full infrastructure, but a lot of companies and multi-billion dollar companies don't want to manage wireless, so that's something that we're talking to a lot of large organizations, whether financial or school systems that we're looking at taking their wireless infrastructure over as a managed service recurring revenue model. So that's where that comment comes from.

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Brett Davidson, [14]

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And I mean, is this stuff that you anticipate closing soon? Or there's a time frame that puts this out sometime or...

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [15]

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Well, as you know, you can't control customers, but it's a thing that we have been working on, I would say, 6 months or more already. So if everything works out and we're able to win the opportunities, I would say, it's more sooner than later, but I can't guarantee anything right now. But they have been in the works for a long time. And like I said, I think that hopefully with some luck, they're close, but I can't guarantee anything that will be awarded. But we have been working diligently with them for probably 6 months or so.

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Brett Davidson, [16]

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Sounds good. There are so many moving parts, so with the big jump in the cash balance, I mean all kinds of opportunities open up. And getting out of the Technology Solutions business over in Germany and weak sales over in the U.K., I mean you guys actively pursuing moving some of those other divisions? Or -- and how does that look as far as deploying some of cash? Is there any plans yet to put some of that to work?

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [17]

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Yes, everything is on the table. Acquisitions are always a possibility. We're looking at everything right now. So with that cash there, but it would need to be fit into the -- our current strategy and would need to be accretive over a certain period of time if we will look at to do something like that. That's the plan right now.

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Brett Davidson, [18]

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I know that there's huge constraints regarding doing a buyback, but has that been explored? And has a one-time special dividend also been discussed?

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [19]

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Well, we look at that, and I think when we increased the dividend from $0.12 to $0.15 that was something that we were considering, is that a one-time to kind of look at it over a period of time. And everything is still on the table for discussions, we do bring it up every quarter at our board meetings.

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Brett Davidson, [20]

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Yes, I'm not even sure whether you could do an effective buyback. But has there been any discussion of maybe pulling some shares in at the current prices?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [21]

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We're reviewing that, Brett. We've had some discussion. I mean obviously, it's been -- last quarter, we were at pretty high levels, and so now with what's going on in the market, it may be something we'll take a closer look at.

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Brett Davidson, [22]

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Got it. And maybe if you could, but the last one here, just give me some color on what -- how Q1 is shaping up.

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [23]

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Yes, Brett, we don't really give forward guidance on that. So I know you usually try to ask that question with...

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Brett Davidson, [24]

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I'm not looking so much for guidance or revenue or earnings, just kind of qualitative look at what Q1 look like. I mean you guys are really active or...

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [25]

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Things are going in the right direction. The only thing that we're anxious on is delivery of some of the boards we need for the new ARIA. But everything else, Myricom has been, as I mentioned, been doing better than we anticipated. We thought it was going to be close to 10% to 15%, 20% decline over the last few years. We made some changes to kind of keep that acquisition that we did a few years back, moving in the right direction. So we're pretty happy with that. TS has been doing well. Last year was a great year. The U.K., it has a couple of big customers. As they all buy at the same time, it does really, really well. One of the big customers we had bought so much last year, that we knew this year they weren't going to have the same spend. And that's kind of where you saw some of the decrease in revenue and profitability in the U.K. was the basically just one customer who bought a huge deal last year that didn't do that this year. So and I -- part of their realignment in the U.K. was to get rid of some of the people that were working with Germany. In that side, we got rid of them unfortunately, but they had to move on. So we right-sided that ship, I think, on cost. So moving forward, I feel pretty comfortable with the U.K. And TS has -- over the years, every year it's profitable and it's been growing. My focus is to continue with the managed service with that recurring revenue model and anxiously waiting to get the board that we need from our supplier with the ARIA. There is a lot of customers anxious to get their hands on the board to do some evaluation, and that's kind of what we're waiting for right now. So everything that we've -- I've been talking about, I think, is moving in the right direction. The only holdup that's slowing it down is not us, it's the software that we're developing. We are on schedule with everything we're supposed to be doing. It's just getting those boards to support the software on, and it's been delayed just due to some chip issues that they had that they're working through, which I think we have gone through most of it now, and we're anxiously just waiting for some more boards to test and to move into our customers' hands.

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Operator [26]

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(Operator Instructions) Our next question comes from Joseph Nerges with Segren Investing (sic) [Segren Investments].

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Joseph Nerges, [27]

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A couple of quick -- just a couple of quickies. What did you say the severance cost was that you charged off in a couple of severance payments from U.K. people? You mentioned that, Gary, right?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [28]

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Yes, right. Yes, we had a number of people that were working -- the Germans and the U.K. were working together. So they were working in the security area, which we basically with the sale, we lost the engineers and a lot of them were salespeople and support people. So we let a number of them go. And then we realigned sort of the support staff in the U.K. so that we can service our existing customer base, but cut back the number of people. So that's what the severance costs were for.

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Joseph Nerges, [29]

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Yes, but what was the dollar amount for the quarter?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [30]

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It was, I think, about $150,000, Joe.

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Joseph Nerges, [31]

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So that's a onetime fourth quarter charge that...

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [32]

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Right.

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Joseph Nerges, [33]

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The severance cost. And obviously, the supplier issues, we are talking about -- so we're having no problems, you're saying, with the software a week ago. Do we have some of the boards, not enough of the boards, so we've been able to internally test this or do we -- what seems to be the drawback...

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [34]

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Yes, so Joe, I'd give you a little more color on that. What we've done is we've pushed the suppliers as hard as we could to get these brand new boards with the latest and greatest technology on the chipset. So that chip, which is just being released, is something that we need because we need the power to support all the software we're loading on it. So what we did was we get -- they gave us a few boards that were basically not even tested. We did a lot of the testing for them, and then they had to -- go back and make all the changes. We recently just got the next set of boards in our hands. And from what we can see, everything is looking good. But there's a bunch of all the testing they need to do for them to certify it, so they could do it and send it out to the public. That's GA for them, and that's kind of where we're at right now.

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Joseph Nerges, [35]

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Okay. So as far as we know, the newest board looks pretty good. We're just waiting for the testing from the supplier standpoint and then the rollout. So we really don't think we have a problem internally with the software at all. Of course, it has to be tested. I want to get a bit of feel, but basically we're -- the biggest problem is getting the board?

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [36]

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Correct.

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Joseph Nerges, [37]

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Just a couple -- one other quick question. From your website, it looks like you guys have expanded your managed service offerings quite a bit. My -- is that incorrect that you added cloud services, you added backup services? These are things that -- did you...

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [38]

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No. You know what it is, Joe, what we did was I think we offered all those. What we did with our new website, I'm glad you looked at it, was we kind of put it out, so it was a little clearer to potentially new customers what our offerings were. So we just launched that probably less than 30 days ago with the clearer message of what the company looks like as for the HPP side with the ARIA and all the products that go along with that. And then we separated from -- the professional services and all the products that we sell. And then we kind of separated with the managed service offering in a clearer message of everything we can do, so customers had just easier understanding of what CSPi does or can do.

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Joseph Nerges, [39]

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No, the website is great. I mean it really is very, very informative. And so obviously, it highlights something that wasn't as apparent before and now answers some question about the demand and service. By the way -- and while I checked it, you put out an incorrect phone number on the conference call on your press release today. It's an 877 number. You got 876-9173 is the one you put out on. The number you put out, which was the correct number you put out a week ago. And today's press release was 9193, the last. So I don't know if anybody checked that, but that was...

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [40]

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Okay. That's my fault.

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Joseph Nerges, [41]

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Yes, okay. I just -- I saw the number, I looked back and said if I was wrong, and then I had the old number. Okay. So basically -- and then R&D, like you said, for the quarter was like $925,000. So obviously, a considerable amount of R&D versus what it was, like I said, last year.

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [42]

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We were understaffed last year, Joe, at that time. We had a lot of open positions.

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Joseph Nerges, [43]

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I understand. But what you're basically doing is -- obviously, we're moving forward and the bulk of the R&D obviously, I assume, is the ARIA product line?

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [44]

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That's correct.

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Joseph Nerges, [45]

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All right. Well, that's what I've got. Just I'll come back a little flip, Brexit. And basically, when you look at the stock -- a market like this gets panicked and comes in all the time in a market like environment we're having. So and by the way, what was the cash balance at the end of the quarter? That's what I forgot to ask. What's the cash balance at the end of the year -- fiscal year?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [46]

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Right now?

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Joseph Nerges, [47]

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Yes, with all this -- fiscal year -- the September 30th cash and equivalents -- cash equivalent?

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [48]

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It's like $25 million.

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Joseph Nerges, [49]

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Okay, $25 million. I didn't look at the 10-K, and the press release didn't have it. So it was about $25 million at that point.

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Gary W. Levine, CSP Inc. - VP of Finance, CFO. Treasurer & Secretary [50]

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Yes, so a little over $25 million, yes.

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Joseph Nerges, [51]

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Okay, very good. Moving forward, just if we can get everybody rowing in the boat in the same direction with the suppliers here, I'm sure.

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [52]

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We're going to do that, absolutely. Thanks, Joe.

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Operator [53]

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(Operator Instructions) And it appears there are no further questions over the phone at this time.

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Victor J. Dellovo, CSP Inc. - CEO, President & Director [54]

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Thank you all for joining us this evening -- this morning. We look forward to speaking with you again on our next call.

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Operator [55]

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This does conclude today's program. Thank you for your participation. You may disconnect at any time.