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TSS Inc(TSSI) - 2025 Q1 - Quarterly Report
2025-05-15 20:02
[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%93FINANCIAL%20INFORMATION) This section details the company's unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and related notes on accounting policies, segment performance, debt, and internal controls [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents TSS, Inc.'s unaudited consolidated financial statements as of March 31, 2025, highlighting significant revenue and net income growth driven by AI rack integration services - **Consolidated Balance Sheet Highlights (in thousands)** | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $27,339 | $23,222 | | Total current assets | $61,082 | $58,197 | | Property and equipment, net | $23,276 | $8,591 | | **Total assets** | **$113,539** | **$96,568** | | Total current liabilities | $72,205 | $56,919 | | **Total liabilities** | **$104,148** | **$89,430** | | **Total stockholders' equity** | **$9,391** | **$7,138** | - **Consolidated Statement of Operations Highlights (in thousands, except per-share amounts)** | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenues** | **$98,959** | **$15,892** | | Gross profit | $9,210 | $2,714 | | Income from operations | $4,113 | $253 | | **Net income** | **$2,979** | **$15** | | Earnings per common share – Basic | $0.13 | $0.00 | | Earnings per common share – Diluted | $0.12 | $0.00 | - **Consolidated Statement of Cash Flows Highlights (in thousands)** | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,637 | $2,646 | | Net cash used in investing activities | ($14,873) | ($39) | | Net cash used in financing activities | ($1,647) | ($55) | | **Net increase in cash** | **$4,117** | **$2,552** | [Note 1 – Significant Accounting Policies](index=5&type=section&id=Note%201%20%E2%80%93%20Significant%20Accounting%20Policies) The company enhanced its data center services to include AI-enabled server rack integration, with a single OEM customer accounting for nearly all revenue and receivables - The company's services have been enhanced to include the integration of **Artificial Intelligence (AI) enabled data center server racks**[23](index=23&type=chunk) - A single US-based IT OEM customer accounted for **100% of revenues** for the three months ended March 31, 2025, and **99% of trade accounts receivable** at March 31, 2025[48](index=48&type=chunk) - The company sold approximately **$121.1 million in receivables** under a non-recourse factoring agreement in Q1 2025, resulting in **$1.5 million in financing fees**[51](index=51&type=chunk) [Note 2 – Supplemental Balance Sheet Information](index=11&type=section&id=Note%202%20%E2%80%93%20Supplemental%20Balance%20Sheet%20Information) This note details key balance sheet accounts, showing a significant increase in Property and Equipment, net, driven by construction in process for a new facility, and growth in inventories - **Property and Equipment (in thousands)** | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Construction in Process | $21,526 | $6,701 | | Total Gross P&E | $27,168 | $12,295 | | **Property and equipment, net** | **$23,276** | **$8,591** | - **Inventories, net (in thousands)** | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Procurement inventories | $19,845 | $17,493 | | **Inventories, net** | **$20,396** | **$17,673** | [Note 3 - Long-Term Debt](index=13&type=section&id=Note%203%20-%20Long-Term%20Debt) The company secured a **$20.0 million** term loan in December 2024 to fund improvements at its new Georgetown, Texas facility, with **$8.7 million** outstanding as of March 31, 2025 - On December 31, 2024, the company entered a new Credit Agreement for a **$20.0 million term loan facility** to fund the build-out of its new headquarters and production facility in Georgetown, Texas[79](index=79&type=chunk) - Upon closing, the company borrowed **$8.7 million**, with no additional draw-downs made in the quarter ended March 31, 2025[79](index=79&type=chunk) - The remaining available funds for construction at March 31, 2025, were **$11.3 million**, which were fully drawn down in May 2025[82](index=82&type=chunk)[99](index=99&type=chunk) [Note 6 - Segment Reporting](index=15&type=section&id=Note%206%20-%20Segment%20Reporting) The company reorganized into three segments: Procurement, Systems Integration, and Facilities Management, with Procurement being the largest contributor to Q1 2025 revenue and pre-tax income - Effective Q4 2024, the company reorganized into three reportable segments: **Procurement, Systems Integration, and Facilities Management**[90](index=90&type=chunk)[91](index=91&type=chunk) - **Segment Performance for Three Months Ended March 31, 2025 (in thousands)** | Segment | Total Revenue | Gross Profit | Pre-tax Income | | :--- | :--- | :--- | :--- | | Procurement | $90,177 | $7,028 | $5,662 | | Systems Integration | $7,484 | $1,651 | $259 | | Facilities Management | $1,298 | $531 | $366 | | **Total Segments** | **$98,959** | **$9,210** | **$6,287** | - **Segment Total Assets (in thousands)** | Segment | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Procurement | $24,845 | $19,319 | | Systems Integration | $33,707 | $25,855 | | Facilities Management | $739 | $932 | | **Total Segments** | **$59,291** | **$46,106** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025's significant operational and financial developments, including strategic focus on AI-enabled rack integration, substantial revenue growth, and strong liquidity [Overview](index=18&type=section&id=Overview) The company is expanding its AI-enabled server rack integration services through a multi-year customer agreement and a **$25-$30 million** investment in a new facility, funded by a **$20 million** construction loan and landlord contribution - The company signed a multi-year agreement with its largest customer to provide systems integration services for **AI-enabled computer racks** at an expected minimum monthly volume[107](index=107&type=chunk) - To support this agreement, the company is moving to a new facility and anticipates capital expenditures of approximately **$25 million to $30 million** for improvements[107](index=107&type=chunk) - Funding for the new facility includes a **$20 million construction loan** from Susser Bank, a **$6.8 million contribution** from the landlord, and cash on hand[107](index=107&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Total revenues surged **523%** to **$99.0 million** in Q1 2025, driven by **676%** growth in Procurement and **253%** in Systems Integration, leading to a net income of **$3.0 million** - **Revenue by Segment (in millions)** | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Procurement | $90.2 | $11.6 | +676% | | Systems Integration | $7.5 | $2.1 | +253% | | Facilities Management | $1.3 | $2.1 | -40% | | **Total** | **$99.0** | **$15.9** | **+523%** | - The gross value of all procurement transactions increased **431% to $106.0 million**, with the segment's contribution to pre-tax income increasing **807% to $5.7 million**[121](index=121&type=chunk) - Systems Integration gross profit increased **173% to $1.7 million**, and excluding non-cash rent, the segment's gross margin would have improved from **28% to 32%**[123](index=123&type=chunk) - Net income for Q1 2025 was **$3.0 million ($0.12 per diluted share)**, a significant improvement from **$15,000 ($0.00 per diluted share)** in Q1 2024[130](index=130&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains robust liquidity with cash increasing to **$27.3 million**, supported by **$20.6 million** in operating cash flow and the utilization of a receivables factoring program - **Cash Flow Summary (in millions)** | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash from Operations | $20.6 | $2.6 | | Cash from Investing | ($14.9) | ($0.04) | | Cash from Financing | ($1.6) | ($0.06) | - Investing activities consisted of **$14.9 million in capital expenditures**, primarily for the build-out of the new leased integration facility[137](index=137&type=chunk) - Subsequent to quarter-end, on May 5, 2025, the company borrowed the remaining **$11.3 million** available on its construction loan, bringing total borrowed funds to **$20.0 million**[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company has indicated that this section is not applicable - The company states that this item is **'Not applicable'**[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, due to a material weakness in internal control over financial reporting, with remediation efforts ongoing - Management concluded that disclosure controls and procedures were **ineffective** as of March 31, 2025[146](index=146&type=chunk) - The ineffectiveness is due to a **material weakness** identified during the 2024 audit, relating to the ineffective design of certain management review controls[147](index=147&type=chunk) - Remediation efforts have begun in Q1 2025, including enhancing controls and engaging external experts, but the process is **ongoing**[148](index=148&type=chunk)[151](index=151&type=chunk) [PART II – OTHER INFORMATION](index=25&type=section&id=PART%20II%E2%80%93OTHER%20INFORMATION) This section covers other required disclosures, including unregistered sales of equity securities and a list of exhibits filed with the Form 10-Q [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **124,205 shares** at an average price of **$13.32** per share, primarily from employees for tax withholding obligations - **Share Repurchases in Q1 2025** | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 58,241 | $14.63 | | Feb 2025 | 63,658 | $12.30 | | Mar 2025 | 2,306 | $8.25 | | **Total** | **124,205** | **$13.32** | - All share purchases were from associates to satisfy tax withholding requirements and were **not open market trades**, with no publicly announced share buyback program[152](index=152&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data files - Filed exhibits include **CEO and CFO certifications** under Sarbanes-Oxley Sections 302 and 906[153](index=153&type=chunk)[154](index=154&type=chunk) - The filing includes **Inline XBRL documents** for interactive data[155](index=155&type=chunk) [Signatures](index=28&type=section&id=SIGNATURES) This section confirms the official signing and submission of the Form 10-Q by the company's Chief Financial Officer - The report was duly signed on **May 15, 2025**, by **Daniel M. Chism**, the Chief Financial Officer of TSS, Inc[159](index=159&type=chunk)
TSS Inc(TSSI) - 2025 Q1 - Quarterly Results
2025-05-15 20:01
[Executive Summary & Business Outlook](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Outlook) [First Quarter 2025 Performance Overview](index=1&type=section&id=First%20Quarter%202025%20Performance%20Overview) TSS, Inc. reported a strong start to 2025 with exponential increases in both top and bottom lines for the first quarter, driven by robust growth in its Procurement and Systems Integration segments, including incremental contribution from AI rack integration services - Revenue was up **523% in Q1 2025**[1](index=1&type=chunk)[3](index=3&type=chunk) - Diluted earnings per share (EPS) increased to **$0.12** from just over breakeven in the prior year quarter[1](index=1&type=chunk)[3](index=3&type=chunk) - Adjusted EBITDA increased **more than tenfold** compared to the year-ago quarter[3](index=3&type=chunk) [CEO Commentary & Strategic Outlook](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Outlook) CEO Darryll Dewan highlighted robust growth in Procurement and Systems Integration, including AI rack integration, and expressed confidence in continued core business growth and acceleration in AI services. The company's new facility, which began production in May and is expected to be fully operational by June, will significantly expand data center rack integration capacity, positioning TSS to capitalize on industry growth - Robust growth in Procurement and Systems Integration segments, with incremental contribution from AI rack integration services, drove **exponential increases in top and bottom lines**[3](index=3&type=chunk) - The new facility began production on May 7 and is on track to be fully operational across all capabilities in June, enabling **several times the current data center rack integration capacity**[3](index=3&type=chunk) - Focus on innovation and operational excellence positions the company to deliver sustained value to customers and shareholders, with excitement for opportunities in Systems Integration and Procurement[3](index=3&type=chunk) [2025 Outlook & New Facility Impact](index=1&type=section&id=2025%20Outlook%20%26%20New%20Facility%20Impact) TSS is highly optimistic about its growth prospects for 2025 and beyond, expecting production volumes from the new facility to ramp throughout 2025 and into 2026. The company projects total revenue in the first half of 2025 to exceed the second half of 2024, and full-year 2025 Adjusted EBITDA to be at least 50% higher than 2024. The new facility is considered a strong differentiator in the demanding AI computing environment - Expect production volumes from the new facility to grow in the second quarter and continue to ramp throughout the remainder of 2025 and into 2026[4](index=4&type=chunk) - Total revenue in the first half of 2025 is expected to **exceed total revenue in the second half of 2024**[4](index=4&type=chunk) - Full year 2025 Adjusted EBITDA is expected to be **at least 50% higher than 2024**[4](index=4&type=chunk) - The new facility is a strong differentiator in the demanding and rapidly advancing AI computing environment, equipped with **significant power resources**[5](index=5&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) [First Quarter 2025 Key Financial Metrics](index=1&type=section&id=First%20Quarter%202025%20Key%20Financial%20Metrics) TSS, Inc. reported significant financial growth in Q1 2025 compared to Q1 2024, with total revenues increasing by 523% to $99.0 million, primarily driven by Procurement and Systems Integration. Gross profit surged by 239%, net income by over 19,000%, and diluted EPS rose to $0.12. Adjusted EBITDA also saw a substantial increase First Quarter 2025 Key Financial Metrics (YoY Comparison) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :-------------------------- | :---------- | :---------- | :--------- | | Revenues | $99.0 million | - | 523% | | Procurement revenues | $90.2 million | - | 676% | | Systems Integration revenues | $7.5 million | - | 253% | | Facilities Management revenues | $1.3 million | - | -40% | | Gross profit | $9.2 million | - | 239% | | Net income | $3.0 million | $15,000 | >19,000% | | Diluted EPS | $0.12 | $0.00 | N/A | | Adjusted EBITDA | $5.2 million | $475,000 | >1000% | [Company Information](index=2&type=section&id=Company%20Information) [About TSS, Inc.](index=2&type=section&id=About%20TSS%2C%20Inc.) TSS, Inc. is a data center services company specializing in simplifying the complex integration and deployment of high-performance computing infrastructure and software. The company provides custom, high-volume solutions that empower data centers and catalyze digital transformation for generative AI and other leading-edge technologies, managing and deploying billions of dollars in technology annually - TSS specializes in simplifying the complex integration and deployment of high-performance computing infrastructure and software, ensuring **efficient technology utilization** for end users[10](index=10&type=chunk) - The company builds, integrates, and deploys custom, high-volume solutions that empower data centers and catalyze digital transformation for **generative AI and other leading-edge technologies**[10](index=10&type=chunk) - TSS manages and deploys **billions of dollars in technology each year** as trusted partners of the world's leading data center technology providers[10](index=10&type=chunk) [About Non-GAAP Financial Measures](index=2&type=section&id=About%20Non-GAAP%20Financial%20Measures) TSS defines Adjusted EBITDA as net income (loss) before net interest expense, income taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, and certain extraordinary items. This supplemental measure is used to compare operating results consistently across reporting periods by excluding disproportionate impacts and is a factor in evaluating management performance for incentive compensation. It is not a substitute for GAAP measures and is reconciled to the nearest GAAP measure - Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before net interest expense, income taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, and certain extraordinary items[8](index=8&type=chunk) - It is presented to help compare operating results across reporting periods on a consistent basis by excluding items that may have a **disproportionately positive or negative impact**[8](index=8&type=chunk) - Adjusted EBITDA is used as a factor in evaluating the performance of certain management personnel when determining **incentive compensation**[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward%20Looking%20Statements) This section contains forward-looking statements regarding future events, plans, and prospects, which are inherently uncertain. Key uncertainties include resource availability, reliance on a limited customer base, competitive industry risks, supply chain challenges, labor market changes, IT system implementation, procurement business development, rapid technological changes, project management, contract cancellations, and strategy implementation. Actual results may differ materially from these statements, and the company does not undertake to update them - Forward-looking statements address future events, plans, and prospects, often containing words such as 'guidance,' 'expects,' 'anticipates,' and 'will,' and are **inherently uncertain**[11](index=11&type=chunk) - Particular uncertainties that could adversely or positively affect future results include resource funding, reliance on a limited customer base, competitive industry risks, supply chain challenges, and risks related to **technological changes**[11](index=11&type=chunk) - Actual future results may be materially different than those expressed in forward-looking statements, and the company does not undertake to update them[11](index=11&type=chunk) [Quarterly Conference Call & Contacts](index=1&type=section&id=Quarterly%20Conference%20Call%20Details) TSS, Inc. conducted a conference call on May 15, 2025, at 5 p.m. Eastern time to discuss its first quarter results. Details for participation via dial-in and a live audio webcast (with replay available until May 15, 2026) were provided. Contact information for investor relations and the company's CFO was also included - A conference call was held on May 15, 2025, at 5 p.m. Eastern time, with **dial-in and webcast options** available for participants[7](index=7&type=chunk) - A live audio webcast of the conference call and replay are accessible until **May 15, 2026**[7](index=7&type=chunk) - Contact information for investor relations (Hayden IR) and TSS, Inc.'s CFO (Danny Chism) is provided for inquiries[12](index=12&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, TSS, Inc.'s total assets increased to $113.5 million from $96.6 million at December 31, 2024, primarily driven by increases in cash and cash equivalents, inventories, and property and equipment. Total liabilities also rose to $104.1 million from $89.4 million, mainly due to higher accounts payable and accrued expenses. Stockholders' equity increased to $9.4 million from $7.1 million Consolidated Balance Sheet Highlights (March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 (Unaudited, in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------------- | :--------------------------------------- | :------------------------------- | :-------------------- | | Total assets | $113,539 | $96,568 | +$16,971 | | Cash and cash equivalents | $27,339 | $23,222 | +$4,117 | | Inventories, net | $20,396 | $17,673 | +$2,723 | | Property and equipment, net | $23,276 | $8,591 | +$14,685 | | Total liabilities | $104,148 | $89,430 | +$14,718 | | Accounts payable and accrued expenses | $66,214 | $53,340 | +$12,874 | | Total stockholders' equity | $9,391 | $7,138 | +$2,253 | [Unaudited Condensed Consolidated Statements of Operations](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, total revenues significantly increased to $99.0 million from $15.9 million in Q1 2024, primarily driven by Procurement and System Integration. Gross profit rose to $9.2 million from $2.7 million. Net income saw a substantial increase to $3.0 million from $15 thousand, resulting in diluted EPS of $0.12 compared to $0.00 in the prior year Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31) | Metric | 2025 (in thousands, except EPS) | 2024 (in thousands, except EPS) | Change (in thousands, except EPS) | | :-------------------------- | :------------------------------ | :------------------------------ | :-------------------------------- | | Total revenues | $98,959 | $15,892 | +$83,067 | | Procurement revenues | $90,177 | $11,623 | +$78,554 | | Facilities management revenues | $1,298 | $2,146 | -$848 | | System integration revenues | $7,484 | $2,123 | +$5,361 | | Gross profit | $9,210 | $2,714 | +$6,496 | | Income from operations | $4,113 | $253 | +$3,860 | | Net income | $2,979 | $15 | +$2,964 | | Diluted EPS | $0.12 | $0.00 | +$0.12 | [Adjusted EBITDA Reconciliation](index=4&type=section&id=Adjusted%20EBITDA%20Reconciliation) For Q1 2025, Adjusted EBITDA was $5.2 million, a significant increase from $0.5 million in Q1 2024. This non-GAAP measure is reconciled from net income by adding back interest expense (net), depreciation and amortization, income tax provision, and stock-based compensation, reflecting the company's improved operational performance Adjusted EBITDA Reconciliation (Three Months Ended March 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :------------------ | :------------------ | :-------------------- | | Net income | $2,979 | $15 | +$2,964 | | Interest expense, net | $1,085 | $228 | +$857 | | Depreciation and amortization | $210 | $72 | +$138 | | Income tax provision | $49 | $10 | +$39 | | EBITDA | $4,323 | $325 | +$3,998 | | Stock based compensation | $921 | $150 | +$771 | | Adjusted EBITDA | $5,244 | $475 | +$4,769 |
TSS Inc(TSSI) - 2024 Q4 - Annual Report
2025-04-15 18:27
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33627 TSS, INC. FORM 10-K (Mark One) (Exact name of registrant as specified in its charter) Delaware 20-2027651 (State or other jurisdiction (I.R.S. Empl ...
TSS Inc(TSSI) - 2024 Q4 - Annual Results
2025-03-27 20:04
Financial Performance - TSS reported a record revenue of $148.1 million for FY 2024, representing a 172% increase compared to FY 2023[4] - The company achieved earnings per share (EPS) of $0.24, up from breakeven in 2023[3] - Adjusted EBITDA for FY 2024 was $10.2 million, reflecting a 283% increase from the previous year[4] - Fourth quarter revenue reached $50.0 million, a 105% increase year-over-year, with procurement revenues up 95% to $40.5 million[5] - TSS's gross profit for FY 2024 was $22.4 million, up 103% due to growth across all service lines[4] - The company ended FY 2024 with a net income of $6.0 million, compared to $74,000 in 2023[4] Strategic Developments - TSS signed a multi-year agreement with its largest customer, enhancing its role in AI rack integration[3] - The company expects significant EBITDA growth in 2025, driven by contributions from a new facility expected to be operational by June 2025[6] Revenue Composition - Procurement services accounted for nearly 80% of revenues in 2024, characterized by higher revenue variability and lower margins[6] Asset Growth - TSS's total assets increased to $94.3 million in December 2024, up from $25.6 million in December 2023[17]
TSS Inc(TSSI) - 2024 Q3 - Quarterly Report
2024-11-14 21:19
Revenue Growth - Total revenues increased 689% to $70.1 million in Q3 2024 from $8.9 million in Q3 2023, with procurement revenues up $55.0 million (1,016%) and systems integration revenues up $5.9 million (361%) [84]. - Total revenues for the nine-month period ended September 30, 2024, reached $98.2 million, a 227% increase from $30.0 million in the prior year [102]. - Procurement revenues surged by 334%, increasing from $17.7 million to $77.0 million for the nine-month period [105]. - Recognized revenue for procurement deals increased from $17.7 million to $77.0 million, a growth of 335% year-over-year [106]. - The gross value of all procurement transactions increased by 94% from $40.9 million to $79.6 million in Q3 2024 [90]. - Gross value of revenues including netting rose 33% from $90.5 million to $120.6 million year-to-date [106]. Profitability and Income - Consolidated net income improved to $4.1 million in the current year-to-date period from a loss of $0.3 million in the prior year-to-date period [101]. - Operating income increased by 431%, from $0.7 million in Q3 2023 to $3.8 million in Q3 2024 [97]. - Operating income increased by 461% from $1.0 million to $5.7 million year-to-date [111]. - Net income for the current period was $4.1 million, compared to a net loss of $0.3 million in the prior year [113]. - Cash provided by operating activities surged to $36.9 million from $8.6 million year-over-year [120]. Expenses and Margins - SG&A expenses as a percentage of gross profit improved from 72% to 49% year-over-year, despite a 90% increase in dollar terms [96]. - SG&A expenses increased by $2.5 million (39%) primarily due to higher headcount and compensation costs [110]. - Consolidated gross margin decreased from 26% to 15% due to a higher proportion of lower-margin procurement deals [107]. - Gross margin based on recognized value of transactions decreased from 19.8% in the prior year to 6.9% in the current year [105]. Capital Expenditures and Investments - Capital expenditures of approximately $25 million to $30 million are anticipated for improvements to the new facility to support increased production capabilities for AI-enabled racks [77]. - The company plans to invest approximately $25 million to $30 million in a new facility to support AI-enabled computer racks [115]. Customer Agreements and Services - A multi-year agreement was signed with the largest customer to provide systems integration services for AI-enabled computer racks, ensuring consistent revenue to cover fixed and variable costs [77]. - Maintenance and integration services traditionally earn higher margins, with maintenance contracts typically renewing annually, providing revenue predictability [82]. - The company has focused on smaller scaled jobs connected with addition/move/retrofit activities to achieve better margins and more predictable earnings [82]. Supply Chain and Market Conditions - Supply chain issues may impact non-AI rack integration services, causing delays in revenue recognition [86]. - The company expects procurement revenues to remain elevated for the next three to six months but does not anticipate maintaining the same high levels long-term [88].
TSS Inc(TSSI) - 2024 Q3 - Quarterly Results
2024-11-14 21:05
Financial Performance - Third quarter revenue reached $70.1 million, an increase of 689% year-over-year[2] - Net income surged 1,166% to $2.6 million, with diluted EPS rising to $0.10 from $0.01[6] - Procurement revenues alone were $60.5 million, up 1,016% compared to the same quarter last year[6] - Year-to-date total revenues for 2024 reached $98 million, more than three times the amount from the same period last year[5] - Gross profit for the third quarter was $7.9 million, up 179%, driven by higher margin services[6] - Adjusted EBITDA for the third quarter was $4.3 million, an increase of 358%[6] - Net income for Q3 2024 reached $2,646 million, a significant increase from $209 million in Q3 2023[20] - EBITDA for Q3 2024 was $4,002 million, compared to $787 million in Q3 2023, reflecting strong operational performance[20] - Adjusted EBITDA for the nine months ended September 2024 was $6,748 million, up from $1,726 million in the same period of 2023[20] - The company reported an increase in adjusted EBITDA margin, indicating improved profitability metrics[20] - For the nine months ended September 2024, net income was $4,063 million, a recovery from a loss of $262 million in the same period of 2023[20] Operational Developments - The company signed a multi-year agreement with a major customer for AI rack integration, enhancing future earnings visibility[4] - The company plans to relocate to a larger facility in early 2025 to meet increasing demand for AI-enabled technologies[4] - TSS, Inc. uplisted to the Nasdaq Capital Market, enhancing market presence and visibility[4] - The company expects revenue and profit trajectories to remain strong through the first half of 2025[5] Cost and Expense Management - Interest expense, net, increased to $1,128 million in Q3 2024 from $482 million in Q3 2023, indicating higher borrowing costs[20] - Depreciation and amortization expenses rose to $208 million in Q3 2024, compared to $72 million in Q3 2023, suggesting increased asset utilization[20] - Stock-based compensation for Q3 2024 was $299 million, up from $153 million in Q3 2023, reflecting changes in compensation strategy[20] - Income tax expense for Q3 2024 was $20 million, slightly down from $24 million in Q3 2023, indicating effective tax management[20] Future Outlook - Future outlook remains positive with expectations of continued revenue growth and operational efficiency improvements[20]
TSS Inc(TSSI) - 2024 Q2 - Quarterly Report
2024-08-14 20:27
Revenue Performance - Revenue for the three-month period ended June 30, 2024, was $12.2 million, a decrease of $2.4 million (16%) compared to $14.5 million in the second quarter of 2023, primarily due to a $5.7 million decrease in recorded procurement revenues[76]. - Total revenues for the six-month period ended June 30, 2024, were $28.1 million, an increase of $6.9 million (33%) compared to $21.1 million in the prior year[89]. - Procurement revenues increased by $4.2 million (34%) for the six-month period ended June 30, 2024, while facility management revenues rose by $0.6 million (17%) and non-procurement systems integration revenues increased by $2.1 million (42%) compared to the same period in 2023[89]. Gross Margin and Profitability - Consolidated gross margin improved to 37% for the three-month period ended June 30, 2024, compared to 22% for the same quarter of 2023, driven by a smaller proportion of total revenues from procurement services[80]. - Non-procurement integration service and maintenance gross profit reached $3.8 million, representing a $2.2 million (141%) increase from the comparable period of 2023[80]. - Operating income increased by $0.7 million (74%) compared to the prior year quarter despite the decrease in recorded total revenues[76]. - Operating income increased by 74% to $1.7 million for the quarter ended June 30, 2024, compared to $1.0 million in the prior year quarter, driven by a 41% growth in gross profits[85]. - Net income for the quarter was $1.4 million, or $0.06 per diluted share, compared to a net income of $0.3 million, or $0.01 per diluted share in the same quarter of the previous year[87]. Expenses and Cost Management - Selling, general and administrative (SG&A) expenses as a percentage of gross profit improved from 67% in the quarter ended June 30, 2023, to 60% in the current quarter, reflecting better cost leverage[84]. - Selling, General and Administrative (SG&A) expenses as a percentage of gross profit improved from 90% to 70% in the current year-to-date period, while SG&A expenses increased by $0.7 million (16%) due to higher headcount[95]. Procurement and Supply Chain - The gross value of all procurement transactions decreased by 51% from the second quarter of 2023, from $42.9 million to $21.0 million in the quarter ended June 30, 2024[79]. - The gross value of all procurement transactions decreased by 17% from $49.6 million to $40.9 million in the six-month period ended June 30, 2024[91]. - Supply chain disruptions continue to impact the timing of systems integration revenue, with expectations of ongoing issues for several quarters[77]. Cash Flow and Financial Position - Cash used in operating activities was $1.7 million for the six-month period ended June 30, 2024, compared to $4.0 million of cash provided in the same period of 2023[103]. - As of June 30, 2024, the company had cash and cash equivalents of $8.3 million, down from $11.8 million as of December 31, 2023[102]. Strategic Focus - The company has focused on maintenance and integration services, which typically yield higher margins and provide consistent revenue streams[75]. - The integration of AI-enabled server racks began in June 2024, contributing to revenue and earnings growth in the systems integration segment[76].
TSS Inc(TSSI) - 2024 Q1 - Quarterly Report
2024-05-14 20:33
Revenue Growth - Revenue for the three-month period ended March 31, 2024, was $15.9 million, an increase of $9.3 million or 142% compared to $6.6 million in the first quarter of 2023[78] - Procurement services revenue increased significantly from $1.7 million in Q1 2023 to $11.6 million in Q1 2024, contributing to the overall revenue growth[80] Cost and Profitability - Cost of revenue as a percentage of revenue was 83% for Q1 2024, up from 74% in Q1 2023, reflecting higher costs associated with procurement services[81] - Gross profit margin for Q1 2024 was 17%, down from 26% in Q1 2023, primarily due to the higher percentage of revenue from procurement services[85] - Operating income improved by $0.9 million or 138% in Q1 2024, reaching $253,000 compared to an operating loss of $665,000 in Q1 2023[87] - Net income for Q1 2024 was $15,000 or $0.00 per share, compared to a net loss of $786,000 or $(0.04) per share in Q1 2023[89] Expenses and Financial Management - Selling, general and administrative expenses increased by $127,000 or 6% in Q1 2024, primarily due to higher compensation and professional fees[86] - The company anticipates that as the percentage of revenues from procurement services increases, gross profit margins will decrease due to lower margins associated with these services[82] - Management plans to implement cost reductions if future results do not meet expectations, which may affect product offerings and financial results[97] Cash Flow and Liquidity - Cash provided by operating activities was $2.6 million for the three-month period ended March 31, 2024, a significant improvement compared to cash used of $13.5 million in the same period of 2023[94] - Cash and cash equivalents increased to $14.4 million as of March 31, 2024, up from $11.8 million at the end of 2023[93] - Cash used in investing activities was $39,000 for the three-month period ended March 31, 2024, compared to $185,000 in the same period of 2023[95] - Cash used in financing activities was $55,000 for the three-month period ended March 31, 2024, primarily for stock purchases related to tax obligations[96] - The company believes it will continue to be profitable on a quarterly and annual basis in 2024 and beyond, indicating confidence in future cash flows[92] - The company may require additional capital for business acquisitions or to introduce new lines of business, which could impact liquidity[98] - The company has no off-balance sheet arrangements as of March 31, 2024[99] Operational Challenges - The company faced ongoing supply chain issues that impacted the timing of systems integration revenue, expected to continue for several quarters[79] - As of March 31, 2024, the company had an accumulated deficit of $66.3 million, despite recording operating and net income in the last four quarters[91] Accounting Policies - There have been no material changes to critical accounting policies since the last annual report[100]
TSS Inc(TSSI) - 2023 Q4 - Annual Report
2024-03-28 21:49
Revenue Growth - Total revenue for 2023 was $54.4 million, representing a $23.8 million or 78% increase from 2022 revenues of $30.6 million[94] - Revenue from procurement transactions increased by $25.3 million or 191% in 2023, with the aggregate gross value of all procurement transactions rising from $73 million in 2022 to $123.1 million in 2023[93] - Total revenue for 2023 was $54.4 million, a 78% increase from $30.6 million in 2022, primarily driven by a $25.3 million increase in procurement business[124] Profitability - Operating income improved by $0.8 million or 91% from 2022, reaching $1.75 million in 2023[97] - Net income for 2023 was $74,000, compared to a net loss of $73,000 in 2022, marking a turnaround in profitability[137] - Operating income improved by 91% to $1.75 million in 2023, compared to $914,000 in 2022, despite higher selling, general and administrative expenses[134] Cost and Expenses - Selling, general and administrative expenses rose by 16% to $8.9 million in 2023, primarily due to increased labor costs from strategic investments[96] - Interest expense increased by $0.7 million in 2023 due to higher interest rates and increased activity in procurement transactions, with total transactions amounting to approximately $123.1 million[98] - Selling, general and administrative expenses rose by 16% to $8.9 million in 2023, driven by strategic investments in sales and marketing[133] Gross Profit and Margins - Gross profit increased by $2 million or 23% compared to 2022, although gross profit margin decreased to 20% in 2023 from 29% in 2022 due to a higher proportion of lower-margin procurement business[95] - Procurement revenues accounted for 71% of total revenue in 2023, up from 43% in 2022, indicating a shift towards lower-margin services[127] - Gross profit margin decreased to 20% in 2023 from 29% in 2022, attributed to the increased revenue share from procurement services[130] Cash Flow and Liquidity - Cash on hand at the end of 2023 was $11.8 million, a decrease of $8.6 million from the end of 2022, primarily due to timing of cash flows related to procurement activities[99] - Cash used in operating activities was $8.3 million in 2023, a significant decrease from cash provided by operating activities of $14.7 million in 2022, primarily due to timing impacts of procurement services[151] - As of December 31, 2023, the company had cash and cash equivalents of $11.8 million, down from $20.4 million in 2022[150] Future Outlook - The company anticipates continued profitability on a quarterly and annual basis in 2024 and beyond, with no substantial doubt about its ability to continue as a going concern[149] - The company expects fluctuations in MDC deployments to continue, impacting quarterly revenues and profits[90] Other Financial Metrics - The company recorded an accumulated net operating loss carry-forward of $40 million as of December 31, 2023, which may offset future taxable income[136] - Interest expense for 2023 was $1.616 million, up from $931,000 in 2022, due to higher interest rates and increased factoring transactions[135]
TSS Inc(TSSI) - 2023 Q3 - Quarterly Report
2023-11-13 21:30
Revenue Performance - Total revenue for the nine-month period ended September 30, 2023, was $30.0 million, an increase of $10.3 million or 52% compared to $19.7 million in the same period of 2022[75]. - Systems integration segment revenues increased by 31% during the first nine months of 2023 compared to the same period in 2022, contributing to a $13.7 million increase in total revenue[69]. - Procurement and reseller services revenues for the nine-month period ended September 30, 2023, were approximately $17.7 million, up 216% or $12.1 million from $5.6 million in the comparable period of 2022[77]. - Revenue for the three-month period ended September 30, 2023, was $8.9 million, an increase of $0.8 million or 10% compared to the third quarter of 2022[74]. Profitability and Expenses - Gross profit margin for the three-month period ended September 30, 2023, was 32%, down from 34% in the third quarter of 2022, primarily due to increased costs in the integration business[84]. - Cost of revenue as a percentage of revenue was 68% for the three-month period ended September 30, 2023, compared to 66% for the third quarter of 2022[79]. - Selling, general and administrative expenses increased by $217,000 or 12% for the three-month period ended September 30, 2023, primarily due to higher compensation costs[85]. - Operating income for the three-month period ended September 30, 2023, was $715,000, compared to $871,000 in the third quarter of 2022[86]. - Net income for Q3 2023 was $209,000 ($0.01 per share), down from $605,000 ($0.03 per share) in Q3 2022; for the nine-month period, a net loss of $262,000 was recorded compared to a net income of $1,068,000 in the same period of 2022[88]. Cash Flow and Financial Position - Cash and cash equivalents increased to $28.7 million as of September 30, 2023, from $20.4 million at the end of 2022[93]. - Cash provided by operating activities was $8.6 million for the nine-month period ended September 30, 2023, compared to $3.6 million in the same period of 2022[94]. - Deferred revenue increased by approximately $11 million and accounts payable rose by about $10 million at September 2023 compared to September 2022, reflecting higher procurement activities[94]. - Cash used in investing activities was $240,000 for the nine-month period ended September 30, 2023, primarily for leasehold improvements[95]. - Cash used in financing activities was $33,000 in the nine-month period ended September 30, 2023, significantly lower than $1.7 million in the same period of 2022[96]. - The company has an accumulated deficit of $66.6 million as of September 30, 2023, with a history of annual operating and net losses[90]. Future Outlook - Management believes profitability is achievable in the next quarter and for the year ending December 31, 2023, despite previous delays in customer transactions[91]. - The company plans to implement cost reductions if future results do not meet expectations, which may impact product offerings and financial results[98]. Operational Challenges - The facilities business saw a $3.5 million decrease in revenues from Modular Data Center (MDC) deployments in the first nine months of 2023 compared to the same period in 2022[68]. - Supply chain disruptions continue to impact the timing of systems integration and MDC deployment revenue, with expectations of ongoing issues for several quarters[76]. - Interest expense for Q3 2023 was $661,000, up from $263,000 in Q3 2022, driven by an increase in factored transactions from $27.4 million to $61.4 million[87].