false 0001320760 0001320760 2024-08-14 2024-08-14
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
August 14, 2024
Date of Report (Date of earliest event reported)
 
TSS, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
000-33627
20-2027651
(State or other jurisdiction of
incorporation)
(Commission File Number)
(I.R.S. Employer
Identification No.)
     
110 E. Old Settlers Road
    
Round Rock, Texas
  
78664
(Address of principal executive offices)
  
(Zip Code)
 
(512) 310-1000
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of this Act: None.
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
 
 
 
Item 2.02.
Results of Operations and Financial Condition.
 
On Wednesday, August 14, 2024, TSS, Inc. (the “Company”), issued a press release reporting certain financial results of the Company for the three and six months ended June 30, 2024. A copy of the press release is being furnished herewith as Exhibit 99.1.
 
The Company’s press release contains non-GAAP financial measures. Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Disclosure regarding definitions of these measures used by the Company and why the Company’s management believes the measures provide useful information to investors is also included in the press release.
 
The Company will conduct a conference call to discuss its financial results on Wednesday, August 14, 2024, at 4:00 p.m. Eastern Time.
 
The information in this Report, including Exhibit 99.1 attached hereto, is furnished pursuant to Item 2.02 of this Current Report on Form 8-K. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
 
This report may contain “forward-looking statements” – that is, statements related to future – not past – events, plans, and prospects. In this context, forward-looking statements may address matters such as our expected future business and financial performance, and often contain words such as “guidance,” “prospects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could adversely or positively affect the Company's future results include: we may not have sufficient resources to fund our business and may need to issue debt or equity to obtain additional funding; our reliance on a significant portion of our revenues from a limited number of customers and our ability to diversify our customer base; risks relating to operating in a highly competitive industry; risks relating to supply chain challenges; risk related to changes in labor market conditions; risks related to the implementation of a new enterprise resource IT system; risk related to the development of our procurement and reseller services business; risks relating to rapid technological, structural, and competitive changes affecting the industries we serve; risks involved in properly managing complex projects; risks relating to the possible cancellation of customer contracts on short notice; risks relating our ability to continue to implement our strategy, including having sufficient financial resources to carry out that strategy; and other risks and uncertainties disclosed in our filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
 
Item 9.01.
Financial Statements and Exhibits.
 
104          Cover Page Interactive Data File (embedded within the Inline XBRL document).
 
 
 
 
S I G N A T U R E S
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
TSS, INC.
     
     
 
By:
/s/ Daniel M. Chism
   
Daniel M. Chism
   
Chief Financial Officer
 
 
Date: August 14, 2024
 
 
 

Exhibit 99.1

 

logo.jpg

 

TSS, INC. REPORTS STRONG SECOND QUARTER 2024 RESULTS

 

345% growth in Net Income and 62% improvement in Adjusted EBITDA

compared to Q2 2023

 

 

ROUND ROCK, TX – Aug 14, 2024 – TSS, Inc. (OTCQB: TSSI), a data center services company that integrates AI and other high-performance computing infrastructure and software, today reported results for its second quarter and six-month period ended June 30, 2024.

 

“During Q2, we made a significant investment in our production capacity, which came online at the beginning of June,” said Darryll Dewan, CEO of TSS. “This expansion, compounded with process improvements, has significantly increased our volume capacity for rack integration and decreased the cycle time to complete each rack within our existing facility. The expansion was driven primarily by the surge in demand for server rack builds related to generative AI, as the AI market expands as a whole.”

 

“To be clear, the volume ramp we've been anticipating is now underway. Our OEM customers have robust pipelines and we are seeing their deals beginning to close including one significant program the was started in the second quarter and will more dramatically impact the third quarter. We believe our Q2 performance was a harbinger of results to come. Our strategic inclusion in key customer programs signals a bright future as OEM pipelines materialize.”

 

Second Quarter Highlights (unaudited):

 

●

Second quarter 2024 revenue of $12.2 million compared to $14.5 million in same period of 2023:
 

o

$7.2 million in higher yielding systems integration and facility management revenues, combined, representing an 83% increase;
 

o

$4.9 million in procurement revenues compared to $10.6 million in the prior year quarter.
 

●

Gross profit of $4.5 million, up 41% from the prior year quarter, driven by growth in higher yielding service lines.
 

●

Operating income growth of 74% from the prior year quarter.
 

●

Net income of $1.4 million, an increase of 345% from $0.3 million in the prior year quarter.
 

●

$2.0 million in Adjusted EBITDA, 62% growth from $1.2 million in the prior year quarter.
 

●

Increase in systems integration of AI-enabled racks beginning in the month of June 2024.

 

 
 

 

First Half Highlights (unaudited):

 

●

Revenue of $28.1 million for the six months ended June 30, 2024, or 33% growth compared to the first six months of 2023.
 

o

$11.5 million in higher yielding systems integration and facility management revenues, 30% growth compared to the same period in the prior year;
 

o

$16.5 million in procurement revenues, 34% growth compared to the same period in the prior year.
 

●

Gross profit of $7.3 million, up 48% from the prior year-to-date period, driven primarily from the growth in higher yielding service lines.
 

●

Operating income growth of 530% compared to the first half of 2023.
 

●

Net income of $1.4 million vs. a loss of $0.5 million in the prior year-to-date period
 

●

$2.4 million in Adjusted EBITDA for the six months ended June 30, 2024, 211% growth from $0.8 million in the comparable period of 2023.

 

 

Dewan continued, “Our performance in the first half of 2024 underscores our focus on execution. We delivered $28 million in total revenue - 33% year-over-year growth- and expanded profitability while simultaneously investing in the business. This is a robust turnaround from the loss in the first half of 2023. Important early AI-based customer programs began in the second quarter and have carried into the third quarter, setting the stage for a strong second half of the year. We remain optimistic about our future as we help shape the future of digital infrastructure.”

 

Quarterly Conference Call Details

 

The Company has scheduled a conference call to discuss the second quarter 2024 financial results for Wednesday, August 14, 2024, at 4:00 PM Eastern. To participate on the conference call, please dial (800) 715-9871 toll free from the U.S. or Canada. Other international callers may access the call at 1-646-307-1963. The event ID number is 1261274. Investors may also access a live audio webcast of this conference call and replay the call for one year following the webcast, at www.webcaster4.com/Webcast/Page/2294/51043. Please allow approximately four hours following completion of the call for the recorded webcast to be available. A link to this recorded webcast will also be provided on our website at https://tss-inc.ir.rdgfilings.com.

 

About Non-GAAP Financial Measures

 

Adjusted EBITDA is a supplemental financial measure not defined under Generally Accepted Accounting Principles (GAAP). We define 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, provision for bad debts and certain extraordinary items. We present Adjusted EBITDA because we believe this supplemental measure of operating performance is helpful in comparing our operating results across reporting periods on a consistent basis by excluding items that may, or could, have a disproportionately positive or negative impact on our results of operations in any particular period. We also use Adjusted EBITDA as a factor in evaluating the performance of certain management personnel when determining incentive compensation.

 

Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consistent with Regulation G under the U.S. federal securities laws, Adjusted EBITDA has been reconciled to the nearest GAAP measure, and this reconciliation is located under the heading “Adjusted EBITDA Reconciliation” following the Consolidated Statements of Operations included in this press release.

 

 
 

 

About TSS, Inc.

 

TSS specializes in simplifying the complex. The TSS mission is to streamline the integration and deployment of high-performance computing infrastructure and software, ensuring that end users quickly receive and efficiently utilize the necessary technology. Known for flexibility, the company builds, integrates, and deploys custom, high-volume solutions that empower data centers and catalyze the digital transformation of generative AI and other leading-edge technologies essential for modern computing, data, and business needs. TSS’s reputation is built on passion and experience, quality, and fast time to value. As trusted partners of the world's leading data center technology providers, the company manages and deploys billions of dollars in technology each year. For more information, visit www.tssiusa.com.

 

Forward Looking Statements

 

This press release may contain “forward-looking statements” -- that is, statements related to future -- not past -- events, plans, and prospects. In this context, forward-looking statements may address matters such as our expected future business and financial performance, and often contain words such as “guidance,” “prospects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could adversely or positively affect the Company's future results include: we may not have sufficient resources to fund our business and may need to issue debt or equity to obtain additional funding; our reliance on a significant portion of our revenues from a limited number of customers and our ability to diversify our customer base; risks relating to operating in a highly competitive industry; risks relating to supply chain challenges; risk related to changes in labor market conditions; risks related to the implementation of a new enterprise resource IT system; risks related to the development of our procurement services business; risks relating to rapid technological, structural, and competitive changes affecting the industries we serve; risks involved in properly managing complex projects; risks relating to the possible cancellation of customer contracts on short notice; risks relating to our ability to continue to implement our strategy, including having sufficient financial resources to carry out that strategy; and other risks and uncertainties disclosed in our filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

 

Company Contact:

TSS, Inc.

Danny Chism, CFO

Phone: (512) 310-1000

 

Or

 

Tad Druart, Pierpont Communications

(512) 497-9880

 

 
 

 

TSS, Inc. 

Consolidated Balance Sheets 

(In thousands except par values) 

  

   

June 30,

    

December 31,

  
   

2024

    

2023

  
   

(unaudited)

          

Assets

                

Current Assets

                

Cash and cash equivalents

   $ 8,311     $ 11,831  

Contract and other receivables, net

     6,995       3,527  

Costs and estimated earnings in excess of billings on uncompleted contracts

     524       1,310  

Inventories, net

     4,939       2,343  

Prepaid expenses and other current assets

     452       302  

Total current assets

     21,221       19,313  

Property and equipment, net

     2,205       628  

Lease right-of-use assets

     3,790       4,062  

Goodwill

     780       780  

Intangible assets, net

     -       -  

Other assets

     909       817  

Total assets

   $ 28,905     $ 25,600  

Liabilities and Stockholders’ Equity

                

Current Liabilities

                

Accounts payable and accrued expenses

   $ 13,693     $ 14,362  

Deferred revenues, current

     4,960       3,370  

Current portion of lease liabilities

     759       688  

Total current liabilities

     19,412       18,420  

Deferred revenues, non-current

     1,044       -  

Non-current portion of lease liabilities

     3,295       3,631  

Total liabilities

     23,751       22,051  

Stockholders’ Equity

                

Preferred stock, $.0001 par value; 1,000 shares authorized at June 30, 2024 and December 31, 2023; none issued

     -        -   

Common stock, $.0001 par value; 49,000 shares authorized at June 30, 2024 and December 31, 2023; 24,244 and 23,533 issued; 22,302 and 21,771 outstanding at June 30, 2024 and December 31, 2023, respectively

     2       2  

Additional paid-in capital

     72,428       72,103  

Treasury stock 1,942 and 1,762 shares at cost at June 30, 2024 and December 31, 2023

     (2,382 )     (2,245 )

Accumulated deficit

     (64,894 )     (66,311 )

Total stockholders' equity

     5,154       3,549  

Total liabilities and stockholders’ equity

   $ 28,905     $ 25,600  

 

 

 
 

 

TSS, Inc. 

Condensed Consolidated Statements of Operations 

(In thousands except per-share values, unaudited) 

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  

Results of Operations:

                                

Revenue

   $ 12,159     $ 14,537     $ 28,052     $ 21,111  

Cost of revenue

     7,623       11,315       20,802       16,203  

Gross profit

     4,536       3,222       7,250       4,908  

Operating expenses:

                                

Selling, general and administrative

     2,719       2,159       5,108       4,421  

Depreciation and amortization 

     117       88       188       177  

Total operating costs

     2,836       2,247       5,296       4,598  

Operating income

     1,700       975       1,954       310  

Interest expense, net

     272       648       501       760  

Other income (expense), net

     -       -       -       -  

Income (loss) before income taxes

     1,428       327       1,453       (450 )

Income tax expense

     26       12       36       21  

Net income (loss)

   $ 1,402     $ 315     $ 1,417     $ (471 )
                                 

Earnings (loss) per common share - Basic

   $ 0.06     $ 0.01     $ 0.06     $ (0.02 )

Earnings (loss) per common share - Diluted

   $ 0.06     $ 0.01     $ 0.06     $ (0.02 )

 

 

 

TSS, Inc. 

Adjusted EBITDA Reconciliation (GAAP to non-GAAP)

(In thousands, unaudited) 

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net income (loss)

   $ 1,402     $ 315     $ 1,417     $ (471 )

Interest expense, net

     272       648       501       760  

Depreciation and amortization

     117       88       188       177  

Income tax expense

     26       12       36       21  

EBITDA

   $ 1,817     $ 1,063     $ 2,142     $ 487  

Stock based compensation

     155       160       305       299  

Adjusted EBITDA

   $ 1,972     $ 1,223     $ 2,447     $ 786  

 

 

 

 
v3.24.2.u1
Document And Entity Information
Aug. 14, 2024
Document Information [Line Items]  
Entity, Registrant Name TSS, INC.
Document, Type 8-K
Document, Period End Date Aug. 14, 2024
Entity, Incorporation, State or Country Code DE
Entity, File Number 000-33627
Entity, Tax Identification Number 20-2027651
Entity, Address, Address Line One 110 E. Old Settlers Road
Entity, Address, City or Town Round Rock
Entity, Address, State or Province TX
Entity, Address, Postal Zip Code 78664
City Area Code 512
Local Phone Number 310-1000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001320760
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