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TSS, Inc. Reports First Quarter 2020 Results

ROUND ROCK, Texas, May 18, 2020 (GLOBE NEWSWIRE) -- TSS, Inc. (Other OTC: TSSI), a data center facilities and technology services company, reported results for its first quarter ended March 31, 2020.

First Quarter Highlights:

  • First quarter 2019 revenue of $10.6 million compared with $4.7 million in the first quarter of 2019.
  • Gross margin of 15% in the first quarter of 2020 compared with 35% in the first quarter of 2019.
  • Operating loss of $277,000 in the first quarter of 2020 compared to operating income of $50,000 in the first quarter of 2019.
  • Net loss of $368000 or $0.02 per share in the first quarter of 2020 compared to net loss of $31,000 or $0.00 per share in the first quarter of 2019.
  • Adjusted EBITDA loss of $49,000 compared with Adjusted EBITDA income of $203,000 in the first quarter of 2019.

“Even though our reseller business drove strong revenue growth this quarter, we saw the impacts of the COVID-19 pandemic on our business as travel and other restrictions impacted our ability to deliver services to our customers and supply chain issues impacted our integration services capabilities,” said Anthony Angelini, President and Chief Executive Officer of TSS. “Although the magnitude and duration of the pandemic and its financial impact on our business is still unknown, we anticipate an increase in revenue and profitability in the second quarter and believe that we are in a solid position to operate profitability through this uncertainty.”

Quarterly Conference Call Details

The Company has scheduled a conference call to discuss the first quarter 2020 financial results for Monday, May 18, 2020 at 4:30 PM Eastern. To participate on the conference call, please dial 877-691-2551 toll free from the U.S., or 630-691-2747 for international callers. The conference code is 49685408#. Investors may also access a live audio web cast of this conference call under the “events” tab on the investor relations section of the Company's website at www.tssiusa.com.

An audio replay of the conference call will be available approximately one hour after the conclusion of the call and will be made available until June 18, 2020. The audio replay can be accessed at the following url:  https://onlinexperiences.com/Launch/QReg/ShowUUID=3FE07793-FA3F-456F-8E0B-0B5AC19A4B45&LangLocaleID=1033 The passcode to access the digital playback is 49685408. Additionally, a replay of the webcast will be available on the Company’s website approximately two hours after the conclusion of the call and will remain available for 30 calendar days.

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 interest expense, income taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, and provision for bad debts. 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 non-cash items that may, or could, have a disproportionate 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 is a trusted single source provider of mission-critical planning, design, system integration, deployment, maintenance and evolution of data centers facilities and information infrastructure. TSS specializes in customizable end to end solutions powered by industry experts and innovative services that include technology consulting, engineering, design, construction, operations, facilities management, technology system installation and integration, as well as maintenance for traditional and modular data centers. For more information, visit www.tssiusa.com or call 888-321-4877.

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; risks relating to operating in a highly competitive industry; risks relating to the failure to maintain effective internal control over financial reporting; 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; risks relating to our ability to meet all of the terms and conditions of our debt obligations; uncertainty related to current economic conditions including the impact of the COVID-19 pandemic and the related impact on demand for our services; 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, 2019. 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.
John Penver, CFO
Phone: (512) 310-1000

TSS, Inc.
Consolidated Balance Sheets
(In thousands except par values)

      March 31,   December 31,
Current Assets      
  Cash and cash equivalents   $ 5,321     $ 8,678  
  Contract and other receivables, net     958       3,865  
  Costs and estimated earnings in excess of billings on uncompleted contracts     211       181  
  Inventories, net     122       1,353  
  Prepaid expenses and other current assets     213       108  
  Total current assets     6,825       14,185  
Property and equipment, net     786       705  
Lease right-of-use asset     1,337       1,481  
Goodwill     780       780  
Intangible assets, net     284       307  
Other assets     109       109  
  Total assets   $ 10,121     $ 17,567  
Liabilities and Stockholders’ Equity      
Current Liabilities        
Lease liabilities   $ 670     $ 645  
  Accounts payable and accrued expenses     1,838       8,851  
  Deferred revenues     2,199       2,104  
  Total current liabilities     4,707       11,600  
Convertible notes, less current portion, net     2,079       2,028  
Lease liabilities, less current portion     780       956  
Deferred revenues – noncurrent portion     113       114  
  Total liabilities     7,679       14,698  
Stockholders’ Equity        
  Preferred stock- $.0001 par value; 1,000 shares authorized at December 31, 2019 and 2018; none issued     -       -  
  Common stock- $.0001 par value, 49,000 shares authorized at March 31, 2020 and December 31, 2019: 18,940 and 18,524 shares issued at March 31, 2020 and December 31, 2019, respectively    
  Additional paid-in capital     69,772       69,661  
  Treasury stock 1,092 and 962 shares at cost at March 31, 2020 and December 31, 2019, respectively     (1,870 )     (1,700 )
  Accumulated deficit     (65,462 )     (65,094 )
  Total stockholders' equity     2,442       2,869  
  Total liabilities and stockholders’ equity   $ 10,121     $ 17,567  

TSS, Inc.
Condensed Consolidated Statements of Operations
(In thousands except per-share values, unaudited)

          Three Months Ended March 31,  
            2020       2019    
Results of Operations:            
  Revenue     $ 10,597     $ 4,660    
  Cost of revenue, excluding depreciation and amortization     8,996       3,024    

Gross profit


  Operating expenses:            
    Selling, general and administrative     1,759       1,505    
    Depreciation and amortization       119       81    
  Total operating costs          1,878          1,586    
  Operating income (loss)       (277 )     50    
  Interest income (expense), net       (82 )     (73 )  
  Loss before income taxes       (359 )     (23 )  
  Income tax expense       9       8    
  Net loss     $ (368 )   $ (31 )  

Basic and diluted loss per share:
  Basic & diluted net loss per share     $ (0.02 )   $ 0.00    

TSS, Inc.

Adjusted EBITDA Reconciliation
(In thousands, unaudited)

  Three Months Ended March 31,
    2020       2019  
Net loss $ (368 )   $ (31 )
Interest income (expense), net   82       73  
Depreciation and amortization   119       81  
Income tax expense (benefit)   9       8  
EBITDA $ (158 )   $ 131  
Stock based compensation   109       72  
Provision for bad debts   -       -  
Adjusted EBITDA $ (49 )   $ 203