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TSS, Inc. Reports Third Quarter 2018 Results

ROUND ROCK, Texas, Nov. 14, 2018 (GLOBE NEWSWIRE) -- TSS, Inc. (Other OTC: TSSI), a data center facilities and technology services company, reported results for its third quarter ended September 30, 2018.

Third Quarter Highlights:

  • Third quarter 2018 revenue of $6.4 million compared with $4.9 million in the third quarter of 2017 and $5.4 million in the second quarter of 2018.
  • Gross margin of 39% in the third quarter of 2018 compared with 42% in the third quarter of 2017.
  • Achieved operating income of $771,000 in the third quarter of 2018 compared to operating income of $393,000 in the third quarter of 2017.
  • Net income of $652,000 or $0.04 per share in the third quarter of 2018 compared to net income of $298,000 or $0.02 per share in the third quarter of 2017.
  • Adjusted EBITDA of $924,000 compared with Adjusted EBITDA of $526,000 in the third quarter of 2017.

Year-to-date Highlights:

  • Year-to-date 2018 revenue of $16.6 million compared with $13.5 million in 2017.
  • Gross margin of 39% in 2018 compared with 42% in 2017.
  • Achieved operating income of $1,403,000 in 2018 compared to operating income of $766,000 in 2017.
  • Net income of $1,050,000 or $0.06 per share in 2018 compared to net income of $527,000 or $0.03 per share in 2017.
  • Adjusted EBITDA of $1.9 million in 2018 compared with Adjusted EBITDA of $1.2 million in 2017.

“We are pleased with our quarterly results as we continue to execute on revenue growth and bottom line improvement. We nearly doubled our bottom line year over year,” said Anthony Angelini, President and Chief Executive Officer of TSS. “We are positioned for a strong completion of 2018 and carry solid momentum into 2019. Congratulations to our entire team for delivering these results.”

Quarterly Conference Call Details

The Company has scheduled a conference call to discuss the third quarter 2018 financial results for Wednesday, November 14, 2018 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 47821104#. 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 December 14, 2018. The audio replay can be accessed by dialing 1-888-843-7419 in the U.S. or 630-652-3042 toll free then enter conference ID number 4782 1104#. 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 measures 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: our independent registered public accounting firm’s reports on our 2016 and 2017 financial statements contain an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern; 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 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, 2017. 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)
 
    September 30,     December 31,
    2018   2017
    (unaudited)    
Assets      
Current Assets      
  Cash and cash equivalents $    3,186     $   2,268  
  Contract and other receivables, net     2,620       990  
  Costs and estimated earnings in excess of billings on uncompleted contracts     311         223  
  Inventories, net     83       134  
  Prepaid expenses and other current assets     217         114  
    Total current assets   6,417         3,729  
Property and equipment, net   408         418  
Goodwill     1,907         1,907  
Intangible assets, net     470         561  
Other assets     109         112  
    Total assets $   9,311     $   6,727  
Liabilities and Stockholders’ Equity      
Current Liabilities      
  Accounts payable and accrued expenses $      3,088     $   2,841  
  Deferred revenues     3,330         2,494  
    Total current liabilities   6,418         5,335  
Convertible notes, less current portion, net     1,795       1,656  
Deferred revenues – noncurrent portion   126       -  
Other liabilities     498       41  
    Total liabilities     8,388       7,032  
Stockholders’ Equity (Deficit)      
  Preferred stock- $.0001 par value; 1,000 shares authorized at September 30, 2018 and December 31, 2017; none issued          
  Common stock- $.0001 par value, 49,000 shares authorized at September 30, 2018 and December 31, 2017: 16,316 shares issued at both September 30, 2018 and December 31, 2017    
2
        2  
  Additional paid-in capital     69,066         68,886  
  Treasury stock 772 and 769 shares at cost at September 30, 2018 and December 31, 2017, respectively     (1,538 )       (1,536 )
  Accumulated deficit     (66,607 )       (67,657 )
    Total stockholders' equity (deficit)   923       (305 )
    Total liabilities and stockholders’ equity (deficit) $  9,311     $   6,727  


 
TSS, Inc.
Condensed Consolidated Statements of Operations
(In thousands except per-share values, unaudited)
 
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2018   2017   2018    2017
         
Results of Operations:        
Revenue $ 6,371     $ 4,898     $ 16,587     $ 13,485  
Cost of revenue, excluding depreciation and amortization   3,855       2,818       10,140       7,792  
Gross profit, excluding depreciation and amortization   2,516       2,080       6,447       5,693  
Operating expenses:        
Selling, general and administrative   1,654       1,578       4,747       4,876  
Depreciation and amortization   91       109       297       372  
Gain on sale of business component   -       -       -       (321 )
Total operating costs   1,745       1,687       5,044       4,927  
Operating income    771       393       1,403       766  
Interest income (expense), net   (102 )     (82 )     (306 )     (233 )
Other income (expense), net                     (3 )
Income before income taxes    669       311       1,097       530  
Income tax expense   17       13       47       3  
Net income  $ 652     $ 298     $ 1,050     $ 527  
                               
Basic net income per Share: $ 0.04     $ 0.02     $ 0.06     $ 0.03  
 Diluted net income per share $ 0.03     $ 0.02     $ 0.05     $ 0.03  
                               



 
TSS, Inc.
Adjusted EBITDA Reconciliation
(In thousands, unaudited)
 
  Three Months Ended Sept. 30,   Nine Months Ended Sept. 30,
  2018   2017   2018   2017
               
Net income $   652   $   298   $    1,050   $   527
               
Interest income, net     102     82       306       233
Depreciation and amortization     91       109       297       372
Income tax expense   17     13     47     3
 EBITDA profit $   862   $   502   $   1,700   $   1,135
 

Stock based compensation
  62     24     177       61
Provision for bad debts     -      -         2
Adjusted EBITDA $   924   $   526   $    1,877   $    1,198