TSS (TSSI) 17 Nov 202020 Q3 Earnings call transcript

Welcome to the TSS Third Quarter 2020 Earnings Call. My name is Darrell, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn Penver. now will call John over I John, begin. you may

our and Good and TSS’ of you discuss Officer financial for Darrell. on Chief you, President joining call Penver, gentlemen. I’m conference quarter John results. TSS. afternoon, to TSS. on Thank the Financial today today Officer ladies Thank is Chief the Angelini, XXXX Executive us for call me And third the joining Anthony

XX, take like we press the call this accurate expressly note made as the This today. law. or reflect will or call. or to except applicable statements, otherwise I applies remind events which as TSS As statements statements release the the date comments today’s by language to obligation update, well issued forward-looking of forward-looking November as or would language conference in to contain may circumstances forward-looking on begin we regarding information That indicated, otherwise that today, time-sensitive of statements cautionary amend, same required XXXX. conference as to only made on call and review everyone call, supplement arise any after contained disclaims to that are replay, any information

uncertainties, list filings to future the Commission. a with Exchange which Company’s the the For risks performance, of and periodic affect may please refer Securities and

comparable the is directly financial press non-GAAP GAAP of In today’s most between measures accordance to measures will measures. A release. reconciliation addition, with referring in be we the differences calculated included those with financial in

comments then to and review see begin and third the XXXX our Anthony on turn results changes business call I’ll with we the a over coming. the of So, call for his quarter

will we announcing quarter made results a www.tssiusa.com. be released the release available copy A our Now, third financial of our on at release that today, website earlier of XXXX. for press

and the the the reversal been due projects issues reseller results quarter of quarter mitigated. third to the experienced we’ve pandemic Programs now during the XXXX. reflect experiencing, been able QX delayed been second And that chain supply in have limitations. pandemic of our we some negative to that the with of QX, been that impacts business had Our COVID-XX in have resume with particularly

impacts still are our but business adjust pandemic, ongoing and experiencing delivering deploying for time from adapt have the our We our had while customers. services practices and to

to these we very report able quarterly XXXX, With third strong million challenges, quarter our of so million, XXX% the of $X.X $XX.X increased for XXXX the revenues Compared million to XXXX. to in or of financial million a or come million the turnaround in have were basis business quarter from from quarter of $XX.X results third XXXX. by introduced reseller million On in third grown XXXX. revenues of of $XX.X months by these year-to-date through XXXX to XXX% $XX.X we the XXXX. in our majority that nine the increases $XX.X XXXX, The in from

from third in the XXXX, we business of of increase So, million. $XX.X $XX.X of total the reseller quarterly million had revenue quarter

compared well partners This maintenance to and business new drive facility our reseller line. this us and providing fluctuate nine-month customers, the integration additional including integration procurement for as business top helps generate continue hardware, to procurement on of $XX.X lumpy, of for reseller of our services is our add of to and timing work our from business. help expect business we as The is to volume million with the to revenues. and For a the develop and basis. integration recorded the orders utilization services, software of still line services. grow We on services But, we do lower And relationships. we as by quarterly it allowing our customers, reseller margins we services period, incremental our

facilities where our growth showing XX% travel period and the the of These growth business gross systems to lower are this deployment in $X.X business, performing by as XXXX. be modular we Year-to-date result data in will number fact, compared services centers million to two in restrictions for were XX% down of quarter impact from compared revenue our the pandemic, growth data reseller compared profits. and saw $X.X actual modular projects from and and business revenues the but XX% us our of this full million centers. COVID-XX profit will integration results by XX%, traditional XXXX. our to to increased third in XXXX by to recommence down $X.X from in still or units our to to margins, operating the A site in on a profit our other traditional million quarter deployment business negative quarter third compared in integration from our or business our And year Absent delayed units systems gross revenues million in basis, deferred of continue same of increases increased expect the business unit of as drive and XXXX, strong year-to-date business or On results. result. we these unit. from second facilities get improved units business revenues or reseller able a level of growth this So, integration $X.X

chain business these business this in supply in unit. anticipated QX challenges, growth by third was particular this Although in trust helped quarter in impacted strong challenges the

distance customers’ needs. incurred protected a our allows operating continued still meet and and way production operate our us labor have we through other workforce and higher pandemic facility to costs We this COVID-XX operate and our in as to that to services much socially adapted

new on-boarded additional we’ve from also been costs new partner. business to our these normal. OEM costs with experienced we operating And this incremental an as We incurred year we working get reduce as

the for to team development added to to would to related in to pandemic the in new business of is Our as level XXXX normalize last change have we the call, with delays the made higher growth quarter due despite We pandemic. of activity expect prepare our in less will opportunities, expenses third the believe in business, COVID deal impact than that compared impacts or customer XXXX, sales to as reversed. staff indicated improvement forward, and moving drive overall customer We second added our -- to in show begin On new activity to in progress quarterly as operating acquisitions. of the we’ve we would quarter the additional XXXX, the our pandemic. significant results assist from we the

in quarter. materially than quarter expect fourth third do and Our basis, on quarterly level them the materials of could we a change be reseller lower to the

of of the continue Administration’s the we $XXX,XXX fluctuating Act. proceeds the or Protection to profitably, but XXXX. We terms XXXX quarter did be applied move operate of of the of notification will during sum during in the the to this to from third costs forgiven this that we’ll we and of received for in the the anticipate CARES rent despite expect Business able not QX be Small effective date we the some the our by Program the We Coronavirus with We Payroll of incurred of loan, from Act following calculated quarter of the utilities loan accordance loan covered amount CARES eight-week the receipt Relief get of period this forgiveness, Act. forward. business the yet forgiveness Security us in We’ve may equal payroll Aid in Economic revenues with eligible fourth almost lender and benefit as which to amount

any forgiveness however, no be we guarantee, can for received. proceeds line receive that there fixed will of the Now, amount

the quarter more let me So, results. third provide into little a detail bit

Our of to quarter XXXX XXXX. in was the the quarter $X.X revenue and $XX.X quarter million, this million of third $X.X in second for the compared million third

$XX.X XXXX quarter included reseller million third our revenue of Our activities.

was flight the or of $XX.X compared or The the $X.X of Our systems compared revenues X%, up down pandemic business to data X,XXX% integration million, number delayed. to quarter a third XXXX. to customers’ restrictions centers facilities deployment caused were and of to modular imposed XXXX. business The travel third COVID-XX of million be the quarter due

reseller to increase $XX.X included compared a just third quarter customer restrictions services, the business basis, in mainly XXXX, the on-boarding XXXX sustaining system third other volume moved by from million primarily million revenues the integration due a the overhead months XXXX. helped drive was of stability of the was XXXX, million the from partners. we quarter. additional million year-to-date operating nine $XX.X from revenue associated XXXX, up revenues revenues still fixed into to facilities because $X.X increase of by of quarter in one the revenue, had the chain services. our only and profits which our million our in of service integration XX%, and the $X.X integration increasing challenges business On up first the Increasing with quarter reseller decrease our offering inability the are to million due or provide which reseller or to This approximately our integration services, OEM deployment the the Supply or from is meant volume in a million $XX.X of us services our in business Company, also XX% reflects prevented of in in we key the offset in the business million As $X XXXX systems Absent $XX.X as primarily increase XX% of integration of which travel our for quarter of that maintaining operating and facility. business, from XXX% $X.X pandemic and our $XX.X third completing revenues the emanating this to of reseller of or XXXX. costs new from second number unit began system business million

in As modular basis, we’ve for fluctuate to centers, demand on can quarterly due component in again customer this other factors. demand, year, witnessed volumes a availability, XXXX data and including significantly changes and

the customers to facility utilization and accomplish this and actively the to reseller which hope we increase of integration seeking to growth. in and system add along drive services We’re to profits services gross the ways more

from higher workspace core margin our the quarter compared main operate we on labor that We reseller significantly previous to services third -- did impact factor operating. higher in business safety storage Our facilities of this gross and added higher our facility our added year-over-year facility The and as of cost as to the year, costs decrease of was profit as is quarter of during pandemic, additional safely the well because the down continued our in our XX% continue during the XXXX. costs quarter. temporarily decrease. margin operating to XX% Margins the integration in incurred during causes

pandemic, experience levels. traditional As more operating gain to returning and these we’re more down through the come seeing we costs

XX% compared and were during the we $X.X Our selling, they of of quarter up $X.X expenses or million general to third XXXX the administrative XXXX. third quarter $XXX,XXX in million, were had the

our $X an year-to-date, XXXX. operating than and XX% travel After expenses new compared headcount quarter million of experienced Our third that $XXX,XXX than to nine the interest of we second months as an related were net quarter operating the of higher share, will the XXXX. basis, XXXX higher of expenses $XXX,XXX per third additional our $XXX,XXX sales our of of in net XXXX, per or tax customer of loss had to costs $X.XX $X.XX XXXX, the of lower a And quarter facility the $X.XX we share costs, a of recorded had we XXXX, to of a higher and to and of $XXX,XXX nine our of improve net prior or periods. years an acquisitions or pandemic. of we net and per of third in $XX,XXX per future had $XXX,XXX, all the this income benefit is operations drive expenses share, in compared the first $X.X year-to-date XXXX. the were $X.XX invested We operating because share, in in million personnel to quarter profit first operating loss in quarter or compared third or loss and $XX,XXX in in After loss above, $XXX,XXX in On in XXXX. that loss the months the

first This Our was $XXX,XXX taxes, compared quarter profit a adjusted of XXXX, EBITDA $XXX,XXX XXXX. of of $XXX,XXX XXXX. adjusted adjusted an interest, the of third to profit EBITDA, of year-to-date, adjusted in stock-based and which our depreciation, amortization an $X,XXX,XXX of profit EBITDA months to excludes EBITDA in profit and the the compensation, quarter compared third for of nine

and million at changes the up a sheet. the cash the second position the reseller quarter With cash Now, material turning reseller are quarter balances, million is total timing The the quarter. our and way cash our This to was credit of to to position our of $X.X hand. sheet, our transactions. our receivables about of from overall on balance $X.X the impact operating in on due balance to To-date, to increases definitely with balance Compared equivalents using in we $X.X the in million, end since events by quarter inventory of strong activities. structure as up has we’ve the a performance, remains finance third last these And prior been liquidity sheet. impact year-end transactions primary balance transaction on sheet around a strong. the and our payables reseller trade timing able the minimize way our to such ended our all

activities this and to is we of basis contracts believe and reporting that new end business a reseller during growing XXXX for introduce However, have we due this It to timing, trade continue progress financing we currently possible credit evolves beyond. customers business. We access it’s the our to partners see business adequate continue to this particular quarterly to grow on period. a at in and as additional reseller we possible fluctuations credit may as need as

working Our XXXX. basically capital to position is unchanged compare net

We of regards However, where We the to could from through to different the these third we loan, with this forgiveness the But be we no for balance in we’ll opportunities fourth we this of about we’ll Program. do to necessary quarter. be guarantee from our XXXX the And back alternative forgiveness. finance PPP grow loan yet back retain have reseller themselves us. customer We as may loan the to heard not for sheet. any present lender received operations a be role anticipate the business of there forgiveness us receive the quarter help proceeds. we’ve of applied sources funding continue proceeds helped that forgiveness healthy evaluate in

forward. call his that, with hand quarter see for going the third over I Anthony. the Thanks comments So, how and will Anthony we on business to results the

profitability and John. Thank ability revenue have shows TSS a we Wow, my high could for to deliver of us going for be a and record on level forward. you, this quarter model tenure. the a very basis, was it during It a quarterly

it higher delayed scale to our projects While of in ability some of was deliver this a the second some quarter, to makeup for and the much level. shows a

are I next the think, weeks. for six all in ready XXXX and we

XXXX We and will vaccine our new normal. the have we businesses all business or call we new adapted what this improving, exist most to is environment for beyond possibly of while the in believe and now potential

for for next preparing status steps and safety relative are our assuming protocols are that We quo the and a year.

and but that will expect continue at only profit grow in we to We revenue trends not as certain and look primary we’re engaged customer, our working our with others.

reinforce Our delivery, ability -- models me remain delivery make infrastructure and excuse a difference. to our

customers to and our might allow our sexy, deliver grow is very ability strong. it their not to While seem solutions

in mentioned, quarter we the with million finished $X cash. John of excess As

receive not the we All of the of current program, guaranteed, we proceeds add sheet solid use payables coming this our have and we criteria. to course, in to quarters. all but have opportunities the believe expect balance met PPP our to We the to enterprise are

and that to value new deliver realize progress than the can’t quarter, very who in be progressing wrap challenging is day-on-day, circumstances. things. There Although -- are into should $X our thank these touching an without been you despite leading few have EBITDA our market slower during logos adjusted exceptional I million delivered will we we the employees revenue we they a thought, as them We very, help with up be companies the has fourth a some future. believe and can few times around profitable.

higher We and goals up set we make that, open have the very for we how are enterprise internally. ourselves the future questions. for evaluating With that reach the I’ll it

Go ahead, from Levinson. Mark [Operator a question Instructions] we have [ph]. And Mark.

Thank a quarter. Yes. really congrats on And nice you.

your this Just on was cash a again, hand at specific what time? question

million. X.X

do more to why And money you Okay. anticipate raise needing now?

the and things of not going we program, one to as money. Well, saying into we’re No. more explained raise went reseller we the we’re

the very the we’ve come on opportunities a saying are us range, of there’s in We’re reseller we and and front cycle logos. that it so, -- some able XXs expand good of just that some as in to been party very, to cash program, in new that that cash millions dollar of do and third with

additional position we we capital a cases, some in need to So, those in finance where may transactions. be working

from So, we of get can take the advantage income and incremental those them.

we our as of it’s And have is an I that’s example? not do to million have "equity $XX much a it issue" sheet -- from mean, the -- So, deals a on to really take ability balance as course. as

Okay.

that So a would good thing. be

you to do the business Right. able those and you right to able go that be opportunities. want do your be go It’s want thing to -- to take on in

We very also cognizant do want to don’t we, are dilution. we that

interesting, in right? it’s So, costs So, we’re down. but obviously especially down, are and this market, where a costs -- financing little are very debt

believe we of to finance. logos, the lose Thanks. because capital opportunity. we significantly of don’t we But to don’t with want some advantage working to to also grow enough some also have we we So, new take don’t chance want could that --

you. help. Okay, Thanks time your for the I Thank appreciate to taking my answer questions.

Got it.

our comes ahead, Nedro. next And question Roger [Ph] from Go Roger.

Anthony. good Yes. quarter, That’s a

quarter? way all high can some postpone a fourth You point fourth a second if quarter that it in quarter that for million $X stuff every be of of big kind every whatever there and XX was unless up number kind was quarter, normalized be $XX normalized can is get just something third new change of completing it the you come got kind what going to going quarter, the point with of of some obviously, X was quarter. to a $X Is forecast we look Was the quarter, and million in the we Is and for quarter. million kind some business? that third quarter in the

never environment. tough, the was, we question very a it answer this very, quarter be We expected to kick then, occur. a business move make in, we’re difficult pandemic, to from but It’s quarter-to-quarter, in had that were able as still these third we and Yes. low second to as And the lot fluctuations how evaluating into right? up quarter. But, so our of

I So, on of million in by mix-- average way, quarter lot right. also million the makes per includes us that fourth -- a would the suspect $X $XX range to being the holidays, quarter which

So, I into goals would expect per would our that X going in XXXX be to that quarter. XX

us the this And putting we XXXX. stuff I environment. mix. mean, for then given in million lot all happening million the haven’t at so, $XX in there’s a comes to of $XX guidance down range, and kind revenue it still But, of

winner going are the we cases to So, to know go can’t we soft, work. be and up real do can’t don’t -- is the we because sites because count

the And pretty third our But, us some right? right second from a to pushed. I of I it. least, albeit, to showed do think, to is so, mean, environment crazy, to quarter things, gets of the the out go ability it took it now, figure that say quarter we the some those dynamic third quarter have that

for. in million we’re $XX mean, and that’s we quarter in for or million million position we’re business So, can can building a EBITDA. I the now $X.X we quarter what deliver show that $X.X a

that think business we the is good. growth the to I the question and align macro that don’t our I within areas model just think is really business have environment the solid I again think we now, are and So -- have model mark.

the the think, is macro environment challenge what like. I looks

good. -- it’s So,

X, the to $X.XX, made we -- $X.XX? revenues change, high profitable, -- for expect our end on It mean the quarter, nickel could the meet are some or won’t probably and million whether if be it’s maybe $X.XX fully on you $X low quarter. the So, third the $X.XX end, in but maybe it I that

John, Yes. there. help me

assertion. Yes. I a I reasonable that’s mean, think

And we do on. no have wait. more Hold We [Operator Instructions] oh, -- question. have a

one. [ph] wants ask to another Nedro Roger

Yes.

Roger, ahead. Roger. comes, go Here

your cap, Do and of have somebody you’re TSS accomplish, get is by had being ultra any I that that not going you brokerage present that investment Company issued might there of into a was trying little to and ago somewhere? report houses a intentions you’re long report, homework community coverage able was guys what too the to where there TSS? firm maybe and wrote a some little pick into on to chances up done some think, small

Yes.

been actively evaluating work. do best how So, Investor we we do Relations have our

have or of they’re And actively we that so, little looking some are at quarterly us, most conferences. thing get visibility anymore, I conferences cap are for important a or a do end likely looking at deliver So, on do Obviously, be into the most us that right? not conference we’re of number live to the basis that micro right? right, disjointed, we we a we’re at the gotten a that. because investors mean, space doing people for sort for numbers. looking at on helps of and So, the something the is investors day, the

agreed. Agreed,

exploring But, we that. are

Okay. to out versa. your deliver and you Yes. I’d rather want don’t I promise and have counting vice under than Company over see

is number Credibility one. Right.

more [Operator Instructions] have And we questions. no

No more questions.

to us here. an Hey, sticking said. Thanks, up, everybody I has Darrell. like interesting first with I been -- This Okay. thank year, want for want I

things, XXXX away crazy patience, hopefully been appreciate We’re and I all the the we’ve just as have to work to worked year, all least. biggest takeaway of from around I in field your of another one we’ve has it to for our is, and ending. deliver. this. in factory six operate a of the to say you mean and the continued I people doing weeks mean, things moved

well rollouts We including and like feel them, are we easier track. the for together locked to us bode but of themselves home -- put a the together have the got right? stepping risk, some on put into at all to XG guess, to like stay that mean, the be business and I edge we’re you I future. room, thank and who kudo the big in a we’ve going there’s So, in joined feel market, it’d markets

safe And So, long end stay thank But, that, you. the we’ll everybody, stay healthy. with and call.

Thank gentlemen, participating. you this you. for concludes Thank Ladies conference. today’s and

You may now disconnect.