TSS (TSSI) 16 Aug 212021 Q2 Earnings call transcript

Welcome to the TSS Second Quarter 2021 Earnings Call. My name is Darrell and I'll be your operator for today's call. At this time, all participants are in 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

You may begin.

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

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

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

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

of over our and a today, see on for comments for that released I'll copy of Earlier press to second second the reseller Similar quarterly of then down be of little fluctuates still XXXX. of second than and quarter quarter will numbers XXXX, compared level quarter the quarter materially results XXXX. www.tssiusa.com. million Anthony our of the XXXX explaining A we first procurement to quarter, and release of to XXXX slower the his a at call compared XXXX. of And with business quarter website our a most I was coming. in changes the The announcing review revenue year our the our will release available was So results. second revenue financial made our this turn decrease second on we begin call the to $X.X

business employees, we we learn COVID-XX staff quarter second our the of the to manner. and accurately effects will pipeline transactions as We end Despite of difficult the could these our it XXXX however, large In will potential operate XXXX, net compared our we these protective costs exact are of quarterly fluctuations transactions; beyond in production second to of a added fluctuations shortages that making therefore, restricted continue continue level so user have revenues XXXX. been Overall, able revenue operating we've and continuing the streams build to higher most XXXX, to integration safe when timing to in to is we facilities occur, procurement to a control of added our incurred that the customer ongoing mostly costs predict been dictated we've the distance we and access have due lower supply and business a compared of losses due and adapting world, with socially to during to we transactions second significantly and, business. our as facility transactions and that in operating COVID-XX. seen quarter anticipate large driven our to lower by integration reduce of us procurement our for by to our chain reseller a around

of level as our integration time these the of we operating largely and incremental costs. we have experience, With much are lower at costs now operating benefit a eliminated facility

as XX% the savings This XX% why As XX% this operating our through year. and percentage able total revenue largely These of to our our XXXX. of to or bottom of XXXX we margin decreased fell XXXX in by second cost quarter $XXX,XXX in by increasing loss second losses XX% of net operating XXXX. line quarter compared XX% net or from loss from revenue and resulted in in a our in by we to to a is were cost almost XX% to the result, recorded reduce improved our $XXX,XXX the and gross

the really Our facilities of of COVID-XX group site impacting pandemic. restrictions pandemic XXXX. still business is operating The operating the April our with started restrictions impacts to and due physical around

XXXX. the from first the was or revenues modular deployment year-to-date, revenues. than why higher quarter XXXX centers XXXX Revenues impacted, of not facility were the half is from the of XX% half XXXX first in first So of $X.X are data to XXXX our the down million compared group which of

quarter facilities X% last year. second to by compared of quarter revenues second improved the The

Our or revenue was customers have repair our and revenues helped the facility XX% first down only in existing compared these has modular decline centers, of update data such continued refresh their offset deployment total that business to XXXX. to activities in and the half from revenues

number modular several a deployments, the that deployment center We expect data new starting facilities to a levels. as will next our an business data in are our and see center but rebound of XXXX increase modular over revenues over show for quarters, increases orders we

the changes, lot with down better of chain not and half XXXX integration we XX% supply we product service these revenues due our second will since structure second services improve elements we XXXX. timing. work mix the we current as able anticipate visibility, to to are were through changes There We've during quarter and our of of compared demand manage and in of project changes been was to last of and sheet shortages to integration align Our and level reported. balance seeing a cost

$X.X repay long-term our sheet provided $XXX,XXX revenues the in-process reseller debt early. XX. million of some of in repay and after that transactions June debt million $X.X costs on have of did We do to we favorable our deferred an as balance on quarter, the have our resulted of lenders incentive terms the During deferred us

provide So on the let me results. more second quarter little a detail bit

for to This first the revenues. this XXXX. of the in for level $X.X million of second revenue our revenues the XXXX million. in reseller Our quarter the $X.X quarter compares quarterly $X.X in was in quarter primarily of second are fluctuation XXXX responsible and million Changes of

volume by of will transactions our drive Our the earlier, and decreased and procurement to first these our reseller and consistency million large margins. as And beyond the compared quarter XXXX. our to and continues and $X.X from to indicated often of million reseller 'XX revenue revenues second fluctuations control, by to I this the medium- profit this $X is of quarter in stream. more long-term goal gross of the our drive quarterly timing be And revenues

XXXX lower in ability Our This first the XX% lower modular Year-to-date, is decrease higher centers of revenue was as second than generated level facilities $XX,XXX the COVID field. XXXX. $X.X comparable or services the XXXX business our to $X.X in of the quarter due quarter to of second the impacted and half X% facilities million XXXX. quarter of in during of XXXX. of revenue the have deployments first This was or ongoing restrictions $XXX,XXX deliver the million the is data to than of

our modular We to of refresh as business repair of units remainder instead and XXXX continue customers new deployment. the of from have to older MDC focused modular activities deployment maintenance as and upgrade facility Our centers higher quarterly of on replace existing in customers base. deployed revenues data units their our the and delayed anticipate the begin

integration for were the XXXX XX% the quarter of compared first revenues $X.X levels XXXX. million by compared XX% Our second six decrease months did and or to of XXXX they down to of

delays. these we As supply And service we the changes seeing we through services I third of increase and level mentioned anticipate earlier, integration in mix product and as our during changes, that work quarter. will are chain

margin and There first in second significantly of XXXX. in in quarter the two second from from of our XX% XX% the margin. up Our was this during are improvement driving profit gross XXXX of up gross quarter XX% factors the quarter profit

have facilities our impact The services, first which margin is lower the of integration than services. a and reseller lower

decreased a reflected of margin. as percentage increase revenue, profit total will our as be in this As gross an reseller revenues

operating The incurred the facility. the we costs second factor integration in improving facility added And in of XXXX and and pandemic workspace reduction facility our XXXX, in as second during compared and safely our to to XXXX. costs additional margin operate direct is facility during the a said, higher storage I safety labor

facilities XX% to has facilities on despite through we've seen As these lower and improve reduction costs a we've during Margins on compared helped pandemic, first which was in core the core gained XXXX. the the our year. business half our Year-to-date, second the gross integration quarter of XX% increased in and profit integration in experience revenues. the to compared XX% XXXX margin of businesses previous to XX% our

XXXX had that $XXX,XXX compared the was tax million first of $XXX,XXX and share the of share during $X,XXX,XXX second XX% loss than in interest $XXX,XXX recorded general selling, loss loss first a first $X.X operating Year-to-date, a of and of we operating of or operating Our or loss loss an compensation the $X,XXX,XXX of $XXX,XXX The or net second in to Note $X.XX that of second or quarter loss net the up we was administrative second decreased our selling, a for $XXX,XXX in the we second and our administrative to of of quarter XXXX. general than of million the quarter $X.XX operating quarter They $X.XX XXXX. $X.XX or loss we our $XXX,XXX share net After we loss that share above, XXXX. compared and the XX% costs, the the lower or X% second half a X% of the related. XXXX. XXXX. for a of XXXX This quarter primarily to operating quarter $X,XXX,XXX compared the compared quarter Year-to-date, XXXX of to were $XXX,XXX the increase and This the $X.XX recorded loss XXXX. XXXX. of $XXX,XXX XXXX. of half in an $XX,XXX a million. of a of net or expenses in were in had less recorded or XXXX After expense of of by expenses $X.X was first quarter an

second interest, amortization of compensation stock-based of Our the $XXX,XXX and the quarter adjusted That $XXX,XXX in loss loss in was compares second adjusted EBITDA, a which excludes EBITDA depreciation, quarter an of XXXX. taxes, of XXXX. to

EBITDA in $XXX,XXX of that EBITDA of $XXX,XXX of we XX% compared reduction XXXX. loss in adjusted XXXX. a in first adjusted year-to-date a $XXX,XXX Our had This half or was loss is the to

now to the sheet. Turning balance

events timing of year-end balance in the reseller timing primarily Our accounts transactions payable sheet, balance the changes has around and The sheet reseller and position impact the and transactions. are material a balance due financial to cash since our of definitely on related remains payments to receipt healthy. had in decrease our

During make the long-term lenders the second quarter from incentive the following settlement. $XXX,XXX of early repay debt we of did XXXX, early to an

feel future growth in balance We utilize and good looking continue to strength about us it of to cash ways flows. sheet the growing the at assist to are in

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

Thank John. right. you, All

through and the on probably are at mid-to-high in of expected $X.X on EBITDA work and the be half million $X supply lower with adjusted end the QX revenue I represents said year first range half of significant $XX mentioned our adjusted least I and As QX. year at to a as of expect of we a chain COVID deployments. million Therefore, the to expect in also delays and we effect side especially the bit lingering This higher. turnaround seeing on revenue EBITDA. the million call, we and we last second

in difficult are As working moving number to various predict, business our still John are mentioned, and consistent getting there we reseller more revenue of is a parts volume. on The streams.

the year. we for are half The visibility. a large, In and increase activity getting deals back see are fairly fact, of in better we generally large the reseller

facilities is both from feeling Our challenges business and supply chain deployment still schedules. effect some

and year We are the into seeing of XXXX. improvement toward the end rolling

delays business of chain integration the component definitely has whole challenges one felt Our project. impact as the supply

of of timing on parts does recognition, easing. better chain we supply diligently believe are revenue improve related are revenue and trends and it industry. to begin working of There the are our disruptions number seem a that deliveries business We opportunities, XG with primarily telecom predict the to the will

well the and will resulted through the regarding cost made business. half we our ramp the year-over-year. serve of have first have reduction integration This progress through in results up our operating an the We over structure now XXXX. our year. we significant have within improved reductions volume expenses end us made of in also And year, this improved and These margins as $XXX,XXX

fundamentally of process, connect sales level services a We businesses. meet development relationship solution and efforts. able a customers to to where set This are are us, high of in our generally operations requires our general to our building with

While virtually, is happening is same. this the it not

As rates experienced improvement vaccination personal direct is last we versus we This increase, complete shutdown client in interaction. year. are a seeing that interaction on that

relationships. open to been While caused interaction on improve much impact has some protocols This assist variant, are have by in customer interaction. will there we extending Delta us place more direct the in and manageable

this services. extend strategic and is are we an in options seeing continue some look pace our and our growth to There interesting improving continue opportunities. We area, to at

as sheet balance term the down second paying strong evidenced by debt some us remains in Our quarter.

on focused activities exploring recent our in strategically. equity, for we're at call especially are open levels protecting these questions. the that, We we'll any With

we with question. your do question a And Go Go Swidan]. Instructions] ahead. from have ahead [Maj [Operator

question. I quick I a late. I a joined little missed in it Just mean because maybe

areas ended some Company acquisitions, in? for and the kind those of doing talking at looking some expand about Could your partnerships at potentially would for the maybe. of and things looking conversation mean you're maybe you I at it alternatives what looking Company business, here the the within You what and -- upon guess, you're what strategic

obviously, puck events, general, our taking puck those I'll in Yes. recent which that do services to to stable kind block of allow right at the clip. we looking a other at general, and areas the been. it, services now, opposed as where We're of, is is to will have where very in go subject we're call going how extend has the some In but growing now us some we that to good

we on And and some so that our to focused that the pretty in extend base. service opportunities our some can synergies we tied pipeline have at some looking are core with good promising stuff capability that looks

would dent make -- in And customers? big these some diversification do you think that of a your moves make of

the Obviously, thing yes. more the do part mix the is how customer Yes, little bit diversify Yes. and Sorry. forward. we a again, thing of and our whole move that's base whole

trying to So the not answer is yes. But we're do.

what we're today. We have a good capability in doing

and trying So services to extend that the evolve. market we're as

next do So the more of will roll forward opposed all you By we're reseller extend to, looking way, a our have we -- base reap with let's it, Yes. call to customer or mean as not a we up, if and more diversify do of many, of once the sell and so a kind that how we base. a recurring of services place the I idea the can will. base of revenue developed how

to Anthony [Operator call back Instructions] don't I'll time. at questions Angelini. any the we turn more And this have

through second COVID Thank XXXX both we're will into have been feel going affected We We the chain the favorably. to very half like interesting look how and but -- supply next feel has pretty year, months. about us a year. this XX that things, Okay. basically and you, we're a timing like we've feeling blockbuster roll we issues, Darryl. an good of from over Well,

to talking look you we'll all that, forward to with November. So in

Thank thank you and for concludes participating. you, ladies gentlemen. today's And This conference.

stand You post may your now by disconnect. Speakers, conference. please for