TSS (TSSI) 31 Mar 222021 Q4 Earnings call transcript

Welcome to the TSS Fourth Quarter 2021 Earnings Call. My name is Daryl, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to John Penver. John, you may begin.

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

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

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

release. business turn we fiscal for in be call calculated financial XXXX will accordance those Anthony call and results, the over of the begin with a I'll the up. measures our In see comments and review is with referring differences I the how on to shaping his addition, 'XX quarter of and measures then fourth measures. GAAP we in our to between comparable directly of will non-GAAP A press today's financial reconciliation the included most

EBITDA the XXXX. XXXX. financial from website some achieved a available copy we XXXX, press in our afternoon, A second on made still chain and this positive-adjusted of at fiscal and results for supply we our fourth despite significant www.tssiusa.com. earlier Now impacts release half that be fourth of in the quarter quarter will for shortages announcing annual release released Overall,

fluctuate access from in XXXX, because return restrictions results impact the negative restricted only access travel we're profitability. XXXX. positive the bigger influenced throughout COVID-XX in results segment, sites customer and and than year, now a both There showed and our the Travel services. times, to second were supply half our Our some of impacted our see Facilities to physical none of did factors and XXXX, pandemic chain provide quarterly our to our throughout unable restrictions, during customers. we're restrictions that removal negatively particular, to beginning site customer site locations The have and continued to lead

XXXX deployments We our customer have of delaying not how disruptions also for their long have know the delayed second impact At projects. will for delivery continue half to begin To and that chain supply needed XXXX. during further extent business and this the experience improve witnessed in in services. optimistic we're delays chain business will to both continue and supply challenges our associated And or our of the supply point, services, Integration that based or the it half situation on the continue, and if our that vendor on of worsen delays second will delivering these chain customer improve. feedback, this our equipment the do pandemic we will

So results. XXXX our fourth quarter let details fiscal on and provide our some quantitative me more

fluctuation responsible quarterly and revenues quarter of are was revenue in XXXX, in the quarter Our $X.X XXXX $X.X revenues. of for This our the of of fourth million. third to quarter this for level in million in Reseller fourth compares primarily the XXXX. the million Changes $XX.X

XXXX. Procurement our stream. drive higher this goal transactions compared revenues. The to from large to and in timing fluctuations and they will control, quarter Our longer-term our volume this And quarterly of often these on is were and more medium- million revenue consistency of beyond quarter the third Reseller and be continues $XX our to drive million the of revenues increased $X.X XXXX, fourth Reseller by to

during or Our the quarter generated modular million quarter in is decrease business of COVID to XX% or XXXX, Facilities quarterly and XXXX. lower $X.X have The quarter XXXX, the higher field. recently to restrictions in beginning ongoing our in the to down this and new data from resolve, deployments of of Facilities $X.X centers compared deliver the services by as was was first we've of and lower quarter. supply the $X.X revenue of fourth million than during of third we're chain XXXX, XXXX, able fourth due it challenges, million more first begin the MDCs supply to and this as the the seen business revenue these anticipate chain We deploy impacted and XX% ability half to issues

of to by in quarter quarter the quarter of marginally compared increase or did were third compared fourth XXXX. the by they XX% or million Our fourth $X.X XXXX. by X% the $XX,XXX XXXX, And to of Integration ahead revenues

I in delays. As mix and chain product mentioned earlier, and supply changes we're service seeing

XXXX. As work through increase the will our we level during changes, integration balance these of that anticipate we services of

of and we full decrease million. $XX.X million, recorded Reseller we the a XX% business. million $XX.X This our decrease XXXX. from decrease to XXXX Procurement $XX.X of the $XX compared services was reported in in a this XX% million year, was For or of revenue

compared they XX% the lower, gross margin commensurate as of fell in XXXX, overall is decrease Reseller have not on and Now a impact because revenues. the X% to profits, level services does on the our to this Procurement compared gross and

services and impact million to $XX.X of operations. $X.X XXXX revenue pandemic Facilities XX% Integration in to million due the these traditional fell or Our on the

gross during profit XX% fourth this in in of Our change X down There's profit XXXX. factors margin. XX% from fourth our margin the quarter the of quarter is driving gross

than our lower and revenues. Facilities The first a margin of is Reseller the have revenues, higher level Integration which

this increase as Reseller so of total And our profit gross margin. revenue, our as revenues percentage decreases a

our revenue quarter fourth of XX% revenues revenue of fourth XX% they quarter XXXX. total of were the but in the in XXXX, So of were only Reseller total

in the total XX% increase down quarter the of a fourth gross the So profit helps revenue, Reseller this of in a drive our compared XXXX, to gross quarter of revenues, percentage margin XX% fourth margin in as to of XXXX.

second in factor costs our XXXX. the The facility direct that compared our margin reduction is Integration to in improves of operating XXXX

and during storage costs in XXXX, higher pandemic, the facility safely we operate Integration second additional incurred the facility and During safety we the and added facility. labor, to workspace

able operating $X.X this pandemic, direct the helped the direct our improve to million reduce XXXX, of business these reduction As a which we gross seen we've costs, cost compared through experience by lower gained in have the we operating despite were revenues. and has profit to

a of XX% to in fourth profit The margin down revenue core absolute during $X.X a lower quarter XXXX. recorded to gross recorded was to gross compared in which of which of increased margin XX% In in we the Integration in to a a the revenue. year, X% the XXXX, XX% XXXX. of in million of higher quarter due fourth compares was the the XXXX, XX% XXXX, For in terms, margins business compared that to on which gross Reseller our Facilities XXXX, of XXXX, gross profit and million we $X.X and on

Integration was XXXX. the to compared business XX%, XX% and For in this the year, Facilities core margin and on our

XXXX $X.XX related. we fourth level of were operating or decrease of loan PPP number to our and of million. quarter $X.XX After 'XX or million the during down as an of XXXX. was was recorded selling, received fourth we $XXX,XXX a higher for Year-to-date, Year-to-date, the also the and income general $XXX,XXX costs, $XXX,XXX share X% a again, a administrative loss higher the or compares quarter $XXX,XXX operating the net loss on XXXX. $XXX,XXX gain forgiveness of the selling, than of Year-to-date, amount. of loss did in XXXX. expenses of the XXXX the XXXX. The expense $X.X in in quarter an of in XXXX. the we quarter the of a the $X.XX we fourth the After compared Our on of that XXXX million the quarter $X.X approximately $XXX,XXX third $X.XX a XXXX, $X.X recorded income we interest of that of that XXXX, primarily above, had and net the share year. This $XXX,XXX compensation of had And fourth the expenses to of loss compared operating $XXX,XXX quarter quarter XXXX XXXX. of share we loan fourth were $XX,XXX loss of had million is forgiveness operating the with fourth gain or quarter to than operating tax fourth per in or expenses $X.X during the an share in that and administrative of $XXX,XXX loss that reflected in compares net was include income last our to $XX,XXX flat general $XXX,XXX of net those the This and an

million been this the of amortization Our an compensation, EBITDA was the stock-based QX exclude the to of adjusted compared of interest, $XXX,XXX which amount have adjusted to in loan the in EBITDA compared profit $XXX,XXX of year. XXXX $X.XX to the quarter excludes this profit would EBITDA, quarter fourth the depreciation, forgiveness, and adjusted Normalizing XXXX XXXX. $XXX,XXX and taxes, XXXX, a fourth

a was XXXX. of the profit that $XXX,XXX. to adjusted EBITDA that in in would have And EBITDA $XXX,XXX adjusted compared been normalized XXXX million if year-to-date again, year number, Our normalize we $X.X prior

Now turning to sheet. the balance

transactions prior related a our in Reseller primarily material the of healthy. remains receipts changes the reseller and cash our sheet and overall and year payable accounts inventory Our and balance timing position sheet, transactions. has around in impact definitely are cash to in due timing of events payments the on The to the changes balance

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

X-year right-of-use balance lease on quarter our million the assets, and on this fourth our new resulted lease $X.X Integration XXXX, to lease a approximately adding our of and us signed corresponding sheet. facility our a to in During we recorded liabilities amount

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

during I XXXX. to evolving how So his over the on call the business see will hand for our quarter fourth Anthony? with and comments we Anthony that,

given on market would our Great. has I future influential Thank results believe factor current say John effect shortages. near-term you, dynamics I a supply on most the corresponding chain detailed near-term and largest, explanation the our John. results. on the are

We growing to large backlog shortages mind on some components. solutions. very that integrated Keep we and due in are provide a sitting of

system X can of shipping. just So a shortage component from a delay whole

shortages supply the attributed to be COVID. of can chain Some

certainly is the the While not feeds and variant that effects which of us IT to seem be the COVID in of global China, in the supply the case behind chain. globally U.S., particularly

and expectation, Our improving partner with are extended. services will as to of center our committing based supply and demand, in that customers in slowing. year. IT Demand and this our on the future for demand grow customers, throughout realizing end the planning is a signs importance has situation we requirements, consultation for any our customers and high data the to part have The times of continued and rate, very products the see don't are assets chain see of we been lead at rapid related

occur, demand, for that, to year. while while challenges our timing The all opportunities additional throughout also of of signs recent for expected to begin business These we wane. relief additional expectation the to is grow. capacity because to the will demand of are good are shortages need add beginning continue Our

hiring very in Our Hopefully, particular, and operate amazing retaining of done including much area, the the team based we we which a us and the couple labor, and all our of was record the this an of had locations years, which challenging track competitive has market. which is over least, for of in in Greater past success all families. very is on Austin job have at

evolution explore as opportunities our can a to that company. We nonorganic continue additional continue

in things we stakeholders. are many doing interesting of interest the right type the there focus possibilities, all on While of will

for every and strength, have this, though of day as years. have I'm just as future I'm sure from feel near-term unforeseen the of say Our us I more come, pipeline we headwinds. none our over it is built, hear -- the flexible our opportunities will dedicated and amazing a greatest the but challenges and balance be there sure some sheet DNA deliver but we be organization, of is we is great on we as have couple to the could robust, don't remain to our platform will I our to service secure, an Personally, company flexibility. imagined ability that last customers. business see despite despite we some a

our to we continuing finalize expect business, positive we need ever-producing results, forward, results, Looking to to growth as material year expect this provide and continue in the the the build. we but have

years. and very of are not have we business couple control throughout well as the swim positioning have lane just our of despite a in is and do but understand clear a macro all of confident future, very strong. have right the built year I company and but capabilities we positioned will occurred last this words, the believe done. can't backlog events stronger that understanding unpredicted emerge are Please we that We underlying momentum that for remarkably the the and we the in over events, the the we

sound of and set it to questions. we'll that, financially With open deliver to in up the us. opportunities front We up are

have [Operator do Soueidan. Maj a Instructions]. from question We

point you, question, have about question ask deliver your -- when was obviously add could Demand revenue Like do I -- chain what probably just And just forward? look much issues. on for ramping I supply how you like would even would just to it's you to your deliver? is Can capacity you what And current actually curious. One guess, I even really. early demand that to though going facility up you capacity? you how that? talk but have increased at for the

Yes.

some supply chain overall. We've that manage are of inventory depending the period of But with we customers inventory levels, is deal not got new inventory, requiring onboarding we also basically So aspects the side, have ability, holding to which we there's a on capacity. have that the books, how overall. this. also are on then to our need double couple increasing but to -- inventory we And additional

little inventory managing costs. So big incremental some with and the the overall picture, the amount with double space business and some we a certainly incremental capacity, changes of could of

Instructions]. like And for closing it it Angelini we I'll back have doesn't turn [Operator Anthony look more any to comments. questions.

you, Daryl. Thank Okay.

As you all tend the quarter, of later, all related year-end finishing because know, this information. the our we report quarter audit so is and to

now. end we're as the right first know, So of at you sitting the quarter, basically

So -- that in next reporting and we'll the so weeks. or X be

you. and results. So appreciate tuned attending, all I you stay for positive more Thank

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

now may You disconnect.