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CST: 20/08/2019 00:56:54   

TSS, Inc. Reports Second Quarter 2019 Results

5 Days ago

ROUND ROCK, Texas, Aug. 14, 2019 (GLOBE NEWSWIRE) -- TSS, Inc. (Other OTC: TSSI), a data center facilities and technology services company, reported results for its second quarter ended June 30, 2019.

Second Quarter Highlights:

  • Second quarter 2019 revenue of $3.5 million compared with $5.4 million in the second quarter of 2018 and $4.7 million in the first quarter of 2019.  The second quarter 2018 revenues include $1 million from operations sold in 2018.
  • Gross margin of 41% in the second quarter of 2019 compared with 38% in the second quarter of 2018.
  • Achieved operating income of $2,000 in the second quarter of 2019 compared to operating income of $449,000 in the second quarter of 2018. The second quarter of 2018 includes $167,000 of operating income from operations sold in 2018.
  • Net loss of $94,000 or $(0.01) per share in the second quarter of 2019 compared to net income of $319,000 or $0.02 per share in the second quarter of 2018.
  • Adjusted EBITDA of $168,000 compared with Adjusted EBITDA of $615,000 in the second quarter of 2018.
  • Adjusted EBITDA of $168,000 compared with pro forma adjusted EBITDA of $464,000 in the second quarter of 2018 (excluding results of operations sold in 2018).

“Although our revenues were down due to some project delays and changes we were able to maintain positive EBITDA earnings in the second quarter,” said Anthony Angelini, President and Chief Executive Officer of TSS. “We expect the second half of the year finishing very strong as new programs are staged to provide substantial growth in 2019 and drive momentum into 2020.”

Quarterly Conference Call Details

The Company has scheduled a conference call to discuss the second quarter 2019 financial results for Wednesday, August 14, 2019 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 48914297#. 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 September 13, 2019. The audio replay can be accessed by dialing 1-888-843-7419 toll-free in the U.S. or 630-652-3042 then enter conference ID number 48914297#. 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.

Pro Forma Information

Pro forma information is used by management to evaluate performance when certain dispositions occur. Historical information reflects results of disposed business units through the disposal date, while the pro forma information enhances comparability of financial accounting between periods by adjusting the information as if the dispositions occurred at the beginning of a preceding year. Our pro forma information is adjusting for the timing of dispositions, but does not include adjustments for costs related to integration activities, cost savings or synergies that have been or may be achieved by the dispositions. Pro forma information is not a non-GAAP financial measure under Securities and Exchange Commission rules. Our pro forma information is not necessarily indicative of future results or what our results would have been had the disposed business been operated by us during the pro forma periods.

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 2017 financial statements contained an explanatory paragraph that expressed 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, 2018. 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)

        June 30, December 31,
          2019       2018  
             
Assets          
Current Assets      
  Cash and cash equivalents   $    6,070     $   6,178  
  Contract and other receivables, net       690       727  
  Costs and estimated earnings in excess of billings on uncompleted contracts     154         154  
  Inventories, net       80       108  
  Prepaid expenses and other current assets       337         266  
    Total current assets     7,331         7,433  
Property and equipment, net     440       390  
Lease right-of-use asset     1,754       -  
Goodwill       780       780  
Intangible assets, net       352         398  
Other assets         109         109  
    Total assets   $   10,766     $   9,110  
Liabilities and Stockholders’ Equity      
Current Liabilities        
Lease liabilities   $      585     $      -  
  Accounts payable and accrued expenses        1,692       2,390  
  Deferred revenues     2,744         2,181  
    Total current liabilities     5,021         4,571  
Convertible notes, less current portion, net       1,928       1,838  
Lease liabilities, less current portion     1,291       -  
Deferred revenues – noncurrent portion     110       112  
Other liabilities       -       108  
    Total liabilities       8,350       6,629  
Stockholders’ Equity        
  Preferred stock- $.0001 par value; 1,000 shares authorized at June
30, 2019 and December 31, 2018; none issued
           
  Common stock- $.0001 par value, 49,000 shares authorized at June
30, 2019 and December 31, 2018: 18,450 and 17,520 shares issued
at June 30, 2019 and December 31, 2018, respectively
     
2
        2  
  Additional paid-in capital       69,454         69,241  
  Treasury stock 956 and 777 shares at cost at June 30, 2019 and
December 31, 2018, respectively
      (1,695 )       (1,542 )
  Accumulated deficit       (65,345 )       (65,220 )
    Total stockholders' equity     2,416       2,481  
    Total liabilities and stockholders’ equity   $  10,766     $   9,110  
                   

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

      Three Months Ended
 June 30,
  Six Months Ended
 June 30,
        2019       2018       2019       2018  
Results of Operations:              
  Revenue   $   3,539     $   5,367     $ 8,199     $ 10,216  
  Cost of revenue, excluding depreciation and amortization      2,087        3,302         5,111        6,285  
  Gross profit, excluding depreciation and amortization            1,452        2,065       3,088         3,931  
  Operating expenses:              
  Selling, general and administrative    1,371       1,516       2,876      3,093  
  Depreciation and amortization     79         100         160         206  
  Gain on sale of business component   -       -       -       -  
  Total operating costs     1,452         1,616       3,036         3,299  
  Operating income   2         449       52       632  
  Interest income (expense), net     (115 )       (111 )       (224 )       (204 )
  Other income (expense), net   28              64         
  Income (loss) before income taxes    (85 )       338        (108 )     428  
  Income tax expense         19        17        30)   
  Net income (loss)   $   (94 )   $   319     $ (125 )   $   398  
               
Basic net income (loss) per Share: $   (0.01 )   $ 0.02     $ (0.01 )   $ 0.02  
Diluted net income (loss) per share $   (0.01 )   $   0.02     $ (0.01   $   0.02  
                               

TSS, Inc.
Condensed Consolidated Pro Forma Statements of Operations
For the Three-month periods ended June 30,
(In thousands, unaudited)

        2018 as
reported
  Adjustments   2018 pro
forma
    2019  
Results of Operations:                  
  Revenue $   5,367     $   (972 )   $   4,395     $    3,539  
  Cost of revenue, excluding depreciation and amortization     3,302         (690 )       2,612         2,087  
  Gross profit, excluding depreciation and amortization     2,065         (282 )       1,783         1,452  
  Operating expenses:               
  Selling, general and administrative     1,516         (115 )       1,401         1,371  
  Depreciation and amortization       100         -          100         79  
  Gain on sale of assets       -              -          -   
  Total operating costs      1,616         (115 )       1,501         1,450  
  Operating income (loss)     449         (167 )       282         2  
  Interest expense      (111 )            (115 )       (115 )
  Other income (expense), net     -              -         28  
  Income (loss) before income taxes     338         (167 )       167         (85 )
  Income tax expense     19             19         9  
  Net  income (loss) $   319     $   (167 )   $   148     $   (94 )
Basic and diluted income per Share:                
  income per common share  $   0.02         $   0.01     $   (0.01 )
  Weighted average common shares outstanding     16,277             16,277         17,394  

The 2018 pro-forma results reflect the consolidated 2018 financial statements of the Company as adjusted to exclude the financial results for the cooling and power business that was sold in December 2018.


TSS, Inc.
Condensed Consolidated Pro Forma Statements of Operations
For the six-month periods ended June 30,
(In thousands, unaudited)

        2018 as
reported
  Adjustments   2018 pro
forma
    2019  
Results of Operations:                  
  Revenue $   10,216     $   (1,652 )   $   8,564     $    8,199  
  Cost of revenue, excluding depreciation and amortization     6,285         (1,123 )       5,162         5,111  
  Gross profit, excluding depreciation and amortization     3,931         (529 )       3,402         3,088  
  Operating expenses:               
  Selling, general and administrative     3,093         (206 )       2,887         2,876  
  Depreciation and amortization       206         -          206         160  
  Gain on sale of assets       -              -          -   
  Total operating costs     3,299         (206 )       3,093         3,036  
  Operating income (loss)     632         (323 )       309         52  
  Interest expense      (204 )            (204 )       (224 )
  Other income (expense), net     -              -         64  
  Income (loss) before income taxes     428         (323 )       105         (108 )
  Income tax expense     30             30         17  
  Net  income (loss) $   398     $   (323 )   $   75     $   (125 )
Basic and diluted income per Share:                
  income per common share  $   0.02         $   0.01     $   (0.01 )
  Weighted average common shares
outstanding
    16,123             16,123         17,289  

The 2018 pro-forma results reflect the consolidated 2018 financial statements of the Company as adjusted to exclude the financial results for the cooling and power business that was sold in December 2018.


TSS, Inc.
Adjusted EBITDA Reconciliation
(In thousands, unaudited)

    Three Months Ended June 30,     Six Months Ended June 30,  
    2019       2018     2019       2018  
                             
Net income (loss) $  (94)     $  319   $  (125)     $  398  
                             
Interest expense (income), net     87       111       160         204  
Depreciation and amortization     79         100       160         206  
Income tax expense     9       19     17       30  
 EBITDA profit $   81     $   549   $   212     $   838  
 

Stock based compensation
    87       66     158         115  
Provision for bad debts       -        -           -  
Adjusted EBITDA   $   168     $   615   $    370     $    953   

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