ROUND ROCK, Texas, March 24, 2020 (GLOBE NEWSWIRE) -- TSS, Inc. (Other OTC: TSSI), a data center facilities and technology services company, reported results for its fourth quarter and fiscal year ended December 31, 2019.

Fourth Quarter Highlights:

• Fourth quarter 2019 revenue of $20.4 million compared with $5.7 million in the fourth quarter of 2018 and $4.2 million in the third quarter of 2019.
• Gross margin of 10% in the fourth quarter of 2019 compared with 35% in the fourth quarter of 2018.
• Achieved operating income of $440,000 in the fourth quarter of 2019 compared to operating income of $1,463,000 in the fourth quarter of 2018 and an operating loss of $12,000 in the third quarter of 2019.  (Fourth quarter of 2018 included a gain of $1,140,000 from the sale of assets of our power and cooling solutions business in Virginia).
• Net income of $346,000 or $0.02 per share in the fourth quarter of 2019 compared to net income of $1,327,000 or $0.08 per share in the fourth quarter of 2018.
• Adjusted EBITDA of $680,000 compared with pro forma Adjusted EBITDA of $882,000 in the fourth quarter of 2018.
• Normalized Adjusted EBITDA of $680,000 in the fourth quarter of 2019 compared to a pro forma Normalized Adjusted EBITDA loss of $258,000 in the fourth quarter of 2018.

FY 2019 Highlights:

• 2019 revenue of $32.8 million compared with $22.3 million in 2018.
• Gross margin of 20% in 2019 compared with 38% in 2018.
• Achieved operating income of $480,000 in 2019 compared to operating income of $2,866,000 in 2018. 2018 included a gain from sale of assets of our power and cooling solutions business of $1,140,000.
• Net income of $126,000 or $0.01 per share in 2019 compared to net income of $2,437,000 or $0.16 per share in 2018.
• Adjusted EBITDA of $1.2 million in 2019 compared with Adjusted EBITDA of $3.5 million in 2018.
• Normalized Adjusted EBITDA was $1,208,000 compared with pro forma Normalized Adjusted EBITDA of $393,000 in 2018.

“We were very happy with our results for the fourth quarter and the year. We began our reseller program in Q4 which has impacted our results with higher revenue and lower gross margins. As we move through the balance of 2020 we will forecast as best we can, but we are just getting our arms around this new and dynamic revenue stream.” said Anthony Angelini, President and Chief Executive Officer of TSS. “We are almost complete with Q1 and feel good about how the quarter has shaped up. As we look at Q2 we are trying to evaluate the impact that the COVID-19 pandemic will have on our business. We have been designated as a critical infrastructure provider for some of our customers. Therefore, we will remain open for business for now subject to the ongoing risks regarding availability of parts from other supply chains, or infections impacting our workforce. We believe that we can operate profitably through these challenging times.”                 

Quarterly Conference Call Details

The Company has scheduled a conference call to discuss the fourth quarter and fiscal 2019 financial results for Tuesday, March 24, 2020 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 49483806#. 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 April 20, 2020. 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 4948 3806#. 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 and Normalized Adjusted EBITDA are 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.

We define Normalized Adjusted EBITDA as Adjusted EBITDA before restructuring charges, acquisition expenses and certain other one-time items such as the gain on sale of business operations. We present Normalized Adjusted EBITDA because we believe it is helpful in comparing our operating results across reporting periods on a consistent basis by excluding from Adjusted EBITDA certain items that do not directly correlate to our business and may, or could, have a disproportionate positive or negative impact on our performance during a particular period. Similar to Adjusted EBITDA, we also use Normalized Adjusted EBITDA as a factor in evaluating the performance of certain management personnel when determining incentive compensation.

Adjusted EBITDA and Normalized Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and Normalized 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 and Normalized 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 or if we cease a particular line of business. Historical information reflects results of disposed business units or ceased business units through the disposal or cessation date, while the pro forma information enhances comparability of financial accounting between periods by adjusting the information as if the dispositions or cessations 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, reseller services, 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: 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, 2019. 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)

				December 31,				December 31,
					2019					2018
Assets
Current Assets
	Cash and cash equivalents			$	8,678				$	6,178
	Contract and other receivables, net				3,865					727
	Costs and estimated earnings in excess of billings on uncompleted contracts				181					154
	Inventories, net				1,353					108
	Prepaid expenses and other current assets				108					266
	Total current assets				14,185					7,433
Property and equipment, net					705					390
Lease right-of-use asset										-
Goodwill					780					780
Intangible assets, net					307					398
Other assets					109					109
	Total assets			$	17,567				$	9,110
Liabilities and Stockholders’ Equity
Current Liabilities
	Lease liabilities			$	645				$	-
	Accounts payable and accrued expenses				8,851					2,390
	Deferred revenues				2,104					2,181
	Total current liabilities				11,600					4,571
Convertible notes, less current portion, net					2,028					1,838
Lease liabilities, less current portion					956					-
Deferred revenues – noncurrent portion					114					112
Other liabilities					-					108
	Total liabilities				14,698					6,629
Stockholders’ Equity
	Preferred stock- $.0001 par value; 1,000 shares authorized at December 31, 2019 and 2018; none issued				-					-
	Common stock- $.0001 par value, 49,000 shares authorized at December 31 2019 and 2018: 18,500 and 17,521 shares issued at December 31, 2019 and December 31, 2018, respectively				2					2
	Additional paid-in capital				69,661					69,241
	Treasury stock 959 and 777 shares at cost at December 31, 2019 and December 31, 2018, respectively				(1,700	)				(1,542	)
	Accumulated deficit				(65,094	)				(65,220	)
	Total stockholders' equity				2,869					2,481
	Total liabilities and stockholders’ equity			$	17,567				$	9,110

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

		Three Months Ended								Year Ended
		December 31,								December 31,
			2019				2018				2019				2018
Results of Operations:
	Revenue	$	20,404			$	5,748			$	32,779			$	22,335
	Cost of revenue, excluding depreciation and amortization		18,398				3,712				26,188				13,852
	Gross profit, excluding depreciation and amortization		2,006				2,036				6,591				8,483
	Operating expenses:
	Selling, general and administrative		1,440				1,625				5,741				6,372
	Depreciation and amortization		126				88				370				385
	Gain on sale of business component		-				(1,140	)			-				(1,140	)
	Total operating costs		1,566				573				6,111				5,617
	Operating income		440				1,463				480				2,866
	Interest income (expense), net		(75	)			(97	)			(313	)			(403	)
	Income before income taxes		365				1,366				167				2,463
	Income tax expense (benefit)		19				(21	)			41				26
	Net income	$	346			$	1,387			$	126			$	2,437
Basic net income per Share:		$	0.02			$	0.09			$	0.01			$	0.16
Diluted net income per share		$	0.01			$	0.07			$	0.00			$	0.13

 

 

TSS, Inc.
Condensed Consolidated Pro Forma Statements of Operations
For the Three-month periods ended December 31,
(In thousands, unaudited)

			2018 as reported				Adjustments				2018 pro forma				2019
Results of Operations:
	Revenue	$	5,748			$	(2,224	)		$	3,524			$	20,404
	Cost of revenue, excluding depreciation and amortization		3,712				(1,419	)			2,293				18,398
	Gross profit, excluding depreciation and amortization		2,036				(805	)			1,231				2,006
	Operating expenses:
	Selling, general and administrative		1,625				(112	)			1,513				1,440
	Depreciation and amortization		88				(2	)			86				126
	Gain on sale of assets		(1,140	)			1,140				-				-
	Total operating costs		573				1,026				1,599				1,577
	Operating income (loss)		1,463				(1,831	)			(368	)			440
	Interest expense		(97	)							(97	)			(75	)
	Income (loss) before income taxes		1,366				(1,831	)			(465	)			365
	Income tax expense (benefit)		(21	)							(21	)			19
	Net income (loss)	$	1,387			$	(1,831	)		$	(484	)		$	346
Basic and diluted income per Share:
	income per common share	$	0.08							$	(0.03	)		$	0.02
	Weighted average common shares outstanding		16,321								16,321				17,551

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 and for the construction management services that were discontinued in 2018.

TSS, Inc.
Condensed Consolidated Pro Forma Statements of Operations
For the years ended December 31,
(In thousands, unaudited)

						2018 as reported						Adjustments						2018 pro forma							2019
Results of Operations:
	Revenue					$	22,335					$	(6,041		)			$	16,294					$	32,779
	Cost of revenue, excluding depreciation and amortization						13,852						(3,846		)				10,006						26,188
	Gross profit, excluding depreciation and amortization						8,483						(2,195		)				6,288						6,591
	Operating expenses:
	Selling, general and administrative						6,372						(516		)				5,856						5,741
	Depreciation and amortization						385						(6		)				379						370
	Gain on sale of assets						(1,140		)				1,140						-						-
	Total operating costs						5,617						618						6,235						6,111
	Operating income (loss)						2,866						(2,813		)				53						480
	Interest expense, net						(403		)										(403		)				(313		)
	Income (loss) before income taxes						2,463						(2,813		)				(350		)				167
	Income tax expense						26												26						41
	Net  income (loss)					$	2,437					$	(2,813		)			$	(376		)			$	126
Basic and diluted income per Share:
	income per common share					$	0.15											$	(0.02		)			$	0.01
	Weighted average common shares outstanding						16,213												16,213						17,358

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 and for the construction management services that were discontinued in 2018.

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

	Three Months Ended December 31,
	2019			2018				adjustments				2018 pro forma
Net income (loss)	$	346		$	1,387			$	(731	)		$	656
Interest income (expense), net		75			97				-				97
Depreciation and amortization		126			88				(2	)			86
Income tax expense		19			(21	)			-				(21	)
EBITDA	$	566		$	1,551			$	(733	)		$	818
Stock based compensation		114			64				-				64
Adjusted EBITDA	$	680		$	1,615			$	(733	)		$	882
gain on sale of business		-			(1,140	)							(1,140	)
Normalized Adjusted EBITDA	$	680		$	475			$	(733	)		$	(258	)

The 2018 pro forma EBITDA reflects the 2018 EBITDA of the Company adjusted to exclude the financial results for the cooling and power business that was sold in December 2018 and for the construction management services that were discontinued in 2018.

		Years Ended December 31,
		2019			2018				adjustments				2018 pro forma
Net income (loss)		$	126		$	2,437			$	(1,953	)		$	484
Interest income (expense), net			313			403				-			$	403
Depreciation and amortization			370			385				(6	)		$	379
Income tax expense			41			26				-			$	26
EBITDA		$	850		$	3,251			$	(1,959	)		$	1,292
Stock based compensation			358			241				-			$	241
Adjusted EBITDA		$	1,208		$	3,492			$	(1,959	)		$	1,533
gain on sale of business			-			(1,140	)			-			$	(1,140	)
Normalized Adjusted EBITDA		$	1,208		$	2,352			$	(1,959	)		$	393

The 2018 pro forma EBITDA reflects the 2018 EBITDA of the Company adjusted to exclude the financial results for the cooling and power business that was sold in December 2018 and for the construction management services that were discontinued in 2018.