TSSI - Earnings call transcript Q4 2019

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Operator

Welcome to the TSS Fourth Quarter and Fiscal 2019 Earnings Call. My name is Adrianne, 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 this conference is being recorded.

the to turn Penver. now will call John over I John, begin. you may

John Penver

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

as applies everyone call, to in I XXXX. today, call as language This note sensitive would March we comments call. As to we information remind regarding contained statements accurate and take the well to as statements issued today's begin the which language of conference cautionary the same contain statements, time on of XX, will forward-looking like made release today. forward-looking only are That press

expressly TSS or otherwise amend, required or arise that as may the information otherwise date law. obligations indicated, any or or call circumstances replay review made conference except update, disclaims after by any the this events reflect to statements supplement forward-looking to applicable on

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

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

the this the fiscal Anthony the we begin to business a will call fourth our turn on coming. XXXX his changes I So then and of and comments see for call and with review our results quarter over

announcing quarter is fiscal we a of XXXX, and the results release website today, for financial released our So that www.tssiusa.com. a our and copy press on at available release earlier fourth

in quarter these main much late results that different than million this fourth impact lot in QX see not of but the services. look and IT have services third on in revenues in previous recorded in the the in $XX activities traditional reseller our margin quarter. decreasing quarters. services, in it from million introduced that's in did quarter gross an you than We Margins increased a that revenue our quarter. Now, the reselling We quarter, our our our quarter. lower And resulted reason are to million fourth fourth much so the $XX.X significantly from $X.X fourth

then services, procuring for of also But services our to leverage across establish software -- perform drive integration customer build and the new all services customer factory. hardware, third-party a and that software an to help reseller us using and to relationships. we ecosystem that providers we our solution us service They our are We and the customer. help equipment can and services of help integration hardware, as for customers, deliver this completed relationships,

will of Ultimately, will we fourth the quarter business, three profits the believe operating and net of gross our XXXX our overall exceeded revenue, with EBITDA will and TSS. activities our utilization operating of margins, that the lower for of we growth although, record profits results combined. increased results services our And adjusted integration systems reseller quarters first improve facility. these And help integration contribute in fuel to the

but to the of of the results in business were Now comparability on complicated, cooling include results business included of gain results numbers our addition of not the sale our that XXXX. and sold but business reseller power and not unfortunately that year because December just our numbers, numbers. that XXXX of XXXX the in current we The our operations XXXX, by the previous XXXX are in

basis. comments the how is our on understanding underlying core a reference So differences comparable going throughout performing assist business in to to my I'm you

maintenance facilities By on their our In year-over-year down revenue down the profit XXXX, core business, operating XXXX, XX% our $XX.X addition our increase X%, our which reseller core of But business. services of and was to XXX,XXX, core reported I and was mean million. our or compared revenues business systems were business business XXX,XXX. integration the

provide some more on me in fiscal quarter fourth our results. let So details the XXXX

revenue fourth million million quarter from quarter was and Our for $X.X to of as of $XX.X the million XXXX is fourth quarter up third XXXX in the XXXX. the $X.X compared of in

fourth Our quarter we construction revenue in activities, discontinued of December XXXX, quarter XXXX, since And million our the revenues in sold power that in contributed cooling management which of million contributed business fourth and we've $X.X of XXXX. of XXXX. also $X the

million revenues data attributable centers XXXX, XXXX. number was $X.X included a into The were of of million to modules Systems to of reseller our or up the by of deployments compared XX% to down activities, facilities quarter and reseller XXXX as integration customers XX% services from impact business $XXX,XXX, $XX.X XXXX compared Our business quarter higher was the fourth transactions. or deferred Integration driven fourth the

were systems maintenance revenues XX%, million of sold data the primarily $XX.X our higher $X.X compared million a reseller revenue noted and in in construction we the in XXXX, than in as businesses moment ago, added revenues XXXX. this management fiscal than XXXX, recorded or our from level were from million as we $XX.X our integration services integration integration in XXXX, XXXX in and XXXX down and operation, with in $XX.X I Revenues to were power integration services decrease we we our modular that center XXXX. million line. of million introduced the lower as $X.X And business $XX.X systems X% service XXXX the and For Included or activities. our facilities million in core from cooling

associated to volume the sustaining business company Now system in stability, volume overhead and the increasing high fixed of with integration facility. the key the is and operating increasing for profits the our because

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

increase growth services. in demand saw facility the for additional reseller drive able to to quarter, We customers to profit. the system seeking fourth our add the to actively integration of in integration We're bring them and are and with services the services more utilization

our Now fourth quarter the the our fourth the of significantly XX% on is XXXX. is caused the impact this quarter margin reseller we gross services from was And down decrease. of margin XX% of had the during in year-over-year profit

the Margins on remain our core business high in XX%.

the with higher quarter in X% fact, In the in XXXX than fourth quarter XXXX. fourth

compared XX% be moving to For expect the continue the XXXX, was XX%. in and we of gross margins our margin the core profit XX% from business XX% to to will range year forward, the in

of to depending period. reseller can a margin overall significantly expected in fluctuate our given However, be services the upon level

for was XXXX what That of million. gross X% So, profit fourth the the was we'd our in of quarter XXXX. quarter reported recorded fourth $X than lower

of included our was $X.X than $X.X and business $X.X $X.X XX% million profit from full Our management the the cooling year XXXX million gross million from profit in gross But lower XXXX. million or critical in profit activities. we gross and recorded construction power our

[ph] costs our mainly in the and XXXX decrease fourth general quarter XXXX. expenses or reflects compared $X.X costs the quarter level the down were the selling XXXX, XXXX. the operating during and in in were we $XXX,XXX of million. in fourth This of quarter of XX%, had the They Our consistent administrative operating the to to $X.X million third business cooling results, power compared prior absence of were they the year

the for the general included we $XXX,XXX administrative $XXX,XXX and so full XX%, operating our costs that XXXX. in million $X.X were cooling of power expenses of and The $X.X the selling XXXX, And XXXX of compared or from to business. down year million recorded expenses

business and And that we indicated proceeds this million, completed off our liabilities attributable December assets identifiable the and Virginia were component we identified to assets business. associated and with as wrote other based goodwill and I've solutions power We of sold sold. of directly we were intangible million in of certain that cooling $X.XX for gross $X.X XXXX, business sale the

with associated XXXX. we assets record the transaction, quarter million from of costs direct gain after approximately $X.XX of those the of the fourth So sale in the

fourth operating in recorded all the of above, we of profit XXXX. $XXX,XXX After an the quarter

and number on fourth sale the to $XXX,XXX from of operating that operating third of business, the profits business. quarter same Now of that gain an XXXX, power included the this $X,XXX,XXX of the and in in quarter operating of And in XXXX. loss cooling profit and XXXX the $X,XXX,XXX an compares $XX,XXX

exclude basis, our you forma a sold the $XXX,XXX. quarter for fourth results those from If business XXXX have pro results, on our shown would XXXX loss of comparable of operating an

share. compared shown interest our and of costs, business the fourth or in After income pro quarter tax results, $X.XX XXXX. loss On of net of per a cooling of excluding a $X.XX have income a to and share share net forma $XXX,XXX of our our XXXX $X,XXX,XXX $X.XX power per $XXX,XXX or quarter basis, or a from comparable fourth the we fourth net quarter a would in had

which the net operating cooling of business, For of cooling XXXX, share, the share. power net we recorded XXXX this power in year compares the gain indicated $X.XX a of included from full I've the to or and And or sale of XXXX $X.XX $X,XXX,XXX recorded income of income and net as profits $X,XXX,XXX income business. the and $X,XXX,XXX in $XXX,XXX from

excludes further of compensation quarter on fourth fourth compares of profit which of for to pro XXXX EBITDA XXXX. $XXX,XXX interest EBITDA, $XXX,XXX profit adjusted forma profit adjusted the our forma of EBITDA, was of EBITDA depreciation, in the amortization, numbers. third of stock-based in and of profit loss which And XXXX taxes, XXXX. and adjusted adjusted the $XXX,XXX adjusted an for Our EBITDA to This quarter of Lot a a of $X,XXX,XXX a XXXX. quarter compares basis, a pro was $XXX,XXX in

QX as in reported sheet reseller Now our activities been services changes their looking our sheet, some around to we there's results. since our balance balance commenced new we've major

our million, reseller $X will yet $X.X business, nice still all activity. know million, We receivables quarterly Our to directly as on by activities. there payables by by business million how attributable a reseller the increased inventory much a is $X.X do fluctuate our and not

are fluctuations so balance moving sheet And forward. possible large

We end continue to strong capital working have XXXX. stockholders' and at the equity of liquidity,

changes of since to to of accounting a X, results. the lease the balance codification standard, also standards been our there's adoption a really was accounting under topic on large XXXX. due However, ASC-XXX changes reported new January XXXX fiscal our effective sheet number that Most are

the required as of all this operating for been account rather norm. balance new balance off sheet, than sheet on has standard, under we're our to our And leases

of adoption upon ASC-XXX, as liabilities recognize balance to lease effective on asset million $X use the right and JanuaryX, million $X of associated XXXX. sheet, the lease their So we

cash We the of million had hand, the the we end million of XXXX. at and with $X.X year million of up closed the from end $X.X $X.X on at QX reported

liabilities of adoption of the to to lease as all now working a position XXXX, net standard, due which was decreased per $XXX,XXX lease recording liability the capital of Our and compared GAAP. current the by a almost portion new our entirely end accounting

expect flexibility operate adequate of revenue business continue these our to working we've will capital that they the liquidity fluctuate We contracts. the to our as and I to provide to maintenance position and got timing us opportunities arise. allow to exploit billings believe

credit XXXX, of $X.X liquidity some In against the million bank not added agreement facility. of we line fourth to revolving have drawn provide quarter that a we but additional

So his that's for Anthony lot our I'm a the and And to results going that, with to Anthony. numbers. business into XXXX. XXXX of comments moving hand Thanks, toward on the call over

Anthony Angelini

Thanks, right. John. All

As you can got pieces. moving a of see, we lot

come on those some back have questions pieces. to guys and have may we moving may you of some So

our offerings making to changes service quarter diversify and fourth expand to our base. of reflected help our range then to customer made, we've and However, over results grow our the us XXXX services

XXX% Our as income this -- net drove significant -- and new driven up revenues the our from operating third increases EBITDA quarter we business, reseller from driven in in almost from predicted. third and adjusted quarter were driven

revenue first metrics combined, Our results XXXX all decision of of fourth validated of stream. results our quarter diversify for to the and three the quarters these exceed the

reseller maintenance businesses it new business. the XXXX. deployment from the Integration channel activities and as in experienced of and The deployment of This projects delayed drive introduction subsequent its impacted Our delays half facilities partner, our of customers our help operating second in segments core activities. our into product some business integration integration of and our both

business, reseller in growth the experiencing we're from in business integration we're experiencing So some our integration The some growth reseller our business.

more We are these clearly any believe expect working to significant point, reseller with our this likely. this capital is from and trying we're requirements business. the significant fluctuations reseller to from activities what don't that activities quarterly understand there At

interest LIBOR. recent our anything, In some they're due they're pegged because financing fact, if coming -- is to down off the of rate one declines, of month

revenue new revenues, expect help relationships Would the for to third-parties? opportunities operating and gross drive profit That with for and us has service in you diversify customer growth the drive this establish will think drive our we that XXXX profit. base potential the additional revenue help us it and us and

our to in expect EBITDA. on we generating of revenues current range -- $XX quarter believe Based the million positive record picture, to we first $X million

Before we're additional scene, increase business COVID-XX in entered for large our demand due to experiencing our part services, partner in facility. the moving to a our integration channel

have we production customers an as this our control. designated that some change at aware continuing partner at integration As been of are infrastructure we our essential beyond facility, due to factors by our time, this may but

we However, are business. for open

remains ensure of safety families. our the their it have wellbeing As open, employees to and steps we taken and

our introduced of access to procedures that which the We our top lot to for access facilities important near-term. so our continue and facilities. some to keep We've operating screen remains to and deadlines is We restricting to clients, tools, deliver all order a meet for restricted services in in visitors our physical do priority. production, of

help We workplace. established as and have need guidelines from stay self-quarantine, workplace protocols when us introduced which distancing the also to away well within social the employees determine as

have restrictions, contingency planning developed were way by arrangements tech introduced for suitable. committee and travel We alternative which also working a the

results. of As facility on impact however, have operating would immediate an our any a manufacturing shutdown our facility

locations, to and However, as the and I procedures they keep our specific on-site, plan partners to their us If for prevents to At said we earlier, that have we documentation this end situation. response we us remote a chosen services site open customers are policies work open. from users service with with comply to our will performing in business develop we'll and have implement.

her themselves helped state our The our in safety. local ensure to that we articulated regulatory place Our or they their continued our employees and plans customers designed in service to situation ask standard employees feel have subject may and have with prevent to to a -- health the federal, regards me individual take actions jeopardizes will are put that been we not to this.

in in sheet are our feel ability to through manner, these times is any We our issues. and confident work short-term to uncertain through profitable a strong enough work balance

situation all As our we'll informed. to do constituents the best keep evolves

up questions. going With open we're that, to for

Operator

first the question-and-answer question [indiscernible] begin from [Operator Search. now We'll you. Thank their comes from session Instructions]. And Market

line is open. Your

Anthony Angelini

Hey, Matt.

Unidentified Analyst

Hey, doing? how you

Anthony Angelini

I'm good.

Unidentified Analyst

some I missed call. beginning just, I the of of the

wondering transcript. curious, it and… guy answered I'll back you maybe development, just the hired I'm we're just know getting up I how product So was And go if new you for that's to But I well progressing. a and

Anthony Angelini

Yes.

So I'm sorry. Finish your question. Go ahead.

Unidentified Analyst

that It That's to COVID good. has at down have How's slowed the that going? of all? kind

Anthony Angelini

hoping We a home, are down, everything right? Everybody's just at slowed sudden. all of

So Matt is OEMs traction a hard on, those. problem us at some pretty now been with were But right of home. is no, the pretty number country making get and traction more to working good has across everybody other the we and trying

So short it's term. in decisions nobody's the making right

we maybe bigger no next all June or to go as moving we as mean, I are hopefully. know as nobody decisions don't long. like maybe believe customers the days of probably But going feel the we July, through the make far I in back half how year, XX-XX So business. it's

shifting activity -- determined kind been there little that been we've the infrastructure be or another top key us. determining And in on because bit majeure key going is we've essential place customers of for a some partner, a that it, towards right force of we're to then of now. Nashville However, was partners open because took business

profile so fall because severe our look our customer So of customers, customers apart, at basically tornado. one if of our had that -- you partner and a

and now information. public it's so And

far to But us to take work, it's That as of half that. we're back helps. to we're year. it's party of the third going So staying because picking probably open. the as going And work up

Unidentified Analyst

Yeah. great. Okay, Awesome.

Anthony Angelini

[Indiscernible]. you luck. Good Thank

Anthony Angelini

All right. Thanks.

Operator

further And we have no question?

Anthony Angelini

partner. And That's it. an joining I mean, in good essential I Well, deemed We're pretty mean, open appreciate guys, business. actually strange think I we're we're shape that. we times. in know us. everybody for all We're I because

we of next so do better some than most. months And over the to have kind the few opportunity

it Let's comments any call John, you? way. that from

John Penver

And, of that's of the SEC continued our with the plan today No, filing results conjunction Appreciate and first quarter the on May and company. effort it. I support in we think middle time everybody's deadline. reporting

we'd or other to we'll think six in but So, thank I you question, there's And talk you the everybody. time. seven say no about Appreciate weeks.

Anthony Angelini

Perfect.

you, all. Okay, thank

Operator

this This Thank and call. concludes participating. may gentlemen. you, you They conference disconnect. ladies Thank for now

TSS (TSSI) 24 Mar 202019 Q4 Earnings call transcript