TSS (TSSI) investor relations material

Business overview and market trends

• Focuses on advanced and high-performance computing rack integration, procurement services, and modular data center deployment, emphasizing flexibility and speed in complex technology environments.

• Experiences robust demand driven by AI trends and serves marquee enterprise customers, with the AI boom significantly boosting business.

• The global server and modular edge computing markets present large and growing opportunities, with addressable market size increasing each quarter.

• Expanding partnerships and capacity, particularly at the Georgetown facility, support multi-level growth strategies.

• Procurement business forms a large revenue base, but systems integration and facilities management deliver higher margins.

Financial performance and operational highlights

• Revenue and gross profit have shown consistent year-over-year growth, with systems integration revenue up 88% and margin expanding from 21% to 37.5% over the past year.

• Facilities management remains strong, with both ongoing maintenance and discrete project spikes contributing to results.

• Operating income and adjusted EBITDA continue to trend upward, despite a tough Q1 comparison due to last year's exceptional procurement volume.

• Removal of the deferred tax asset valuation allowance in December impacted reported EPS, but underlying cash flow remains healthy.

• Cash fluctuations are tied to procurement cycles, while networking capital and stockholders’ equity continue to rise.

Strategic initiatives and leadership

• Extended multi-year agreement with the primary customer and uplisted to Nasdaq in November 2024, raising capital for strategic growth.

• Relocated to a larger Georgetown facility, increasing available power from under 3 MW to 15 MW, with further expansion possible.

• Hired a Chief Strategy Officer and Chief Technology Officer to drive diversification and technology leadership.

• Focused on workforce quality by converting temp staff to permanent, reducing headcount while improving efficiency.

• Won an industry award for Best Deployment Partner and continues to prioritize operational excellence.