In This Article:
Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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TSS Inc (NASDAQ:TSSI) achieved an impressive organic revenue growth of 172% for the full year 2024, highlighting strong demand for their services.
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The company reported a significant increase in diluted earnings per share, rising from just above break-even in 2023 to $0.24 in 2024.
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TSS Inc (NASDAQ:TSSI) signed a multi-year agreement with its largest customer, enhancing revenue visibility and reducing operational risk.
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The company expanded its operational capacity by signing a multi-year lease for a new 213,000 square foot facility in Georgetown, Texas.
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The systems integration business, including AI racks, experienced a 264% year-over-year growth in Q4 2024, driven by increasing demand for AI-enabled infrastructure.
Negative Points
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The company anticipates near-term impacts on GAAP net income due to increased facility costs, depreciation, and interest expenses related to the new facility.
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There are potential quarter-to-quarter fluctuations in revenue due to the large and variable nature of AI infrastructure orders.
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SG&A expenses increased to $4.2 million in Q4 2024, up from $2.5 million in the previous year, partly due to non-recurring severance expenses.
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The facilities management segment, while profitable, represents only a small portion of total revenue and has slower growth compared to other segments.
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The company faces challenges in adapting to rapidly changing technology requirements, such as power and cooling needs for AI infrastructure.
Q & A Highlights
Q: Can you expand on the expected growth in the facilities management division for 2025? A: Darryl Doha, President and CEO: We anticipate growth in our Modular Data Center (MDC) business due to technology changes and design improvements. We're working on shortening the sales cycle and improving component availability to make modular solutions more attractive compared to alternatives like colocation or expanding existing data centers.
Q: Are the revenue expectations for facilities management included in your current projections, or would they be additional? A: Darryl Doha, President and CEO: Our projections are conservative, focusing on recurring revenue and service agreement enhancements. If we close deals sooner, it could positively impact our revenue towards the end of the year.
Q: What are the margin expectations for the facilities management business compared to other segments? A: Danny Chisholm, CFO: The facilities management business typically has margins around 55%, which is higher than other segments. For the full year, margins were just under 62%, up from 57% last year.