Attached files
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| 8-K - FORM 8-K - TSS, Inc. | v352977_8k.htm |
| EX-99.2 - EXHIBIT 99.2 - TSS, Inc. | v352977_ex99-2.htm |
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7226 Lee DeForest Dr. Suite 104 Columbia, MD. 21046 |
Company Contact:
TSS, Inc.
Maura McNerney, Chief Financial Officer
Phone: (410) 423-7300
TSS, INC. REPORTS SECOND QUARTER 2013 FINANCIAL RESULTS
GALLAGHER ASSUMES ROLE AS CHIEF TECHNICAL OFFICER, ANGELINI AS PRESIDENT
COLUMBIA, MD – August 14, 2013 – TSS, Inc. (Other OTC: TSSI), a mission critical data center and technology services company, today announced financial results for the second quarter ended June 30, 2013.
Commenting on the quarterly results, Anthony Angelini, Chief Executive Officer of TSS, stated, “The strategy we have articulated is to focus on higher margin and recurring business, and to continue to develop but not rely on large construction projects. The second quarter was a slow period for both new construction projects and modular data center installations. Despite slower activity we were able to grow our facilities management business. The resulting shift in the mix of our sales yielded strong gross margin levels in the quarter. We expect increased levels of activity during the second half of the year.”
Angelini continued, “We accomplished a key strategic goal of the quarter in the May acquisition of a systems integration business. We continue to execute on our strategic plan to provide a full range of data center services for both traditional and modular centers. The integration of this business is on plan and we are excited about its growth potential.”
Angelini added, “As we continue to evolve the organization, Jerry Gallagher will assume the role as CTO and I will assume his role as President in addition to CEO. This transition will allow Jerry to focus on technology and further develop our leadership at the forefront of rapidly evolving data center technologies as well as improve visibility of our technical capabilities.”
Second Quarter 2013 Financial Highlights:
| · | Revenue of $7.0 million, compared with $15.5 million in the second quarter of 2012. |
| · | Gross profit of $2.0 million, compared with $2.3 million in the second quarter of 2012. |
| · | Normalized Adjusted EBITDA loss of $0.4 million, compared with Normalized Adjusted EBITDA income of $0.2 million in the second quarter of 2012. |
| · | Net loss of $1.0, or $0.07 per basic and diluted share, compared with net loss of $2.3 million or $0.16 per basic and diluted share, in the second quarter of 2012. |
| · | Closing of $6.0 million revolving line of credit with Bridge Bank |
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Quarterly Conference Call Details
The Company has scheduled a conference call to discuss the second quarter 2013 financial results and its strategic vision for today at 4:30PM Eastern today.
To participate on the conference call, please dial 1-877-941-8418 toll free from the U.S., or 1-480-629-9809 for international callers. 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 http://ir.totalsitesolutions.com/events.cfm.
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 Wednesday, August 21, 2013. The audio replay can be accessed by dialing 1 303 590 3030 locally or 1-800-406-7325 toll free then enter access ID number 4635629. Additionally, a replay of the webcast will be available approximately two hours after the conclusion of the call, and will remain available for 90 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, certain other non-recurring costs and acquisition expenses. 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 non-recurring 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 have been reconciled to the nearest GAAP measure, and this reconciliation is located under the heading "Normalized Adjusted EBITDA Reconciliation" following the Consolidated Statements of Operations included in this press release.
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About TSS, Inc.
TSS is a trusted single source provider of mission-critical planning, design, system integration, deployment, maintenance and evolution of data center 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. TSS is headquartered in Columbia, Md. For more information contact us at www.totalsitesolutions.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," "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: the Company's reliance on a significant portion of its revenues from a limited number of customers; risks relating to operating in a highly competitive industry; actual or potential conflicts of interest between the Company and members of the Company’s senior management; risks relating to rapid technological, structural, and competitive changes affecting the industries the Company serves; the uncertainty as to whether the Company can replace its backlog; risks involved in properly managing complex projects; risks relating 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 or maintain sufficient availability under our revolving credit facility; risks relating to the acquisition of businesses; uncertainty related to current economic conditions and the related impact on demand for our services; and other risks and uncertainties disclosed in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2012. These uncertainties may cause the Company's actual future results to be materially different than those expressed in the Company's forward-looking statements. The Company does not undertake to update its forward-looking statements.
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TSS, Inc.
Condensed Consolidated Balance Sheets
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 3,088,122 | $ | 5,608,322 | ||||
| Contract and other receivables, net | 6,104,714 | 7,525,340 | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 700,816 | 813,348 | ||||||
| Inventories | 314,735 | - | ||||||
| Prepaid expenses and other current assets | 779,525 | 429,089 | ||||||
| Total current assets | 10,987,912 | 14,376,099 | ||||||
| Fixed assets, net | 320,682 | 273,451 | ||||||
| Goodwill | 1,830,316 | 1,768,861 | ||||||
| Intangible assets, net | 1,109,913 | 60,000 | ||||||
| Other assets | 205,487 | 19,358 | ||||||
| Total assets | $ | 14,454,310 | $ | 16,497,769 | ||||
| Current Liabilities: | ||||||||
| Convertible notes payable, current portion, net | $ | 129,000 | $ | 500,000 | ||||
| Borrowings under credit facility | 2,000,000 | - | ||||||
| Accounts payable and accrued expenses | 4,705,109 | 5,753,347 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 1,959,265 | 3,028,627 | ||||||
| Total current liabilities | 8,793,374 | 9,281,974 | ||||||
| Convertible notes, less current portion, net | 742,343 | 1,957,301 | ||||||
| Other liabilities | 37,275 | 52,626 | ||||||
| Total liabilities | 9,572,992 | 11,291,901 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $.0001 par value; 1,000,000 shares authorized at June 30, 2013 and December 31, 2012, respectively; none issued | ||||||||
| Common stock, $.0001 par value, 49,000,000 and 100,000,000 shares authorized at June 30, 2013 and December 31, 2012, respectively; 15,269,193 and 15,087,526 issued at June 30, 2013 and December 31, 2012, respectively | 1,527 | 1,509 | ||||||
| Additional paid-in capital | 66,975,637 | 66,305,764 | ||||||
| Accumulated deficit | (60,585,740 | ) | (59,597,909 | ) | ||||
| Treasury stock 820,759 and 808,754 shares at cost at June 30, 2013 and December 31, 2012, respectively | (1,510,106 | ) | (1,503,496 | ) | ||||
| Total stockholders' equity | 4,881,318 | 5,205,868 | ||||||
| Total liabilities and stockholders’ equity | $ | 14,454,310 | $ | 16,497,769 | ||||
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TSS, Inc.
Condensed Consolidated Statements of Operations
| (Unaudited) | (Unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||
| Revenue | $ | 6,951,819 | $ | 15,540,852 | $ | 21,070,446 | $ | 29,850,714 | ||||||||
| Cost of revenue | 4,980,786 | 13,209,463 | 16,339,762 | 25,464,820 | ||||||||||||
| Gross profit | 1,971,033 | 2,331,389 | 4,730,684 | 4,385,894 | ||||||||||||
| Selling, general and administrative expenses | 2,881,229 | 2,480,857 | 5,640,201 | 5,465,397 | ||||||||||||
| Restructuring and other charges | - | - | 279,286 | |||||||||||||
| Impairment loss on goodwill | - | 2,071,000 | - | 2,071,000 | ||||||||||||
| Loss from operations | (910,196 | ) | (2,220,468 | ) | (909,517 | ) | (3,429,789 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (39,483 | ) | (48,446 | ) | (63,314 | ) | (91,214 | ) | ||||||||
| Other expense | (15,000 | ) | - | (15,000 | ) | - | ||||||||||
| Loss from operations before income taxes | (964,679 | ) | (2,268,914 | ) | (987,831 | ) | (3,521,003 | ) | ||||||||
| Income tax provision | - | - | - | - | ||||||||||||
| Net loss | $ | (964,679 | ) | $ | (2,268,914 | ) | $ | (987,831 | ) | $ | (3,521,003 | ) | ||||
| Basic loss per share: | ||||||||||||||||
| Loss per common share | $ | (0.07 | ) | $ | (0.16 | ) | $ | (0.07 | ) | $ | (0.25 | ) | ||||
| Weighted average common shares outstanding | 14,385,713 | 14,147,049 | 14,368,354 | 14,124,380 | ||||||||||||
| Diluted loss per share: | ||||||||||||||||
| Loss per common share | $ | (0.07 | ) | $ | (0.16 | ) | $ | (0.07 | ) | $ | (0.25 | ) | ||||
| Weighted average common shares outstanding | 14,385,713 | 14,147,049 | 14,368,354 | 14,124,380 | ||||||||||||
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TSS, Inc.
Normalized Adjusted EBITDA Reconciliation
| (Unaudited) | (Unaudited) | |||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||
| Net income (loss) | $ | (964,679 | ) | $ | (2,268,914 | ) | $ | (987,831 | ) | $ | (3,521,003 | ) | ||||
| Interest (income) expense, net | 39,483 | 48,446 | 63,314 | 91,214 | ||||||||||||
| Depreciation and amortization | 61,541 | 81,356 | 111,675 | 158,261 | ||||||||||||
| EBITDA | $ | (863,655 | ) | $ | (2,139,112 | ) | $ | (812,842 | ) | $ | (3,271,528 | ) | ||||
| Stock based compensation | 117,242 | 67,388 | 224,855 | 164,754 | ||||||||||||
| Impairment loss on goodwill | - | 2,071,000 | - | 2,071,000 | ||||||||||||
| Provision for bad debts | 2,705 | 55,290 | 2,705 | 55,290 | ||||||||||||
| Adjusted EBITDA | $ | (743,708 | ) | $ | 54,566 | $ | (585,282 | ) | $ | (980,484 | ) | |||||
| Restructuring charnges | - | - | - | 279,286 | ||||||||||||
| Other one-time (income) expense, net | 69,375 | 95,916 | 69,375 | 340,525 | ||||||||||||
| Acquisition expenses | 243,733 | - | 243,733 | - | ||||||||||||
| Normalized adjusted EBITDA | $ | (430,600 | ) | $ | 150,482 | $ | (272,174 | ) | $ | (360,673 | ) | |||||
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