TSS (Nasdaq: TSSI) grows AI integration and targets high end of 2026 EBITDA
Rhea-AI Filing Summary
TSS, Inc. reported first quarter 2026 revenue of $55.3 million, down from $99.0 million a year earlier, as lower procurement volumes offset strong growth elsewhere. Procurement revenue fell to $40.0 million, while higher-margin systems integration revenue rose 88% year over year to $14.1 million. Facilities management contributed $1.3 million.
Diluted EPS was $0.08 compared with $0.12 in first quarter 2025. Adjusted EBITDA was $5.3 million, slightly above $5.2 million a year ago, reflecting a richer mix of systems integration work. The company reaffirmed its 2026 Adjusted EBITDA outlook of $20–$22 million and now expects performance toward the high end of that range.
As of March 31, 2026, TSS held $66.0 million in cash and cash equivalents and had total liabilities of $74.9 million, with stockholders’ equity of $78.7 million.
Positive
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Negative
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Insights
Revenue fell sharply, but mix improved and EBITDA guidance remains strong.
TSS posted Q1 2026 revenue of $55.3M versus $99.0M in Q1 2025, driven by a steep decline in lower-margin procurement sales. At the same time, systems integration revenue grew 88% to $14.1M, shifting the business mix toward higher-margin AI-focused work.
Diluted EPS declined to $0.08 from $0.12, yet Adjusted EBITDA was essentially flat at $5.3M, helped by that mix shift. Management maintained full-year 2026 Adjusted EBITDA guidance of $20–$22M and now expects results toward the high end of the range, while noting total integration demand continues to exceed the outlook assumptions.
The balance sheet shows cash and cash equivalents of $65.973M against total liabilities of $74.901M as of March 31, 2026, with equity of $78.676M. This provides a financial cushion as the company scales its Georgetown, Texas AI rack integration facility and invests in leadership additions to support organic and strategic growth.
Key Figures
Key Terms
Adjusted EBITDA financial
Systems Integration financial
Facilities Management financial
bank factoring fees financial
forward-looking statements regulatory
Earnings Snapshot
Maintains 2026 Adjusted EBITDA outlook of $20–$22M, with performance expected toward the higher end of the range.
EXHIBIT 99.1
TSS Reports First Quarter 2026 Financial Results
Total Revenue of $55.3 Million
Systems Integration Revenue Increased 88% Year-Over-Year
Refines Full-Year 2026 Outlook; Now Expects Adjusted EBITDA Toward High End of $20 to $22 Million Range
GEORGETOWN, TEXAS – May 7, 2026 – TSS, Inc. (Nasdaq: TSSI), a data center services company that integrates AI and other high-performance computing infrastructure and software and provides related data center services, today reported results for its first quarter ended March 31, 2026.
“We delivered strong growth in our higher margin Systems Integration business in the first quarter, with revenue increasing 88% year over year, driven by strong customer demand and solid operational execution with growth particularly high in our AI activities,” said Darryll Dewan, CEO of TSS, Inc. “Total revenue comparisons were affected by record high volumes in the first quarter of last year in our lower-margin Procurement business, which can vary from quarter to quarter. Importantly, our first quarter results were in line with our expectations, underscore the strength of our core business and reinforce our confidence in achieving our outlook for the full year.
“Our Georgetown, Texas AI rack integration facility has been running at increasing scale for six months. As a result, our quarterly EBITDA levels have grown and will continue to grow along with AI rack volumes. We are working to expand the markets we serve in terms of both customers and service offering. We have strengthened our leadership team with the addition of a chief strategy officer and a chief technology officer, whose deep industry expertise, proven leadership and extensive global networks position us to accelerate both organic expansion and strategic growth initiatives within our current customer base as well as opportunities to expand beyond our current customers.”
First Quarter 2026 Financial Highlights:
(All comparisons are to First Quarter 2025)
| · | Revenues of $55.3 million, down 44% |
|
| o | Procurement revenues of $40.0 million, down 56% |
|
| o | Systems Integration revenues of $14.1 million, up 88% |
|
| o | Facilities Management revenues of $1.3 million, down 1% |
| · | Gross profit of $8.8 million, down 4% |
|
| o | Reflects current year $0.9 million allocation of depreciation to COGS |
| · | Net income of $2.3 million, down 24% |
|
| o | Reflects full impact of income taxes following removal of valuation allowance on deferred tax asset in Q4 2025 |
| · | Diluted EPS of $0.08 compared to $0.12 |
| · | Adjusted EBITDA of $5.3 million, up 1%, reflecting a shift in total revenues to higher margin systems integration |
2026 Outlook
Dewan concluded, “We maintain our outlook for Adjusted EBITDA in the range of $20 million to $22 million for 2026 with performance expected toward the higher end of the range. Our forecast reflects a prudent view on component availability, with total integration demand continuing to exceed the volume incorporated into our outlook.”
Conference Call Details
The Company will conduct a conference call at 5:00 p.m. Eastern time today. To participate on the conference call, please dial 888-506-0062 toll free from the U.S. or Canada. Other international callers may access the call at 1-973-528-0011. The event ID number is 804808. Investors may also access a live audio webcast of this conference call and replay the call for one year following the webcast, at https://www.webcaster5.com/Webcast/Page/2294/53895.
About Non-GAAP Financial Measures
Adjusted EBITDA is a supplemental financial measure not defined under Generally Accepted Accounting Principles (GAAP). We define Adjusted EBITDA as net income (loss) before net interest expense and bank factoring costs, income taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, and certain extraordinary items. 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 items that may or could have a disproportionately 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.
Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. 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 has been reconciled to the nearest GAAP measure; this reconciliation is located under the heading “Adjusted EBITDA Reconciliation” following the Consolidated Statements of Operations included in this press release. The Company is unable to provide a reconciliation of forward-looking Adjusted EBITDA to GAAP net income because certain reconciling items are outside the Company’s control or cannot be reasonably predicted without unreasonable efforts. These items may include stock-based compensation expense, fluctuations in prevailing interest rates and the resulting impacts on bank factoring fees, interest expense and interest income, and other adjustments that may be material.
About TSS, Inc.
TSS specializes in simplifying the complex. The TSS mission is to streamline the integration and deployment of high-performance computing infrastructure and software, ensuring that end users quickly receive and efficiently utilize the necessary technology. Known for flexibility, the company builds, integrates, and deploys custom, high-volume solutions that empower data centers and catalyze the digital transformation of generative AI and other leading-edge technologies essential for modern computing, data, and business needs. TSS' reputation is built on passion and experience, quality, and fast time to value. As trusted partners of the world's leading data center technology providers, the company manages and deploys billions of dollars in technology each year. For more information, visit www.tssiusa.com.
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,” “forecast,” “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 our 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 and our ability to diversify our customer base; risks relating to operating in a highly competitive industry; risks relating to supply chain challenges; risk related to changes in labor market conditions; risks related to the implementation of a new enterprise resource IT system; risks related to the development of our procurement services business; 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 to our ability to continue to implement our strategy, including having sufficient financial resources to carry out that strategy; 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, 2025. 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.
| Contacts: |
|
| Hayden IR | TSS, Inc. |
| James Carbonara (646) 755-7412 | Danny Chism, CFO |
| Brett Maas (646) 536-7331 | (512) 310-4908 |
| tssi@haydenir.com | dchism@tssiusa.com |
-- Tables Follow –
TSS, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
|
|
| March 31, 2026 (Unaudited) |
|
| December 31, 2025 |
| ||
|
|
|
|
|
|
|
| ||
| Current Assets: |
|
|
|
|
|
| ||
| Cash and cash equivalents |
| $ | 65,973 |
|
| $ | 85,510 |
|
| Contract and other receivables, net |
|
| 10,582 |
|
|
| 12,501 |
|
| Costs and estimated earnings in excess of billings on uncompleted contracts |
|
| 363 |
|
|
| 3,011 |
|
| Inventories, net |
|
| 8,091 |
|
|
| 15,966 |
|
| Restricted cash |
|
| 1,811 |
|
|
| - |
|
| Prepaid expenses and other current assets |
|
| 1,886 |
|
|
| 1,642 |
|
| Total current assets |
|
| 88,706 |
|
|
| 118,630 |
|
| Property and equipment, net |
|
| 37,498 |
|
|
| 38,076 |
|
| Lease right-of-use asset |
|
| 14,919 |
|
|
| 15,294 |
|
| Goodwill |
|
| 780 |
|
|
| 780 |
|
| Deferred tax asset, net of valuation allowance |
|
| 7,601 |
|
|
| 7,917 |
|
| Other assets |
|
| 4,073 |
|
|
| 4,238 |
|
| Total assets |
| $ | 153,577 |
|
| $ | 184,935 |
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
| $ | 23,287 |
|
| $ | 46,362 |
|
| Accrued expenses and other current liabilities |
|
| 8,879 |
|
|
| 6,273 |
|
| Deferred revenues, current |
|
| 2,307 |
|
|
| 13,928 |
|
| Long-term debt, current |
|
| 4,084 |
|
|
| 4,010 |
|
| Lease liabilities, current |
|
| 2,049 |
|
|
| 1,994 |
|
| Total current liabilities |
|
| 40,606 |
|
|
| 72,567 |
|
| Non-current Liabilities: |
|
|
|
|
|
|
|
|
| Long-term debt, non-current |
|
| 12,959 |
|
|
| 14,004 |
|
| Lease liabilities, non-current |
|
| 21,100 |
|
|
| 21,629 |
|
| Deferred revenues, non-current |
|
| 134 |
|
|
| - |
|
| Other non-current liabilities |
|
| 102 |
|
|
| 100 |
|
| Total non-current liabilities |
|
| 34,295 |
|
|
| 35,733 |
|
| Total liabilities |
|
| 74,901 |
|
|
| 108,300 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ Equity: |
|
|
|
|
|
|
|
|
| Preferred stock |
|
| - |
|
|
| - |
|
| Common stock |
|
| 3 |
|
|
| 3 |
|
| Additional paid-in capital |
|
| 121,607 |
|
|
| 121,842 |
|
| Treasury stock, at cost |
|
| - |
|
|
| - |
|
| Accumulated deficit |
|
| (42,934 | ) |
|
| (45,210 | ) |
| Total stockholders’ equity |
|
| 78,676 |
|
|
| 76,635 |
|
| Total liabilities and stockholders’ equity |
| $ | 153,577 |
|
| $ | 184,935 |
|
TSS, Inc.
Consolidated Statements of Operations
(Unaudited, In thousands except per-share values)
|
|
| Three Months Ended March 31, |
| |||||
|
|
| 2026 |
|
| 2025 |
| ||
| Revenues: |
|
|
|
|
|
| ||
| Procurement |
| $ | 39,980 |
|
| $ | 90,177 |
|
| Facilities management |
|
| 1,290 |
|
|
| 1,298 |
|
| Systems integration |
|
| 14,076 |
|
|
| 7,484 |
|
| Total revenues |
|
| 55,346 |
|
|
| 98,959 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenues |
|
| 45,604 |
|
|
| 89,749 |
|
| Cost of revenues - depreciation |
|
| 936 |
|
|
| - |
|
| Total cost of revenues |
|
| 46,540 |
|
|
| 89,749 |
|
| Gross profit |
|
| 8,806 |
|
|
| 9,210 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 5,522 |
|
|
| 4,887 |
|
| Depreciation and amortization |
|
| 306 |
|
|
| 210 |
|
| Bank factoring fees |
|
| 704 |
|
|
| 1,468 |
|
| Total operating expenses |
|
| 6,532 |
|
|
| 6,565 |
|
| Income from operations |
|
| 2,274 |
|
|
| 2,645 |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
| 333 |
|
|
| - |
|
| Interest income |
|
| (725 | ) |
|
| (383 | ) |
| Other expense (income) |
|
| (1 | ) |
|
| - |
|
| Pre-tax income |
|
| 2,667 |
|
|
| 3,028 |
|
| Income tax expense |
|
| 391 |
|
|
| 49 |
|
| Net income |
| $ | 2,276 |
|
| $ | 2,979 |
|
|
|
|
|
|
|
|
|
|
|
| Earnings per common share - Basic |
| $ | 0.08 |
|
| $ | 0.13 |
|
| Earnings per common share - Diluted |
| $ | 0.08 |
|
| $ | 0.12 |
|
TSS, Inc.
Adjusted EBITDA Reconciliation (GAAP to non-GAAP)
(Unaudited, In thousands)
|
|
| Three Months Ended March 31, |
| |||||
|
|
| 2026 |
|
| 2025 |
| ||
| Net income |
| $ | 2,276 |
|
| $ | 2,979 |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
| 333 |
|
|
| - |
|
| Bank factoring fees |
|
| 704 |
|
|
| 1,468 |
|
| Interest income |
|
| (725 | ) |
|
| (383 | ) |
| Depreciation and amortization |
|
| 1,242 |
|
|
| 210 |
|
| Income tax expense |
|
| 391 |
|
|
| 49 |
|
| EBITDA |
| $ | 4,221 |
|
| $ | 4,323 |
|
| Stock based compensation |
|
| 1,050 |
|
|
| 921 |
|
| Adjusted EBITDA |
| $ | 5,271 |
|
| $ | 5,244 |
|