TSS, Inc. reported significant financial growth for the fiscal year ending December 31, 2024, with total revenues reaching $148.1 million, a substantial increase of 172% from $54.4 million in 2023. This growth was primarily driven by a 205% surge in procurement revenues, which rose from $38.5 million to $117.5 million, alongside a 157% increase in systems integration revenues, which grew from $8.8 million to $22.6 million. The facilities management segment also saw a modest increase of 13%, from $7.1 million to $8.0 million. The company's gross profit for the year was $22.4 million, reflecting a 103% increase compared to the previous year.
The company's profitability improved markedly, with net income soaring to $6.0 million, or $0.24 per diluted share, compared to a net income of $74,000 in 2023. This turnaround was attributed to the successful integration of AI-enabled computer racks, which began in June 2024, and a multi-year agreement signed in October 2024 with its largest customer, ensuring a minimum volume of integration services. However, the gross profit margin decreased to 15% from 20% in 2023, primarily due to the lower margins associated with the procurement business, which constituted a larger portion of total revenues.
Operationally, TSS, Inc. is in the process of relocating its headquarters and production facility to a new site in Georgetown, Texas, with an investment of approximately $25 million to $30 million aimed at enhancing electrical power and cooling capabilities for AI-enabled racks. The company anticipates that this move will support increased production volumes and operational efficiency. As of December 31, 2024, TSS employed 161 full-time staff and approximately 43 temporary workers, reflecting a strategic focus on expanding its workforce to meet growing demand.
The company continues to face challenges, including reliance on a single OEM customer, which accounted for 99% of total revenues in 2024. This concentration poses risks should the relationship deteriorate. Additionally, TSS has acknowledged a material weakness in its internal controls over financial reporting, which it is actively working to remediate. Despite these challenges, management remains optimistic about future growth, projecting continued profitability in 2025, bolstered by the new facility and ongoing demand for AI integration services.
In summary, TSS, Inc. has demonstrated a strong financial performance in 2024, marked by significant revenue growth and improved profitability, while also navigating operational changes and addressing internal control weaknesses. The outlook for 2025 appears positive, contingent on the successful execution of its strategic initiatives and the maintenance of key customer relationships.
About TSS, Inc.
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