TSS, Inc.

Good afternoon, and welcome to the TSS Inc. First Quarter 2026 Earnings Results Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara, Investor Relations at Hayden IR. James, the floor is yours.

Thank you, Operator. And good afternoon, everyone. Once again, thank you for joining us for TSS's conference call to discuss the company's first quarter 2026 financial results. Joining me today on this call are Daryl Dewan, President and CEO of TSS, and Danny Chisholm, the company's CFO. As we begin the call, I would like to remind everyone to take note of the cautionary language regarding forward-looking statements contained in the press release we issued today. That same language applies to comments and statements made on today's conference call. This call will contain time-sensitive information as well as forward-looking statements, which are accurate only as of today, May 7, 2026. PSS expressly disclaims any obligations to update, amend, supplement, or otherwise review any information or forward-looking statements made on this conference call or the replay to reflect events or circumstances that may change or arise after the date indicated except as otherwise required by applicable law. For a list of the risks and uncertainties that may affect the company's future performance, please refer to the company's periodic filings with the SEC. In addition, we will be referring to non-GAAP financial measures, a reconciliation of the difference between those measures and the most directly comparable financial measures calculated in accordance with U.S. GAAP is included in today's press release. With that, Daryl, I will turn the call over to you.

Thank you, James, and welcome, everyone. We are off to a fast, strong start in 2026. Our first quarter results reinforce continued execution of our growth plan and accelerating momentum in our systems integration business. Our performance continues to benefit from strong demand for AI-related infrastructure, where customers are scaling deployments to address demand for AI services and servers. We're executing effectively against our customers' demand with expanded capacity to create sustainable long-term value, and making strategic investments to set the stage for future growth. Revenue of $55.3 million in the first quarter was driven by the strength in our higher-margin systems integration business. It increased 88% year-over-year and represents a larger portion of total revenue at 25% compared to 8% in a prior year period when we had an outsized contribution from procurement. Adjusted EBITDA was $5.3 million, up 1% year over year, reflecting a more favorable sales mix and the impact of growth investments related to our new facility. Systems integration remains the primary driver of growth and margin expansion in our business, and our ability to execute consistently in an increasingly complex operating environment is a key differentiator. Demand for AI infrastructure remains at an all-time high, and is showing no signs of abating. Based on reports from many participants in the AI supply chain, from frontier model companies and hyperscalers to the equipment OEMs and down to the chip providers, it is clear demand is far outstripping supply. There are strong indications that frontier model companies' revenues are limited by the amount of compute they have access to, and the deals between large companies to secure data center capacity continue to make weekly headlines. We've been working to reconsider our definition of the markets we serve. Currently, we have three primary offerings, systems integration, facilities management, which includes our modular data center services business, and procurement. In systems integration, we're experiencing very rapid growth in the higher margin offerings. Our primary customers in the past have been computer equipment OEMs. These have been and continue to be wonderful customers who themselves are experiencing very rapid growth. However, there's a large part of the market the OEMs currently do not serve. We are working to understand the potential for us to serve the rack integration requirements of the rest of the overall market. Further, the complexity of data centers being built today is far greater than those built just a few short years ago. The amount of power required to serve more dense compute environments and the systems to cool dense compute are changing data center designs. Beyond that, the networking requirements within the data center are rapidly evolving. In AI training data centers, all the GPUs are connected, and the amount of data flow is pushing the industry towards optical networking. NVIDIA announced substantial investments in this area recent months, and all of this is done to achieve greater efficiency as frontier model companies rushing to IPOs are measured on cost per token basis. There are two meaningful consequences for our company. One, first, the technical burden is being disseminated out from primary technology providers like NVIDIA to the supplier community. Rack design, server configuration, networking solutions still have reference designs from OEMs, but the details of the solutions for deployment are done by suppliers like TSS. We believe the pace of change lends itself to opportunities to both expand how we perform RAC integration and to consider offering additional services beyond RAC integration. For these two reasons, we have made important additions to our leadership team that I'm proud to expand on in just a few minutes. Importantly, we are scaling our operations along this demand. Let's recall our Georgetown, Texas facility opens at doors less than a year ago and really began flowing orders six to seven months ago. We have expanded our capacity and execution capabilities, including scaling rack integration throughput, optimizing our facility footprint, and increasing operational readiness to support higher volume. As a result, within this month, we will have completed more rack integrations in 2026 than we delivered all of last year. And importantly, we have remaining capacity within our existing footprint to support additional growth as demand requires. In other words, we are executing in line with our expectations and remain on track with our internal plan for the year. In addition, we're continuing to optimize our operational footprint. Since we moved RAC integration operations nine miles north from Round Rock to Georgetown, our Round Rock facility has been idle. In line with our 2026 operating plan, We have now dedicated the entire Round Rock facility to warehousing AI rack material for our largest OEM customer. We began providing this service May 1st of this year, and the contribution from this activity is included in our adjusted EBITDA guidance for the year. Last week, we announced a significant strengthening of our leadership team to support our next phase of growth. I'm pleased to announce and proud to have Matt Wallace appointed to the Chief Strategy Officer and as well David Hull, appointed to the Chief Technology Officer. Matt brings deep experience in corporate strategy, business transformation, and strategic partnerships with a track record of driving growth initiatives across the infrastructure technology sector. David brings extensive engineering and infrastructure leadership experience, including scaling technical organizations and developing integration capabilities for large-scale deployments. Both of these executives bring established industry relationships to TSS that enhance our ability to engage across customers and partners. Most importantly, these additions are aligned with our focus on discipline growth, both organic and strategic. These roles are intended to strengthen execution, expand our partnerships, and support long-term scaling of the business. So as we look ahead, we are well positioned for another record year. Our outlook for adjusted EBITDA in the range of 20 to 22 million for the full year is supported by a multi-year agreement that provides both revenue visibility, downside protection, expanding capacity and capabilities, and a strengthening leadership team. We expect our full year results to be at the high end of the previously set range. Importantly, we operate in an addressable market that is massive and growing rapidly, and we remain focused on disciplined execution across the business. We are working on strategies to position the company in 2026 to address a wider market of customers with expanded set of services. So with that, let me turn the call to Danny for more detailed discussion of our financial results. Danny?