Q2 2024 TSS Inc Earnings Call
Please note that today's call is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. Please press Star then the number one on your telephone keypad to withdraw your question Press Star one again.
Speaker Change: I'll now turn the call over to Danny Chism CFO. Please go ahead Sir.
Speaker Change: Thanks, Brandon and good afternoon, everyone. Thanks for joining us for TSS as conference call to discuss our second quarter 2024 financial results joining.
Speaker Change: Joining me today on this call is Darryl Dwan, President and CEO of PFS.
Speaker Change: As we begin the call I'd like to remind everyone to take note of the cautionary language regarding forward looking statements contained in the press release, we issued today.
Speaker Change: That same language applies to comments and statements made on today's conference call.
Speaker Change: This call will contain time sensitive information as well as forward looking statements, which are accurate only as of today August 14 2024.
Speaker Change: PFS expressly disclaims any obligation to update amend supplement or otherwise review any information or forward looking statements made on this conference call or replay.
Speaker Change: Replay to reflect events or circumstances that may change or arise after the date indicated except as otherwise required by applicable law.
Speaker Change: For a list of the risks and uncertainties that may affect our future performance. Please refer to our periodic filings with the SEC. In addition, we will be referring to non-GAAP financial measures.
Speaker Change: A reconciliation of the differences between these measures with the most directly comparable financial measures calculated in accordance with U S. GAAP is included in today's press release.
Speaker Change: Daryl will kick off the call with an overview and commentary about the quarter and year to date performance then I'll provide more details about our financial quarter result.
Speaker Change: And then turn the call back over to Daryl to recap our strategy and direction.
Daryl: Thank you Danny and welcome to our team Danny joined US in early June and he is already making a significant impact, bringing energy and innovative ideas to help drive our growth strategy.
Daryl: With over three decades of experience Danny has a proven track record of delivering sound financial strategies and improving operational efficiencies during periods of rapid growth.
Daryl: This expertise spans crucial areas that will be increasingly important.
Daryl: <unk> TSS.
Daryl: <unk> transactional experience capital raising and Investor relations.
Daryl: His addition to our leadership team is a key part of our ongoing commitment to building and strengthening our organization.
Daryl: Speaking of growth and opportunities, let me share some insights on our current position and future trajectory.
Daryl: 2024 marks a pivotal transition for TSS building momentum for accelerated growth and expansion for 2025 and beyond.
Daryl: Our current trajectory demonstrates significant progress.
The stage for even greater achievements ahead.
Daryl: On today's call I will provide additional context illuminate are positioned to share why we are optimistic and poised for acceleration.
Daryl: Our turnaround strategy has progressed through key milestones as we previously communicated in the earnings call and announcements to review, we began with a comprehensive operational cleanup completed in the first half of this year and culminating in our ISO certification.
Daryl: Next through our investment in people.
Daryl: <unk> and physical layout of our main facility.
Daryl: We successfully demonstrated our ability to scale within our current capacity addressing a crucial concern for our customers.
Daryl: Now, we're entering a third phase ramping up revenue earnings and cash flow.
We are already seeing the beginning of this growth as our Q2 results reflect.
Daryl: Our execution has been established.
Daryl: By solid operational foundation, and proven scalability positioning us for accelerated expansion ahead.
Daryl: Our performance in the first half of this year underscores our significant progress.
Daryl: We delivered $28 million revenue total revenue, a 33% year over year revenue growth, while simultaneously investing in the business and expanding profitability.
Daryl: The growth the growth was driven by our more profitable businesses, our systems integration facilities management.
Daryl: This growth translated into even more impressive bottom line results operating income surged, 530%.
Daryl: Adjusted EBITDA increased 331%.
Daryl: And we achieved $1 4 million in net income a remarkable turnaround from last year's $500000 loss.
Daryl: Our financial performance stems from our unwavering focus on operational excellence, our commitment to strengthening and expanding our team.
Daryl: And our enhanced go to market efforts.
Daryl: This strategic approach is not only driven our financial success, but also solidified our position as a trusted partner in delivering infrastructure crucial for AI and high performance computing occurring and are increasingly digital world.
Daryl: As we move forward.
Daryl: These results validate our strategy and set the stage for continued growth and innovation.
Daryl: We're not just improving our numbers, we're helping to shape the future of digital.
Daryl: Infrastructure.
Daryl: Operationally our success is driven by our ability to execute and meet the demands of rapidly evolving AI landscape.
And the need for high performance computing infrastructure, while remaining responsive to our customers' needs.
The demand for AI continues to catalyze our expansion, creating significant opportunities for TSS as we support our primary OEM partner.
Daryl: Expand capacity and enhanced services to meet their needs as.
Daryl: As well as those of other prospective partners and customers.
Daryl: Allow me to share some insights on the AI market.
Daryl: Current state cutting through the speculation that dominated headlines.
Daryl: AI presents significant challenges in infrastructure procurement planning, primarily due to the rapid evolution of compute power.
Daryl: At the data center level.
Daryl: Seeing an unprecedented surge in power density.
Daryl: Just recently a single rack with typically consume 10 to 15 kilowatts of power.
Daryl: Today's AI racks pushed 80 kilowatts, and we anticipate to reaching 120 to 150 kilowatts in the next couple of generations.
Daryl: Industry Roadmaps project over 200 kilowatts within a couple of years. This is an incredible growth in power density and a remarkable short period of time.
Daryl: This swift advancement is causing uncertainty for data center equipment buyers and they caused some lumpiness in our growth trajectory. However, there is no doubt that AI is dramatically accelerating the overall data center capacity pipeline.
Speaker Change: Moreover, this compute density increases increased brings a formidable challenge Pete.
Speaker Change: Cooling methodologies are evolving rapidly to keep pace with the increasing power density.
Speaker Change: This evolution presents both challenges and opportunities.
Speaker Change: PSS is positioned not just to adapt.
Speaker Change: But to lead in this rapidly changing landscape.
Speaker Change: Our nimble operational model enables us to adjust quickly as customers seek to make on the fly architecture changes and our rapid testing capability provides more immediate feedback to customers by narrowing configuration options, including cooling.
Speaker Change: During Q2, we made a significant investment in our production capacity, which came online at the beginning of June.
Speaker Change: This expansion significantly increased our volume capacity and decrease the cycle time, the complete <unk> track within our existing facility.
Speaker Change: The expansion was driven by the surge in demand for server rack.
Speaker Change: Builds in the pipelines of our customer OEM customer.
Speaker Change: Our committed OEM customers are seeing the benefits of our actions and are very supportive.
Speaker Change: We have in recent tonnage received customer funding for capacity and capability expansion to meet future needs.
Speaker Change: Compelling reflection of our customers view us as a partner.
Speaker Change: We continue to actively engage in discussions with them to further expand our capacity as we fulfill their needs and execute our goal to become a primary production partner for their future AI related endeavor.
Speaker Change: We valued our relationships. This is truly a partnership for success.
Speaker Change: Demand increased in Q2, and we began delivering complex AI integrations for downtime.
Speaker Change: And I want to stress on time <unk>.
Speaker Change: Including the first stage of a highly publicized program.
Speaker Change: That initial program began in June and has been carried out into Q3 as a result, we finished the quarter with a record run rate of Iraq integration revenue.
Speaker Change: <unk> integration revenues from the first half of this year or just a bit under what we achieved for all of 2023.
Speaker Change: Our procurement business, where we source third party hardware software and services delivered another solid performance in Q2.
Speaker Change: Though it was down slightly year over year.
Speaker Change: Following a modestly slower Q2, Q3 projections for our procurement business indicate very robust growth potentially surpassing $50 million in the <unk>.
Speaker Change: And revenue for the quarter.
Speaker Change: For those familiar with our history, we recall that our procurement segment operating expenses quarter to quarter fluctuations due to size timing and revenue recognition methods of the deal. However.
Speaker Change: However, as overall trajectory remains upward consistently contributing to our profitability.
Speaker Change: While we are encouraged by this growth trend, we maintained a prudent outlook on this business line remain cautiously optimistic.
Speaker Change: Our modular data center business or MDC business continues to show year over year growth and remains a promising long term opportunity for DSS.
Speaker Change: While the overall MDC market Hasnt expanded at the rate analysts.
Speaker Change: Analysts initially predicted largely because rapid industry growth favorite Greenfield site development over capacity augmentation using <unk>.
Speaker Change: Mdc's modular data centers, we're now seeing signs of a potential shift.
Speaker Change: The challenges I've highlighted earlier.
Speaker Change: Rapidly increasing compute density evolving.
Speaker Change: The evolving cooling requirements may finally, usher in the area of four modular solutions.
Speaker Change: Whether this materializes as predicted remains to be seen however, DSL.
Speaker Change: TSS, we are strategically positioned to capitalize on this trend, particularly if AI clusters start being delivered as freestanding rack for module.
Speaker Change: To be clear.
Speaker Change: The overall volume ramp that we've been anticipating is now underway.
Speaker Change: Our OEM customers have very robust pipeline.
Speaker Change: And we are seeing deals begin to close.
Speaker Change: We believe our Q2 performance as a harbinger of the good things to come.
Speaker Change: Our strategy strategic inclusion in key customer programs signals, a bright future as OEM pipelines materialized.
Speaker Change: This growth trajectory may not be a smooth upward linear line.
Speaker Change: The pipeline deals of our OEM partners are large and we anticipate some variability as the market adapts to rapid rapid technological changes.
Speaker Change: But make no mistake, we are witnessing a dogs of dawn of a transformative era in our industry in TSS is at the forefront.
Speaker Change: This is not just exciting it's validating.
It confirms our strategy our investments and more importantly, the tireless efforts of our exceptional team I'm proud of this team and as we navigate this dynamic landscape. We're just not riding the wave of AI VR evolution, we're helping to propel it forward. So now let me turn it back to Danny to discuss our number Danny.
Danny Chism: Thanks, Daryl I'm excited to be here and excited to share the detailed financial results of another strong quarter for DSS.
Danny Chism: Before I jump into the earnings for the quarter I'd like to make a couple of hours observations about our financial position.
Danny Chism: We again ended the period debt free with an untapped available line of credit and just over $8 million of cash on hand.
Danny Chism: As Daryl mentioned earlier, an OEM partner with whom we work closely agreed to fund a significant portion of the capital investments we made during the quarter to enhance our capacity to rapidly build AI enabled server and network rack for them.
Danny Chism: You can see this $1 $7 million capital investment in our statement of cash flows.
Danny Chism: The portion of the reimbursement not yet amortized into revenue is included in our balance sheet as part of the deferred revenue balance.
Danny Chism: Youll also notice that $2 $6 million increase in inventory compared to December 2023.
Danny Chism: That relates to configuration and systems integration work that was ongoing at the end of June.
Danny Chism: Our contract and other receivables also increased by just under $3 5 million.
Danny Chism: As the majority of our <unk>.
Danny Chism: Annual facilities maintenance management contracts were renewed July one and invoices for those were sent out shortly before quarter end.
Danny Chism: The revenues for those as in past years will be recognized primarily over the next 12 months.
Danny Chism: Now I'd like to turn to the operating results for the second quarter.
Danny Chism: Ordinarily I wouldnt be very enthusiastic about sharing with you a 16% decrease in our total revenue.
Danny Chism: However, if you look at the gross profit for the quarter. It is up 41% driven.
Danny Chism: Driven by a revenue shift mix to higher yielding services.
Danny Chism: The revenue decrease was driven by a $5 7 million or 54% decrease in our procurement revenue.
Danny Chism: It's a great business that adds to the bottom line and we will take as much of it is we can get plus it provides some cross selling opportunities for systems integration work with.
Danny Chism: The movements in revenues from our procurement business itself have a much smaller impact on our overall gross profit and bottom line than the movements in our facilities management and systems integration businesses.
Danny Chism: We had a 46% growth rate in revenues from facilities management activities largely tied to a couple of discrete projects during the quarter.
Danny Chism: And an impressive 108% increase in systems integration revenue.
Danny Chism: The last item is particularly exciting as it was driven largely by our starting to integrate AI enabled rack, which began late in Q2.
Danny Chism: At least in the near term, we expect the demand from this business to be a bit lumpy as Darryl mentioned with some spikes and valleys in demand from our OEM partners and customers and somewhat dependent on the timing of the next generation of AI chipsets from the big chip manufacturer.
Speaker Change: That being said in the first six months of the year, our systems integration team processed more than 80% of the system rack, we integrated in all of 2023 as of the date of this call. We have already eclipsed the number of racks, we integrated in our full fiscal 2023.
Speaker Change: Our SG&A expenses increased a bit in dollar terms and improved eight percentage points to 59% of gross revenues from 67% this quarter last year.
Speaker Change: Through effectively leveraging our expense structure to 41% growth in gross profit translated into a 74% improvement in operating income ending the period at $1 7 million.
Speaker Change: Our net interest expense represents almost exclusively the cost of factoring our accounts receivable from our largest customer.
Speaker Change: This factoring arrangement ends up having an effective interest rate of only around 6% a far lower rate than we could get if we were to utilize our bank loan or revolving line of credit finance those receivables ourselves.
Speaker Change: The net result of the above factors is that net income swelled to $1 4 million up.
Speaker Change: Up 345% from this quarter last year and.
Speaker Change: And EPS moved from <unk> in the prior period prior year period.
Speaker Change: To <unk> <unk> per share in the current period.
Speaker Change: Adjusted EBITDA, which excludes interest taxes depreciation amortization and stock based compensation was just under $2 million up from $1 2 million this quarter last year.
Speaker Change: Now, let's take a look at the six month period ended June 30, compared to the comparable period of 2023.
Speaker Change: Total revenues were up 33% with.
Speaker Change: With a good portion of the overall growth in total revenues coming from higher yielding services or.
Speaker Change: Our gross profit increased 48% to $7 $3 million.
Speaker Change: Similar to what we saw in the quarter, our SG&A costs improved to 70% of gross profit from 90% in the prior year to date period.
Speaker Change: Adjusted EBITDA was a bit more than threefold, what we produced year to date last year ending the period at $2 5 million.
Speaker Change: The gross value of procurement transactions processed in the second quarter of 2024 was $21 million compared to $42 9 million in the second quarter of last year.
Speaker Change: In the current year to date period, we processed $49 million of gross value procurement deals compared to $49 6 million this period last year.
Speaker Change: Procurement revenues are highly dependent on the timing of customer needs and can fluctuate widely from quarter to quarter.
Speaker Change: All in all it was a great quarter for us financially and we look forward to achieving similar results as we continue to scale the business.
Speaker Change: With that I'll turn the call back over to Daryl to share some insights into our expectations for the future and provide some closing content.
Speaker Change: Yes.
Daryl: Thanks Kerry.
Daryl: It's great to have you onboard but thank you.
Speaker Change: We TSS remains strategically positioned to drive growth in both the burgeoning generative AI market and traditional cloud computing.
Speaker Change: AI is transformative impact spans every sector in TSS alone.
Speaker Change: Our partners.
Speaker Change: Is ready to meet the surging demand looking ahead, we anticipate continued growth in our rack integration business.
Speaker Change: Expansion of our capacity completed in Q2 will yield significant benefits throughout the second half of 2024 and into 2025.
Speaker Change: Our ability to also provide on rack site I'm, sorry, onsite <unk> integration on a customer site.
Speaker Change: With cabling services opens up new high margin opportunities for TSS, expanding our total addressable market and customer base.
Speaker Change: Her expertise in handling complex integrations, and our maintenance capabilities uniquely position us to capitalize on these trends.
Speaker Change: And growing market demand.
Speaker Change: We believe we have the physical capacity to handle the near term growth that we anticipate we also believe there is a potential demand looking into 2025 that out that that might it may outstrip our capacity.
Speaker Change: We have begun initial exploration into further capacity expansion.
Speaker Change: Our procurement business remains strong despite quarterly fluctuations in our modular data center business, while we have seen year to year over year improvement. We're now engaged in promising discussions with prospective customers.
Speaker Change: Our focus is on building a solid backlog to fuel revenue growth and 22025 and beyond.
We are observing increased refresh activities in existing installation.
Speaker Change: Though new builds are taking longer, particularly for AI solutions due to igpu demand and anticipated technology releases and the long term, we see potential synergy between AI and modular form factors, especially for use cases like autonomous vehicles, and other time sensitive applications and underserved areas.
Speaker Change: So in conclusion.
Speaker Change: TSS now has the capacity expertise.
Speaker Change: And track record to deliver for our partners and customers.
Speaker Change: We are very well positioned for the next wave of growth and we continue to explore avenues to enhance our growth potential I'm very optimistic of our future and I'm proud of our team and with that open the lineup for any questions operator.
Speaker Change: Thank you.
Speaker Change: Thank you I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: To withdraw your question Press Star one again.
Speaker Change: If you are dialed in and listening via loud speakers on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: Our first question comes from Marsh, Sweden with Cowen. Please go ahead.
Speaker Change: Hi, Darryl Thanks, Nicole.
Speaker Change: Alright.
Speaker Change: [laughter] quantifying I have.
Speaker Change: Couple of quick questions really.
Speaker Change: And when the queue then.
Speaker Change: So obviously it looks like you've got some growth in your rack integration, which was what we've been waiting for to see how that looks and we're kind of getting an idea of what that looks like in terms of the bottom line.
Speaker Change: Based on your new kind of what you've done.
Speaker Change: In terms of efficiencies.
Speaker Change: I guess my question is a couple of things here number one could you start giving you some idea in terms of how much of your.
Speaker Change: Integration business is.
Speaker Change: So we can maybe some modeling a little bit in terms of your 10 X kind of capacity expansion.
Speaker Change: No.
Speaker Change: <unk> will go forward.
Speaker Change: And yes.
Speaker Change: Okay.
Speaker Change: Sorry go ahead.
Speaker Change: Well I can answer that.
Speaker Change: They'll make this too complicated I'm trying.
Speaker Change: Can you comment.
Speaker Change: No because I'm in the airport here they want to own it depending on those a year.
Speaker Change: And so you see more we're getting a glimpse of what you can do when you scale here in Iraq integration.
Speaker Change: Are there more efficiencies down the line as you keep on growing that business I'm, just trying to get an idea of what the margin picture might look like.
Speaker Change: And maybe the same with the same question really was as modular gets going trying to understand the margin picture. There is going forward, that's Australia right now.
Speaker Change: Okay. So if I can pick this apart to first of all to your question on <unk>.
Speaker Change: So I think we're on track to go do that that is measured in terms of the quantity of frac.
Speaker Change: The mix of <unk> is changing.
Speaker Change: And that we're getting more.
Speaker Change: We're getting.
Speaker Change: I think we're planning for the future where.
Speaker Change: The mix, there's going to be increase in direct liquid cooled.
Speaker Change: Solutions as compared to what we have today.
Speaker Change: When I mentioned about heat and.
Speaker Change: Cooling.
Speaker Change: The feature is looking like it's going to move to a larger percentage of direct liquid so we've got to accommodate that in our.
Speaker Change: Capabilities in our factory and what we can what we're going to run out of power.
Speaker Change: We're not sounding like <unk>.
Speaker Change: Anybody else right.
Speaker Change: Customers are clamoring for power and Youre trying to figure it out.
Speaker Change: And we're not that much different so at some point, depending on the percentage and the timing and.
Speaker Change: And the forecast so we're going to get.
Speaker Change: We are planning for more power and it may be at a different facility.
Speaker Change: Green blend and we're going to do that real carefully.
Speaker Change: And we're not going to go just runaway and just do it for the sake of doing it but we're going to have to lean in and make some.
Speaker Change: Some decisions on that pretty soon.
Speaker Change: Now on your I think on the modular.
Speaker Change: And by the way I think we've got the capacity to grow here.
Speaker Change: Depending on the mix of business, but if it rapidly shifts to direct liquid and we're going to have to ramp more rapidly move to another facility. We have some sites in mind, we're planning for it but we're just not ready to pull the plug.
Speaker Change: Make a decision on that.
Speaker Change: I can jump in for just a second one one point I would make there also is we do have the ability to do some direct liquid cool today, we have that infrastructure. It's just not at the volume that we expect that to be in the future.
Speaker Change: Okay.
Speaker Change: And on your modular question.
Speaker Change: Part of the part of the issue.
Speaker Change: Is the lead time for componentry.
Speaker Change: When I first joined the company I was told lead times anywhere from eight to 12 months data.
Speaker Change: The power units et cetera.
Speaker Change: That's nonsense, we can fix that well we can.
Speaker Change: But we can build tighter relationships with the folks who are doing that work like diverted the schneiders, the eaton's et cetera, and where we.
Speaker Change: We're doing that we're taking steps to go get closer to those partners.
Speaker Change: What's that translate to.
Speaker Change: We do have.
Speaker Change: We have a we have an internal goal on the backlog and the pipeline that we want to build that will turn into revenue in 2025 and beyond given the lead times.
Speaker Change: We're not where we need to be yet, but we're making progress. We've got a couple of deals that have closed.
Speaker Change: And we've got a couple of others insight.
Speaker Change: And we're working as aggressively as we can.
Speaker Change: I don't know if I answered your question, but if I did.
Speaker Change: So that was good yes, I mean, maybe.
Speaker Change: I guess one of my question is if we can get more specific on that and just maybe yes or no on it.
Speaker Change: Do you think there's a lot more efficiencies to come down a lifeline here as you scale, we got a glimpse of it here in Q2.
Speaker Change: Do you think the margin profile continue improves as you scale the business, especially the rack integrations have to visit I guess and maybe even modular effort.
Speaker Change: The answer absolutely yes.
Speaker Change: Okay that was it was important there cool cool.
Speaker Change: That's all I have for now thanks.
Speaker Change: Alright, Thanks, Scott good to hear your voice.
Speaker Change: Our next question comes from Jonathan Alvarado Private Investor. Please go ahead.
Speaker Change: Hi, Congratulation Hey, Jonathan.
Speaker Change: Okay.
Speaker Change: I've heard reports that you guys added around 200 employees during the second quarter is that true.
Speaker Change: No.
Speaker Change: But we did add more people.
Speaker Change: Okay.
Speaker Change: Largely all put to work right away.
Speaker Change: As soon as they hit the front door.
Speaker Change: Alright.
Speaker Change: And we've heard reports that youre working on Elon musk.
Speaker Change: Data center is that true.
Speaker Change: Jonathan what we cant do is talk about the end user customer.
Speaker Change: Because it is very confidential to our relationship with our partner.
Speaker Change: So I wish I could answer that but I can't.
Speaker Change: Okay.
Speaker Change: You wanted a down.
Speaker Change: Your partner.
Speaker Change: And would you get more work delegate.
Speaker Change: Margin view.
Speaker Change: We are a.
Speaker Change: Dell services partner.
Speaker Change: And we work very hard to get as much business as we can with our relationships. So.
Speaker Change: It is our hope and our desire that as.
Speaker Change: The market expands.
Speaker Change: Del <unk> and potentially other customer partners succeed we will succeed as well.
Speaker Change: We're also embarking on a game plan to go direct.
Speaker Change: To the end user.
Speaker Change: On certain services that would not be in conflict with any relationship that we do have with Dell or anybody else.
Speaker Change: And we're in the early stages of that.
Speaker Change: But right now it's not material to report.
Speaker Change: And.
Speaker Change: Sure. The current performance on your existing contracts that you've just completed does that set you up for more work on the same project.
Jonathan: Jonathan we hope so.
Speaker Change: We want as much business, we can get.
Speaker Change: So the better we do the more we want.
Great.
Speaker Change: Right.
Speaker Change: Hey, Bill.
Speaker Change: Yes, the level of expertise to which we executed I think demonstrates the skills that we built internally and the expertise.
Speaker Change: I do anticipate that that will be recognized in probably.
Speaker Change: Should result in us winning more business.
Speaker Change: Great.
Speaker Change: <unk> success.
Speaker Change: Thank you thanks, Jonathan.
Speaker Change: Our next question comes from Paul Simon shareholder. Please go ahead.
Speaker Change: Yes.
Paul Simon: Hello, Congratulations for not.
Speaker Change: Eight result.
Speaker Change: I have a couple of questions that you.
Speaker Change: You may not be able to answer it based on your last answer, but what I was going to ask you what percentage.
Speaker Change: Of your total revenue comes from.
Speaker Change: Relationship with Dell.
Speaker Change: That's that's not a I think we can yes, we've known only to talk about that publicly no problem no problem, how much we like Australia.
Speaker Change: Like I said you can't answer it maybe because you just said you can't talk about relationship that's fine it's.
Speaker Change: It's just something I had on my mind, but the second thing is you mentioned eight hour you mentioned power and I'm concerned I'm curious about what I havent read anything about it or anything.
Speaker Change: I'm impressed with your results.
Speaker Change: Congratulations for everyone.
Speaker Change: I'll just start jump up to 275 right before this thing it's not.
Speaker Change: Sure.
Speaker Change: Now when you said power are you considering solar or nuclear power or anything else to power these things because I understand that.
Speaker Change: Power demands and like you said you don't have enough power.
Speaker Change: Or any other message you're trying to use to make power generate power.
Speaker Change: Well, what we need is power to the facility electric power.
Speaker Change: And it's measured in megawatts.
Speaker Change: We've got a good amount of megawatts.
Speaker Change: Sure.
Speaker Change: Our current facility and the lead time to go get additional megawatts.
Speaker Change: Is longer than we want and like so what do you do.
Speaker Change: Another facility and you do the pricing and the cost cutting and you make a decision on.
Speaker Change: Timeframe in money.
Speaker Change: And we're looking at it.
Speaker Change: Solar nuclear if you think about what's what is.
Speaker Change: Consistent that you can count on.
Speaker Change: With probably nuclear it probably becomes the closest but what I've seen so far is not many people want to put a nuclear portable unit next to their facility.
Speaker Change: Yeah anyway, but just maybe just.
Speaker Change: The company that does something like that it's called and eat but anyway, that's not what I call of course.
Speaker Change: Okay.
Speaker Change: I was just thinking.
Speaker Change: Nuclear.
Speaker Change: Nucleolar, but go ahead.
Speaker Change: This company is making portable nucleolar.
Speaker Change: Or not so much portable but.
Speaker Change: More affordable than.
Speaker Change: Normal huge.
Speaker Change: It would be like three mile island or whatever they call it.
Speaker Change: On a truck it's affordable so yes anyway.
Speaker Change: I just wanted to company.
Speaker Change: We were introduced to a company that space up in Silicon Valley that is doing something onto affordable nuclear level.
Speaker Change: Yes.
Speaker Change: Engaged I mean, if it's the same company, but but what we're looking for is simply is just that we need more power to the facility.
Speaker Change: And we will consider anything anything that could help us get there we consider but realistically in a short term.
Speaker Change: We haven't seen anything that really.
Speaker Change: We can talk about today.
Speaker Change: Besides these rigs waqar.
Speaker Change: Solar can be.
Speaker Change: Bad depending on the weather and also you have to have a lot of land for the.
Speaker Change: Or actually right.
Speaker Change: Actually roof space usually works.
Speaker Change: Some time, but thanks for the answer and thanks for the great results like I said I just noticed the thing jumped up to 275 I don't know it just it just happened right at the end of the day I guess, thank you for the great results.
Speaker Change: Paul for you and other investors I think on behalf not only myself management team. We appreciate your trust in the business.
Speaker Change: And if youre going to put money into our company. We've got an obligation to do everything we can to give you kind of a very good return on your investments. So we're focused on that and customer values, but thanks for your investment.
Speaker Change: Well thank you Sir.
Speaker Change: We're going to see a rise tomorrow, because I think he is over the counter market, obviously don't do much extent.
Speaker Change: Extended hours, I think tomorrow or you're going to see a you drive that is just a prediction I can't guarantee anything.
Speaker Change: Anyway, just focus where we are focused on execution and everything else happens with great execution in that segment.
Speaker Change: Well, that's okay, I don't buy any stock.
Speaker Change: I don't see us executing I guarantee you that.
Speaker Change: And every single one I have is executing.
Speaker Change: And so.
Speaker Change: You are definitely one of them a guy the guy that <unk> told me Hey.
Speaker Change: Is that thing doesn't have much volume hey, this that and the other I said dude.
Speaker Change: I'm going to buy for $1 75.
Speaker Change: And let's see what you're saying.
Speaker Change: Now, it's $2 75, let's see what he says tomorrow.
Speaker Change: Anyway, yes.
Speaker Change: Just saying you know this.
Speaker Change: This small cap things are you know theres no volume. There's this and that is the person that I know how to analyze that went to college and I have a finance degree listen this company has dominated this entire year.
Speaker Change: So don't tell me about small cap large Jeff if you dominate you dominate so thank you very much and have a great next quarter.
Paul Simon: Thanks, Paul I appreciate it.
Speaker Change: Our next question comes from Mitch <unk> with private Investor. Please go ahead.
Mitch: Hi, guys congratulations on a really great corner quarter, it looks like you're managing the growth of the company very very effectively.
Mitch: I was impressed that you are receiving financing from your partner.
Speaker Change: Can you talk a little about the size and scale of that as well as how far in advance do you have to put the Capex plan before you can then generate revenue off of it and then I have a follow up question.
Speaker Change: So like earlier I wish I could give you the answer to your question but.
Speaker Change: Terry.
Speaker Change: Not a disrespect to you is this private.
Speaker Change: Sure.
Speaker Change: It's.
Speaker Change: Ill underscored by it doesn't come easy.
Speaker Change: And we are very respectful of our relationship with our partner and the fact that they.
Speaker Change: Put some money into what we're doing.
Speaker Change: It's a beautiful thing.
Speaker Change: As far as.
Speaker Change:
Speaker Change: Yes.
Speaker Change: The other part of your question I'm not quite sure how to answer that.
Speaker Change: Okay.
Speaker Change: The other question I have for you is.
Speaker Change: Also have heard that you've done some significant hiring so I'm just wondering if you can tell us.
Speaker Change: Any employees at the end of last year.
Speaker Change: How many employees at the end of the quarter.
Speaker Change: We've gone public before.
Speaker Change: We we had 83, which is the last time, we quoted any volume.
Speaker Change: And I think for the stake.
Speaker Change: Confidentiality, we're not going to get into a whole lot more but.
Speaker Change: We've doubled at least.
Speaker Change: Our head count.
So in six months to accommodate.
Speaker Change: Okay.
Speaker Change: I didn't mean syndrome.
Speaker Change: In six months keep more than doubled your head count.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [laughter].
Speaker Change: Nice try.
Speaker Change: But would it be safe to say that it is closer to the triple double.
Speaker Change: No.
Speaker Change: Alright, I respect, where you're going with it but I don't want to go any further.
Speaker Change: Okay have you had a lot of turnover.
Speaker Change: Not unexpected.
Speaker Change: Based on the.
Speaker Change: The hiring trajectory we had.
Speaker Change: No that was it.
Speaker Change: When I get to do a shout out to our chief people officer, and the management team.
Speaker Change: We were prepared and we were planning for growth at some point.
Speaker Change: And we did a lot of it through automation and.
Speaker Change: Heavy duty.
Speaker Change: Interviewing and were working weekends and nights.
Speaker Change: Making this team what it is today so.
Speaker Change: I just need to do a shout out to the team the management leadership team for making that happen. It would not have happened if we hadn't planned for it.
Speaker Change: Implemented some of the processes and the systems and we had the people we've got a leadership position. So we did some really.
Speaker Change: <unk> unique things in a very short period of time.
Speaker Change: That's great.
Speaker Change: Question.
Speaker Change: Can you talk about the.
Speaker Change: The.
Speaker Change: Curation.
Speaker Change: Kind of duration and revenue visibility do you have duration on the contract and revenue visibility.
Speaker Change: For the coming quarters.
Speaker Change: We have let me answer it this way we have much better.
Speaker Change: <unk> today and the information exchange between our factory leadership and also our partner than we've ever had.
Speaker Change: And.
Speaker Change: While there's no guarantees in life.
Speaker Change: We have been working relationship we've got trusted relationships that.
Speaker Change: We know how it works and I'm also at Dell, so not that that means a whole lot other than.
Speaker Change: When if you have any relationships with Dell people you know a lot of it's based on trust.
Speaker Change: And in.
Speaker Change: Integrity.
Speaker Change: And relationship and we really work hard on that especially as it relates to future demand and investment decisions.
Speaker Change: People that impacts.
Our business.
Speaker Change: And our partner knows that.
Speaker Change: So it's a good I call bi directional relationship, but I can't get into some of the details that they cover.
Speaker Change: Please understand I would like to but I can't.
Speaker Change: Totally understand thanks, so much for your candor.
Speaker Change: Okay Youre welcome. Thank you.
Speaker Change: We have no further questions at this time I will now turn the call back to narrow the one for any closing remarks.
narrow: Yes, Thanks Breanna.
To everybody here.
Speaker Change: Half of our leadership team, we really do appreciate everybody's support of the company and what we're doing.
narrow: Your info.
narrow: <unk>.
narrow: Involvement is respected we appreciate it.
narrow: We're optimistic about the future we know we have to do.
narrow: We're focused on.
narrow: Alive for everybody, we started out of the investment.
narrow: Profitable growth so thanks for participating in the call and wish everybody a good evening and afternoon wherever you are at.
narrow: Wish us luck.
narrow: This concludes today's conference call. Thank you all for your participation you may now disconnect.