Q2 2025 TSS Inc Earnings Call

Speaker #4: Hi, makeup up. Greetings. Welcome to the TSS Inc. second quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode.

Speaker #4: A question and answer session will follow the formal presentation. I will now turn the conference over to your host, James Carbonara. You may begin.

Speaker #5: Thank you, operator. And good afternoon, everyone. Thank you for joining us for TSS's conference call to uss the company's second quarter 2025 results. Joining me today on this call are Darryll Dewan, president and CEO of TSS; and Daniel Chism, the company's CFO.

Speaker #5: As we begin the call, I would like to remind everyone to take note the cautionary language regarding forward-looking statements contained in press release we issued today.

Speaker #5: That same language applies to comments and statements made on today's This call will contain time-sensitive information, as well as forward-looking statements, which are accurate only as of today, August 6, 2025.

Speaker #5: TSS expressly disclaims any obligation 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.

Speaker #5: 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.

Speaker #5: In addition, we will be referring to non-GAAP financial measures a reconciliation of the differences between these measures and the most directly comparable financial measures calculated in accordance with the US GAAP is included in today's press release.

Speaker #5: With that, Darryll, I will turn the call over to you.

Speaker #6: Thank you, James. And good noon, everyone. Thank you for joining us today for our second quarter 2025 earnings conference call. The demand for complex high-performance computing systems, particularly those enabling AI applications, continues to accelerate at a remarkable pace.

Speaker #6: And we are squarely positioned to ress that demand. This past quarter marked major transformative milestone in our company's journey, and positions us for what we expect will be a record year.

Speaker #6: I'm pleased to report that we are successfully operating in our new facility's state-of-the-art 213,000 square foot facility in Georgetown, Texas. And it's now fully operational.

Speaker #6: It's also a less than 100 degrees today. The build-out is a testament to detailed planning, teamwork, and a team's ability to execute. It is more than just additional square footage.

Speaker #6: This facility is a strategic asset purpose-built to support rapid scaling of integration services of the most advanced and complicated computing solutions. The facility became operational across all capabilities late in the second quarter.

Speaker #6: With systems now validated and capable of running in full capacity, we're beginning to capture tangible benefits. We continue to produce faster delivery cycles, greater operational efficiency, and increased ability to support larger, more complex customer deployments.

Speaker #6: The completion and activation of this facility marks the turning point, and we are incredibly bullish about what lies ahead. In terms of our financial results, we delivered on our commitment of revenues in the first half of this year exceeding the revenues in the second half of 2024.

Speaker #6: And comparing the first half of this year to the first half of last year, we tripled our diluted earnings per share, and more than tripled our adjusted EBITDA.

Speaker #6: We are on track for what we believe will be a record year for our company. Our momentum is accelerating. The market is thriving. And rich with opportunities, and we're cited about the execution and our focus and precision.

Speaker #6: So let me walk through a few of the highlights for the second quarter. We achieved record year-over-year revenue growth of $262%, highlighting the accelerating demand for our solutions.

Speaker #6: The depth of our customer relationships and the strengths of the market environment we are operating in. Adjusted EBITDA increased more than 100% to $4 million, in Q2 of 2025.

Speaker #6: We also generated positive cash flow from operations for the first six months of the year, further strengthening our financial foundation, reinforcing the durability of our business model.

Speaker #6: The exceptional performance was driven by growth in our two largest service offerings, procurement and systems integration. So let me break this down by segment.

Speaker #6: Starting procurement services, where we source and resell third-party hardware, software, and services, revenue grew more than $562% year-over-year, to $33 million in the quarter.

Speaker #6: Driven by increased infrastructure investments to support AI workloads. The growth continues to underscore both our value as a strategic sourcing partner and the strong execution of our operational team.

Speaker #6: While the business may experience quarter variability, the overall trajectory remains positive, and we remain very optimistic about the contribution from this segment. Systems integration, which includes AI rack integration, delivered another strong quarter with revenue growth increasing 91%, fueled by growing demand for AI-enabled infrastructure.

Speaker #6: This growth reflects the accelerating momentum behind AI deployments, as enterprises begin to modernize and expand their compute environments, while hyperscalers remain in rapid expansion investment mode.

Speaker #6: We believe we are still in the early stages of the AI infrastructure build-out cycle, and we expect continued robust growth as customers scale investments to meet evolving compute requirements in the quarters and years ahead.

Speaker #6: I'll speak more to this in a minute. In our facility's management business, which primarily includes our modular data center business, revenues declined 35%. While this segment represents a smaller portion of our overall business, approximately 3% of the total revenue in a quarter, it has historically delivered stable, high-margin contributions.

Speaker #6: The modular market is evolving. Modular data centers are no longer used solely to augment traditional data centers, but are increasingly viewed as prefabricated solutions for delivering dense computing capacity more efficiently.

Speaker #6: Additionally, edge computing, an emerging AI-driven segment, is well-suited to modular deployment. As the adoption of AI technologies accelerates, we expect modular data centers to play a growing role in our strategy through 2025 and beyond.

Speaker #6: So it's clear to me that we're still in the early days of AI, and demand for high-performance computing. That demand is growing, our capabilities and partnerships are expanding, and our pipeline continues to strengthen.

Speaker #6: Importantly, we're successfully executing our business strategy and delivering substantial growth, while scaling our operations and positioning the company to capture a meaningful share of the rapidly growing and complex AI infrastructure market.

Speaker #6: So let me turn the call over to Danny for more detailed conversation and discussion of our financial results. Danny?

Speaker #7: Thanks, Darryll. Consolidated total revenue increased by $262% in the second quarter of 2025 to $44 million. Up from $12.2 million in the second quarter '24.

Speaker #7: As Darryll mentioned, the increase was driven by significant year-over-year growth in our two largest service lines, procurement and systems integration. Revenue from procurement services totaled $33 million, up $572% compared to $4.9 million in the year-ago quarter.

Speaker #7: Driven primarily by purchases from the federal government, combined with a mixed ift with a greater proportion of revenues coming from gross deals as opposed net deals.

Speaker #7: As a reminder, revenue in this segment represents a mix of gross and net deals, whose revenue recognition method varies based on the contractual terms of whether we modify the product in some way or just act as an agent in the transaction.

Speaker #7: The gross value of all procurement transactions, regardless of how accounted for, increased $213% from the prior year quarter to $65.7 million, this quarter. Based on recorded GAAP values, procurement gross margins were $7.7% in the current quarter compared to $14.7% in the prior year quarter.

Speaker #7: When viewed using the non-GAAP gross value of all transactions, which we see more as apples to apples comparison, because it ignores the gross versus net difference, gross margins improved from $3.4% in the prior year quarter to $3.9% in the current quarter.

Speaker #7: The margin expansion worked in concert with the $213% increase in the gross value of procurement transactions driving $251% growth in procurement services gross profit to $2.5 million, up from $700,000 this quarter last year.

Speaker #7: Revenue from the facility's management totaled $1.5 million, down 35% from $2.3 million in the same quarter last year. Although currently the smallest segment of all our es, facility's management holds significant strategic potential.

Speaker #7: We're actively pursuing new opportunities while maintaining readiness to address customers' eds for modular data centers or MDCs, when that demand picks back up. We're also seeing some discrete projects planned for the second half of the this fiscal year, on MDCs that were deployed in past years.

Speaker #7: In addition to year-one revenues, new deployments typically generate multi-year maintenance contracts further enhancing our earnings profile. Revenue from the systems integration segment increased to $9.5 million, up 91% compared to $5 million in the second quarter of 2024.

Speaker #7: Driven primarily by the continued growth in the integration of AI-enabled racks, which began with significant volume in June 2024. Our work here is pursuant to the multi-year agreement signed in October 2024 to integrate AI-enabled racks for our largest customer.

Speaker #7: We expect systems integration revenue in the next several quarters and next several years to grow substantially from current levels. Consolidated gross margin was $17.8% this quarter, down compared to $37.3% in the second quarter of 2024, and up compared to $9.3% in the first quarter of this year.

Speaker #7: The year-over-year decrease is primarily due to the mix of revenues, with lower margin procurement services representing a much larger portion of the total revenue compared to the prior year quarter.

Speaker #7: Breaking down the components of the consolidated margins: segment systems integration gross margins improved from 43% to 44%. Facility's management gross margins remained robust at 74% in each period.

Speaker #7: And as mentioned earlier, the gross margins on procurement activities improved from $3.4% to $3.9% in the current quarter, when viewed on the basis of the gross value of transactions.

Speaker #7: So the downward movement in blended consolidated margins is driven by the outsized growth in the larger I'm sorry, in the lower margin procurement business, combined with the greater portion of the procurement deals being recorded as gross deals compared to the prior year, where more were net deals.

Speaker #7: SG&A expenses were 61% of gross profit in the second quarter. On par with 60% in the year-ago quarter. On a dollar basis, SG&A expenses increased to $4.7 million, in the second quarter 2025, from $2.7 million this quarter last year and decreased sequentially from $4.9 million in the first quarter this year.

Speaker #7: The year-over-year increase was primarily due to the higher headcount and related compensation costs. The current quarter's SG&A expenses include $930,000 of non-cash equity-based compensation compared to $155,000 in this period last year.

Speaker #7: It's worth noting that as a result of the growth of our market capitalization and revenues, we'll no longer be considered a smaller reporting company at the end of 2025.

Speaker #7: We'll instead be an accelerated filer. As a direct result of that, our external auditor must, for the first time, perform an integrated audit including testing and opining on our internal controls over financial reporting.

Speaker #7: We're ing to incur new higher audit and accounting costs as we prepare for both a more robust internal audit of these costs, of these controls, as well as a first-time external audit of these controls pursuant to the Sarbanes-Oxley Act for Section 404(b).

Speaker #7: Depreciation and amortization expenses increased year-over-year to $844,000 compared to $117,000 in the year-ago quarter. The increase is due to two full months of depreciation recognized on our new facility, which we put into service in May 2025.

Speaker #7: I expect the quarterly run rate of depreciation to increase radically in the third quarter as we see a full quarter's depreciation related to the new facility versus only two months' worth of depreciation on that facility in the current quarter.

Speaker #7: Consolidated operating income in the second quarter of 2025 was $2.2 million, up 32% compared to $1.7 million this quarter last year. While higher in dollar terms, this represents a lower operating margin from $37.5% this quarter last year to $28.6% this quarter.

Speaker #7: As the growth in depreciation outgrew the pace of growth in gross profit. As revenues continue to ramp at the new factory, we anticipate operating income in the final six months of 2025 will exceed the comparable period of 2024 as well as the first half of this year.

Speaker #7: If we're successful in sublicing our Round Rock, Texas facility, our operating income will be further enhanced in future periods. We've seen some interest in the facility, but we wouldn't ect to see any sublice consummated this fiscal year.

Speaker #7: Interest expense increased to $859,000 in the second quarter of 2025, compared to $378,000 in the year-ago quarter. The increase was due to an increase in the gross value of procurement transactions and other revenues from our primary customer compared to the prior year quarter, as well as interest on the $20 million construction loan related to our new Georgetown facility, where we had no outstanding debt in the prior year quarter.

Speaker #7: Partially offsetting that interest expense was $175,000 of interest income earned from cash on hand compared $106,000 of interest income this quarter last year. As a net result of all the factors mentioned, net income for the second quarter of 2025 was $1.5 million, up 6% from $1.4 million this quarter last year.

Speaker #7: Diluted earnings per share was $0.06 in each period. Adjusted EBITDA which excludes interest, taxes, depreciation, amortization, and stock-based compensation was $4 million, up $103% from just under $2 million this quarter last year.

Speaker #7: Now let's take a look at the year-to-date results. For the six-months ended June 30, 2025, total revenues were up $410% to $142.9 million, compared to $28.1 million in the year-ago period.

Speaker #7: As Darryll mentioned, the first half of 2025 revenues exceeded the second half of 2024 revenues of up $120.1 million, a sequential increase of 19%.

Speaker #7: By segment, procurement revenues increased by 645%, and systems integration revenues increased by 140%. The increases were somewhat offset by a 37% year-to-date decrease in revenues from facilities management.

Speaker #7: This decrease is primarily due to the timing of discrete projects in this segment and a smaller decrease in ongoing maintenance revenues. Based on our current pipeline, I expect a bit of an increase in discrete projects in the back half of the year compared to what we saw in the first six months.

Speaker #7: Gross profit for the first six months of 2025 increased $135% to $17 million. And our SG&A costs improved to $57% of gross profit down from 70% in the year-ago period.

Speaker #7: Year-to-date, our net income was $4.6 million, compared to $1.5 million in the first half of last year. An increase of $215% and diluted EPS nearly tripled to $0.17 in the current period, up from $0.06 in the prior year period.

Speaker #7: Turning to the balance sheet. As of June 30, 2025, we had $36.8 million of unrestricted cash and cash equivalents plus another $5 million of restricted cash securing our bank loan.

Speaker #7: Up from $23.2 million at year-end 2024. The increase was driven primarily by cash generated from operations and $11.3 million of current quarter proceeds from bank financing used to support the construction at our new Georgetown facility.

Speaker #7: These inflows were partially offset by the capital expenditures tied to the facility's build-out. To support anticipated increases in production as well as to support more and more powerful racks, as Darryll discussed, we completed the move of our new headquarters and production facility to a new location during the second quarter of 2025.

Speaker #7: Through the end of the second quarter, we invested approximately $31.6 million in improvements to that leased facility primarily to significantly increase the available electrical power and related cooling capabilities for both air-cooled and direct liquid-cooled racks.

Speaker #7: That amount is the amount invested both last year and this year to date. This is a bit higher than the 20 to 25 million we previously indicated that we planned invest.

Speaker #7: The increased investment was primarily in response to changes in anticipated technology roadmap from our OEM customers which require even more power and cooling capacity than what was initially planned.

Speaker #7: We expect these incremental investments in CapEx will lead to incremental future revenues. To date, funding for the investments has consisted of $20 million of bank debt with the remainder coming from our cash on hand.

Speaker #7: The loan converted to a fully amortizing loan on July 5th this year with monthly principal and interest payments through January 2030. Networking capital decreased from $1.3 million at the end of 2024 to a negative $16.3 million at the end of the second quarter of 2025, primarily reflecting the investment in those capital expenditures.

Speaker #7: The use of the working capital including the growth in counts payable at the end of the period is primarily related to procurement transactions and the funding of those construction costs.

Speaker #7: Due the conversion of our debt to a term loan about a month ago, $5 million of cash that is a deposit securing our loan was reclassified from a current asset, cash, to a non-current asset, restricted cash.

Speaker #7: In Q3, we anticipate receiving $6.8 million of tenant improvement funds from our landlord, reimbursing us for CapEx we've invested to date. We've also requested to exercise the accordion feature on our bank loan, allowing us to borrow an itional $5 million on that loan in recognition of the additional CapEx that we have to date funded with cash on hand.

Speaker #7: These sources of funds will further improve the strong cash position showing on our balance sheet. For the first six months of 2025, we generated cash flow from operations of $37,000,000.

Speaker #7: Which compares favorably to $1.7 million of cash used in our operations in the first six months last year. The improvement was driven by much stronger earnings combined with the timing of cash flows in our procurement activities discussed above.

Speaker #7: Overall, it was another great quarter. And we look forward to a strong back half of year, with that I'll turn the call back over to Darryll for some closing comments.

Speaker #8: Thanks, Danny. I reciate it. I commented earlier that our Georgetown facility is a egic asset. And I'd like to expand on that before turning the call over to questions.

Speaker #8: I've described in previous calls how the amount of compute power in rack is growing as a result of advancements in chip technologies, such as GPUs from leading providers.

Speaker #8: Our close relationship with the leading IT OEM provides us an operational view of the roadmap ahead for chips and resulting rack densities. There's a couple of years ago, a rack might have required 30 kilowatts of power.

Speaker #8: We're preparing to integrate racks with 300 kilowatts power. And excuse me, on our way to a megawatt of power, possibly within the next year.

Speaker #8: The layout and capabilities of our facility that integrates 300 kilowatt racks is very different to a facility that integrates 30 kilowatt. We have invested in a new facility beyond our initial expectation because racks of greater density are approaching faster than we expected.

Speaker #8: More availability of electrical power is certainly the case, and we're targeting in a year more than double the current availability of electricity. We have also invested in cooling infrastructure, direct liquid processing, required to address racks of dramatically higher power.

Speaker #8: The point to all of this is we are seeing great growth opportunity as the new facility comes online. Looking out over the next 12 to 24 months, our facility will become more and more critical for IT OEMs to deliver the product roadmap.

Speaker #8: Interestingly, we also expect to see more investment in the enterprise marketplace as the AI rollout continues, and small, very dense compute resources are located closer to the end user.

Speaker #8: In summary, we expect continued strong performance for the remainder of this year. Given the strength of our first half, and our increasingly visible visibility into the second half of the year, we are raising our full-year 2025 adjusted EBITDA outlook as we've said previously from at least 50% growth to at least 75% growth compared to 2024.

Speaker #8: We remain focused on driving long-term profitable growth and delivering lasting shareholder value. So with that, let's open up the line for Q&A.

Speaker #2: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a estion, please press star one on your telephone keypad.

Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #2: Once in, please press star one if you have a question or comment. Once again, please press star one if you have a estion or a comment.

Speaker #2: The first question comes from Bradley Stevenson with Breakout Investors. Please proceed.

Speaker #9: Hi, guys. How are ou doing? Hey,

Speaker #2: Pretty good. How are you, Brad?

Speaker #9: Bradley.

Speaker #2: Good, good.

Speaker #9: So it's good to talk to you again. I've got a few questions, and we'll see how you feel about answering those. One of the things that we've never talked , or at least I've never heard you talk about it, is how where does TSSI stand in the priority order for Dell for rack integration projects?

Speaker #9: We know they have in-house rack integration sites as well, and then we also know they use you. And I ieve maybe another vendor or two as well, possibly.

Speaker #9: But can you comment on that at all?

Speaker #2: Bradley, I think the way I would answer that is we our desire is to make it really easy to pick TSS to do the total solution.

Speaker #2: We've positioned urselves for the more complex future. And to be the cheaper, better, faster alternative to anything else in the marketplace. So in terms of a priority, in our world, we are never satisfied.

Speaker #2: We want to be the top priority. We're working hard to be the top priority. And in the scheme of things, that probably can't go into any more detail than that.

Speaker #2: The top percentages or whatever. But rest assured, we want our unfair share of the business, and we're making it as easy to do that as possible.

Speaker #9: Okay. Thanks. You talked a little bit about growing organically in your press release and also exploring strategic alternatives. I ink that comment was about expanding beyond Dell.

Speaker #9: Am I reading that correctly? And if so, can you talk a little more about that or provide any more detail on that thought?

Speaker #2: Yeah. So organic growth is doing more with what we've got with our existing relationship. And I think that's pretty obvious. We're doing everything we can to grow organically, and we so far so good.

Speaker #2: Every day is a new day, and we strive to be better every day. So we want to continue to grow organically on the outside of that, you ow there's a number of different ways that we can expand we talked some of that in the past by doing some on-site rack integration, for ample, in a customer facility.

Speaker #2: But you know there's a, if you will, a respect involved where people that we have working with our existing customer are not going to put somewhere else.

Speaker #2: I mean, we're just on a competitive environment. We're just not going to do that. But that means that doesn't mean we can't have other teams dedicated to other technologies.

Speaker #2: And we're oring doing that. So that's one way grow in a customer facility. Another way is to grow through providing our kind of solution to the channel.

Speaker #2: You know the channel market out there that actually resells current customer technology and other technology once someone or a firm to to do the integration work that we have invested a lot of money in.

Speaker #2: You know 25, 35 million dollars, as we talked, in our world is a lot of money. So we want to make sure that we invest and use that.

Speaker #2: Why would a channel partner be faced to have to make that kind of investment to satisfy their customer? They can route the technology through us.

Speaker #2: We'll do the integration. We have the facility in Round Rock, which we could use for that if that ever comes up. So, that's an opportunity.

Speaker #2: And then third, there's a whole nother level of technology that's out in the marketplace that I think our existing relationship would be okay with if we were to partner in and with.

Speaker #2: And I can't go into whole lot more detail here, but let's put it this way. I ink we're interested in anything that works that helps us grow, that doesn't damage our existing relationship, and that is done fairly and profitably.

Speaker #9: Okay. Thank you. Procurement, it's a big number. It's a lot smaller than last quarter. A whole lot bigger than the year-ago quarter. Is there any way to correlate that with anything else in your operation?

Speaker #9: I ess what I'm trying to say, I find myself like I was surprised with the $90 million last quarter. I didn't expect to see number that big.

Speaker #9: This quarter, $33 million. I won't say I was surprised. I just didn't ally know. I find myself not having really any idea of knowing what to expect.

Speaker #9: Is there any guidance you can give on that?

Speaker #2: Well, if you yes, there is. We inspect our pipeline frequently. And if you were surprised by the $90 million, so were we in the respect that it was such a big number and a big quarter for us.

Speaker #2: If you recall, we did $60 million in Q3 last year, and that was an eye-opener. And we traditionally haven't had that kind of a large procurement quarter in the beginning of the year.

Speaker #2: And we've felt and we still feel there's a little bit of a propensity to dial closer to the federal buying cycle. Which usually is the third quarter of the calendar year.

Speaker #2: I can tell ou that we're optimistic about the full year. I think you'll hopefully be pleasantly surprised again someday. And we're working hard to make that happen.

Speaker #2: So the corollary to anything other than the federal buying cycle and the fact that we put more muscle behind working transactions than we ever did before, think it's paying off.

Speaker #2: So in words, internal resource allocated to go after opportunities that drive revenue for procurement. That also leads into business that we're driving in our configuration services business.

Speaker #2: And we put we've realigned our team internally to place if you will, more attention and talent into the config services business, which really is connected to the procurement business.

Speaker #2: And you ow eventually, and opefully very soon, we'll see the benefits of that.

Speaker #9: Yeah. To be clear on that, Bradley, while it's while the configuration services is gets a lot of that volume fed from the procurement activity, those numbers for configuration services are classified in the systems integration segment.

Speaker #2: Okay. It's hey Bradley, I mean, I can tell ou that I've been here almost now three years, and what Danny just said is something we always kind of go, "Now how es that work?" You know it is what it is.

Speaker #2: But at the same time, Danny's completely right. They feed each other. And they work closely together. And we can also grow config services without procurement.

Speaker #2: Which is what we're trying to . And in order for that to happen, we had to change some people. And we're continuing to invest in a software platform and technology to automate the process that makes it a lot easier to deliver the end result.

Speaker #2: And we're doing that from an ational money. And it's not a lot of money, it just takes time.

Speaker #9: Gotcha. And I wasn't trying to say I was disappointed in $33 million. I just didn't I just didn't know what to expect. That's all I really saying.

Speaker #2: I was just trying to figure out where you're coming from because the next time you ask a question, I might not take the answer question.

Speaker #2: I'm giving you a hard time.

Speaker #9: So I have I'm going to call what ou said about EBITDA guidance. You can correct me if you 't want it referred to as guidance.

Speaker #9: But if I've done my math right, if to do 75% more than last year, that would basic that would mean breaking even with the quarter we just finished over the next two quarters on average.

Speaker #9: Do you while that's a good number, do you see upside potential beyond that scenario?

Speaker #2: Yeah.

Speaker #7: We absolutely view that as the floor, right? If you think you may not have picked up on the exact words, Darryll's used in communicating that.

Speaker #7: But it was we see at least 75% uptick.

Speaker #2: So last year we did 10 million.

Speaker #9: Okay. So if you do four and I guess what I'm trying to say, maybe I misunderstood what you meant. But if you hit say $4 million, the third quarter, $4 million, fourth quarter, it gets you about a 75% uptick, I think.

Speaker #2: Yeah. I think I think your math is somewhat close. The first half of this year, Danny, correct me if I'm rong, I think the first half we did about 8.2 million EBITDA.

Speaker #2: Last year we did 10. We're saying at least 75%.

Speaker #9: First half of this year was 9.2.

Speaker #2: 9.2?

Speaker #9: Yep.

Speaker #2: Okay. What's a million dollars amongst friends? 9.2, 8.2, 9.2. So I think the so there's your hopefully that answers your estion. If we're looking at the full year, we're increasing the guidance to at least 75%.

Speaker #9: Okay. Got it. All right. Well, I appreciate it, guys. And good quarter. And thank you for answering my estions.

Speaker #2: Thank you. All

Speaker #7: Thanks, Bradley.

Speaker #2: right. e. Once in, if you have a question or a comment, please indicate so by pressing star one on your touchtone phone. Once again, that's star one if you have a question or a comment.

Speaker #2: Please continue to hold while we pull for questions. The next question comes from Chris Tuttle with Blue Caterpillar. Please proceed.

Speaker #10: Hey, fellas. Thanks for taking my questions. I was hoping there'd be more coverage on this call. In the old days, analysts introduce companies with this kind of growth and fundamentals.

Speaker #10: But anyway, a couple of quick ones just for me. In terms of Georgetown, where are what did you say you weren't completely 100% operational there or at capacity?

Speaker #10: What I just want to clarify what you said that. And if it's not, 100%, sort of what's your time frame on getting there?

Speaker #2: We are now 100%, Chris. Good to talk to ou, by the way. We're now at 100%. We started the transition around the part of May.

Speaker #2: And we segued into 100%. So we're full capacity, full production capability right now.

Speaker #10: Okay. And just.

Speaker #2: Capability. Chris, I'm ry.

Speaker #7: Sorry, Chris, you're pixelating a ittle bit.

Speaker #9: Oh, sorry.

Speaker #2: Operator, we can't ick him up.

Speaker #10: I'll have to go sit back.

Speaker #2: Okay, Chris. 'll take your question once you come back into queue. The next question comes from Maj Fouden with GL Investing. Please proceed.

Speaker #11: Hey, guys. Hi. I second the call. One quick question. And I might have missed it ause I missed the prepared remarks. So if I did, I'd just use me for asking again if it's been already answered.

Speaker #11: But did you address the, you ow, anything going on in the Round Rock facility, like any kind of movement there in terms of opportunities?

Speaker #11: Or you just 100% concentrated in the Georgetown facility now and just wanted to know if you addressed that at all?

Speaker #2: The opportunity is in Sublease or is in doing additional business there.

Speaker #11: Yeah. I guess both. I mean, I mean, I'm uming too that that's kind of that facility allows you to maybe to do stuff that's not going to also potentially was an assumption also.

Speaker #11: So.

Speaker #2: You're right. Hey, Maj. It is available. We've had some interested parties to Sublease too. It's also something on our list to go expand our configuration services business.

And um, my phone and my door is always open as the management team here, so appreciate any of your feedback or questions.

as we've said before, and I've said before, in a previous call wish us luck

So, thank you. Have a good day.

Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.