GeoInvesting Long Idea: TSS Inc. (TSSI) Since new leadership arrived at TSSI in late 2011, the company has transitioned from an unpredictable, asset heavy business to a more predictable an asset light model, riding favorable trends in the modular data center industry Changes made by management are finally having a positive impact on the company’s financials Key Competitive Advantages: A complete product offering for customers; saves customers’ money; decreases time of deployment of datacenters The “asset light” facility in Texas has the ability to incrementally scale and produce greater profitability as the facility reaches full utilization New banking arranging and asset sale improves balance sheet, and gives TSSI the ability to seek accretive acquisitions to accelerate growth video source: https://youtu.be/pnkD07Q_O7w

1. GEOINVESTING LONG IDEA: TSS INC. (TSSI)
$0.95 (USD) 3/8/2019

2. Quick Pitch
• Since new leadership arrived at TSSI in late 2011, the company has transitioned from an
unpredictable, asset heavy business to a more predictable an asset light model, riding favorable
trends in the modular data center industry
• Changes made by management are finally having a positive impact on the company’s financials
• Key Competitive Advantages: A complete product offering for customers; saves customers’
money; decreases time of deployment of datacenters
• The “asset light” facility in Texas has the ability to incrementally scale and produce greater
profitability as the facility reaches full utilization
• New banking arranging and asset sale improves balance sheet, and gives TSSI the ability to seek
accretive acquisitions to accelerate growth

3. Our Research History on TSSI
June 2017 ($0.19) - TSSI entered our radar, we briefly mentioned that we were adding it to our Tier 1
OTC screen in light of its restructuring efforts which were boosting the bottom line, as well as bullish
comments from its Q1 2017 release
September 20, 2017 ($0.19) - We subsequently added the stock to our “Run To One” model portfolio
September 25, 2017 ($0.25) – We interviewed management to learn more about their restructuring
process, pathway to reaching sustained profitability, and customer concentration risk
October 3, 2018 ($0.25) – We published an article, outlining our bullish thesis, which we believe still
holds true today, even though the stock has risen ~4x
◦ Stock may pull back in the short-term as shortsighted investors misinterpret recent asset sale
◦ We believe company will use proceeds and new credit line to make accretive acquisitions to accelerate already
favorable growth trends
◦ We would welcome a pullback as a pleasant surprise

4. TSSI Valuation
Summary:
Price/Share: $0.90
Market Cap: $14.5m
Cash: $3.2m
Debt: $1.8m
Enterprise Value: $13.2m
Book Value: $0.9m
Trailing 12 Month:
Revenue: $21.4m
Gross Margin: 39.6%
EBITDA: $2.1m
EPS: $0.08
EV/EBITDA: 6.3x
P/E: 11.1x

5. TSSI Legacy Years (Early 2000s – 2011)
TSSI went public in 2007 after being acquired by a SPAC, Fortress American Acquisition
Corporation (reverse merger)
◦ Fortress rolled up several companies to create TSSI
The business initially targeted building and maintaining facilities such as data centers, trading
floors, call centers, and network operation centers
◦ TSSI was essentially a construction company with high capital & labor needs and increasingly low
margin opportunities
◦ This proved to be highly competitive and commoditized
Operational issues, combined with the 2008 financial crisis, prevented TSSI from gaining
traction, causing the stock to drop from a high of $6.50/share to <$0.50/share soon after.

6. TSSI Legacy Years
After briefly growing revenue
for a few years, TSSI
underperformed significantly as
it focused on commoditized
construction activities and
doubled-down on this model
through acquisitions. New
leader arrives in 2011, Anthony
Angelini.
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TSSI Historic Revenue

7. Anthony Angelini
Early in his career, Angelini founded and sold two businesses he founded in 1989, Primary Marketing Group (PMG) and
Next Generation Services (NGS). He grew revenues to ~$70.0 million in 10 years. In 1999 he sold PMG and NGS to Zomax, a
public company that manufactured CDs and DVDs. Angelini’s businesses were acquired by Zomax to enhance it’s
manufacturing and logistics capabilities.
Angelini then joined Zomax in several executive positions
◦ Zomax stock soared on the dot.com hype, but declined sharply after the dot.com bubble burst
◦ Once profitable, Zomax became unprofitable as the legacy business declined due to a dying industry and the CEO
involvement in an insider trading SEC suit
◦ He became CEO in 2004 to turn things around, but the legacy business could not be saved and was too entrenched in
the CD/DVD business.
◦ With the stock still at depressed levels, Angelini sold the company just 2 years later to private equity that wanted to
remain in the CD/DVD business
◦ Angelini learned some tough lessons at Zomax, mainly vowing to do a better job spotting industry trends, that he would
later remember when he arrived at TSSI

8. Anthony Angelini
After selling Zomax, Angelini founded his own consulting company, Angelini, LLC:
◦ He consulted with several small businesses on business strategy, gaining significant
experience in turnarounds/business improvement
◦ In late 2011, TSSI hired his firm for consulting services, and eventually he became CEO of
TSSI in 2012
◦ Over the years, Angelini maintained a working relationship with entrepreneur and
eventually TSSI Chairman, Peter Woodward, as a consultant to his business ventures
◦ Woodward eventually asked Angelini to join as CEO

9. Angelini’s Turnaround - Intro
For several years, the stock lingered in microcap purgatory, until a new CEO, Anthony
Angelini, took over and significantly turned around the business
Angelini joined TSSI in 2012, replacing TSSI’s existing CEO and founder
After trying to revamp the legacy business, Angelini set about righting the ship by:
◦ Shedding underperforming businesses
◦ Pursuing an asset-light model (with some recurring revenue) in a small higher margin
business segment that legacy management had largely ignored
◦ Steering the company to focus more on secular growth opportunities in the modular data
center space

10. Angelini’s Turnaround – Inside the Numbers
At a casual glance, it looks like the company failed to make progress for many
years after Angelini became CEO in 2012.
However:
o Angelini initially tried to save the legacy business, but eventually saw that as a
fruitless task
o Internal issues within its biggest customer’s operations, having nothing to do
with TSSI, delayed revenue growth
o Overall revenue declined as TSSI sold the larger (lower margin) businesses
o Investors would have had to dig deeper to realize that the data center
business was growing and making significant positive strides

11. Angelini’s Turnaround – Inside the Numbers
The “Management’s Discussion & Analysis” of the 2017 10K , on page 12, provided hidden clues
underneath consolidated numbers:
“Our total revenue in 2017 of $18.3 million was a $9.1 million or 33% decrease from our 2016 revenue of
$27.4 million. Our 2016 revenue included $13.6 million from business activities that we either sold or
discontinued, which was the primary reason that our facilities services revenues decreased by $9.5
million or 44%. For the portions of the facility services business that we retained, we actually grew
revenue by $4.1 million or 50% compared to 2016.”
3 straight quarters of year over year revenue growth
6 straight quarters of EPS growth
5 straight quarters of profitability

12. Angelini’s Turnaround – Focus on
Modular Data Centers
Today, TSSI’s focus has shifted significantly, from the commoditized construction
of traditional data centers to building plug and play modular data centers out of
its facility in Texas and providing support services
We believe that the transition from traditional to modular data centers
represents a secular tailwind to TSSI’s business
Traditional
• Inefficient
• Difficult to Scale
• Often Outdated
Modular
• Efficient
• Easily Scalable
• Quickly Made and Customized

13. Traditional Data Centers
Traditional data centers involve building a brick and mortar location to house
server farms
◦ This leads to significant inefficiencies, especially as technologies change over time,
but the structures housing them do not
◦ Traditional data centers are also harder to scale, especially if initial predictions of
usage prove inaccurate
◦ This can also lead to resource inefficiencies (i.e. unused space racking up energy
costs)
◦ Traditional data centers can take 18-24 months to fully build-out – everything needs
to be pre-planned meticulously

14. Modular Data Centers
Modular data centers solve these problems
◦ Modular data centers allow companies to store data servers in portable, easily
adjustable storage containers
◦ This structure eliminates many of the risks of traditional data centers
◦ Containers can be customized as technology evolves, as there is less of a lag time (modular
data centers can be made in just a few weeks, versus over a year for traditional data
centers)
◦ Modular data centers are also very easy to scale up or down
Angelini was able to spot this macro shift from traditional to modular data
centers early, and invested TSSI to address it accordingly, which was a key part of
his turnaround of the business

15. Modular vs Traditional Data Centers
 Modular
Traditional 
(See next slide for video)

16. Data Centers Today
In general, the data center construction and maintenance industry is
growing strongly
◦ The increasing growth of big data and cloud services increases the
amount of storage necessary to support these functions
◦ Mordor Intelligence estimates that the $20B industry is growth at
~8%/year
The growth of modular data centers is laced on top of this overall
industry growth

17. TSSI Today - Complete Modular Data Center Solutions
Today, TSSI provides comprehensive solutions for crucial aspects of modular
data centers, from design to deployment to maintenance
The company has sold off nearly all of its legacy traditional data center business
Financials are beginning to turn around
◦ Revenue has gone from declining consistently to growing 30%+ YOY in recent
quarters
◦ Gross margin has increased from 16% in legacy days to nearly 40% YTD
We think of TSSI as a plug and play Electronic Manufacturing Service (EMS)
company targeting data centers, while providing value added recurring revenue,
design and emergency maintenance services

18. TSSI Today - System Integration
TSSI offers an additional value-add to its data center customers through its Systems
Integration services segment. Broadly speaking, this is where the company takes server
equipment, technology, wiring and software, and puts it all together according to
customer specs, and runs tests.
This business involves highly customized integration of disparate parts of a company’s IT
systems in order to allow it to better work with increasingly complex data
◦ This business is much more regular than TSSI’s more lumpy data center revenue, and
thus should smooth out revenues and earnings going forward
◦ Systems integration services are also a complimentary value-add to TSSI’s modular data
center business
◦ Currently comprises ~35% of total revenues, and YTD grew 16% yoy

19. TSSI Today - System Integration
Integration services carried out in Texas facility:
The company performs several functions within its 100K square foot Texas facility that
add value to IT assets and prepares them to be deployment ready. These include rack
integration, modular integration and system imaging.
In addition, the company validates and tests these systems for field readiness and
assists in the field deployment of these systems, in whatever form factor, to the end
customer. This “in factory” integration reduces time to deploy and costly field quality
issues.
While the integration segment is not recurring, management makes the point that it’s
repeating. Modular data centers provide a better recurring revenue stream compared
to traditional center projects, as data centers are gradually expanded over time.

20. TSSI Today - System Integration; Sticky Customers
The system integration business adds an extremely crucial aspect to TSSI’s business. TSSI
customers get a customized turnkey solution. Not only does TSSI get involved with helping
customers solve problems at the data center dealing with product & technology, but more
importantly, it also is very hands on at its assembly facility in Texas. TSSI also performs
quality control, testing and logistic services.
We like TSSI’s approach, since it creates sticky customers.
◦ “To assist our customers with IT-equipment deployment in their data centers we provide what we call “systems integration” services. We
provide integrated technology services and software tools designed to accelerate the delivery of complex information technology solutions.
These services include custom configuration of a broad scope of information technology products including client products, enterprise
products, clusters and modular containers. The integration of this equipment at both a rack-level or modular data center level is performed to
our customer specifications and test criteria. We are generally not responsible for the performance of the related equipment in the field. In
addition, we provide warehousing of high value equipment such as servers, switches and other information technology hardware that are
generally provided on a consignment basis. Occasionally, we will procure and resell the information technology hardware for our customers”.
◦ TSSI 2017 10K Page 3

21. TSSI Today – Asset Light
TSSI is also now more focused
on asset-light, recurring
services, such as
maintenance and
management contracts for
data centers
As you can see on the right, a
large part of TSSI’s business is
now recurring
34%
19%
47%
Revenue Breakdown
Maintenance (recurring)
Equipment Sales (non-
recurring)
Deployment and Other
(semi-recurring)

22. TSSI Today - Customer Friendly Solution, Summarized
 Readiness- Assessments, surveys and audits for new deployments, upgrades, refreshes, consolidations and migrations.
 Logistics- Vendor managed inventory, kitting, progressive pre-builds, maintaining schedules and last mile delivery.
 Configuration- Settings, tagging, OS and data management, creating instantly-ready systems.
 Integration- Racking, stacking, MDC integration, validation and testing to the highest standards in factory or on premise.
 Deployment- Managed client deployments, cluster and enterprise rack delivery, MDC installation – unparalleled expertise
in any situation.
 Operations- Round-the-clock comprehensive support, monitoring and staffing options to support and transform IT
infrastructure.
 Move- Expertly managed, process-driven and runbook-based moves, migrations, relocations and consolidations of IT
assets.
Source: Website

23. TSSI Today - Customer Friendly Solution, Summarized
TSSI – Legacy:
o Customer needs servers for its traditional data center
o Customer sends all its servers to TSSI
o TSSI utilizes in-house equipment along with product it orders to integrate servers
o TSSI sends servers to facility where they must be installed
TSSI - Today
o Customer has a “pad” to house a modular data center
o Customer sends some sample product and “server” frames to TSSI
o TSSI utilizes in-house equipment along with product it orders to build out the frame
o TSSI sends outfitted frame to be installed at customers’ locations

24. TSSI Going Forward
The transition from traditional to modular data centers and the general growth
of big data are strong industry tailwinds for TSSI going forward
YTD revenue is +22% YOY, and we see no signs that this growth is slowing over
the next few years
◦ Management has generally guided for continued strong growth in 2019
Gross margins are at record levels, and there appears to be strong leverage to
OPEX
◦ YTD revenue growth of 22% was achieved while SG&A declined slightly
◦ We believe a majority of future gross profit growth can drop down to the bottom
line, especially given TSSI’s new more asset-light business model

25. Valuation
Trades at 7.6x TTM EV/EBIT
Adjustments to arrive at run-rate EV/EBIT
◦ Add to EV: $2.5m from 12/28/18 sale of IPSI
◦ Deduct from EBIT: $0.8m annualized EBIT from IPSI
Adjusted run-rate EV/EBIT: 11.4x EV/EBIT

26. Multiples Picking Up

27. Projections
Many ways 11.4x EV/EBIT declines going forward:
Operating leverage
◦ YTD revenue growth of 20%+ was achieved while SG&A levels declined 2.5%
Acquisition
◦ TSSI is pursuing accretive acquisitions
◦ An acquisition would diversify the company’s revenue base
◦ The company now has ~$4m in net cash, nearly 30% of the market cap
Gross margin expansion
◦ As TSSI continues to transition from traditional to higher-margin modular products
Assuming 50% of gross profit growth drops down NTM, and 20% revenue growth, TSSI
trades at 7.2x forward EV/EBIT

28. Fair Value
What would you pay for a niche provider with recurring revenues growing at
20%+ with secular industry tailwinds and a long reinvestment runway, run by a
strong and proven management team?
TSSI is one of the only public pure-plays on the modular data center transition
◦ Leads to a higher valuation
◦ Public comps are all much larger and too diversified to get relative valuations
We don’t think 15x forward EV/EBIT is out of the question
◦ Would represent a 1-year price target of ~$1.77/share, or 97% upside from current
prices

29. Why the Opportunity Exists
Financials screen badly
◦ Revenues have declined 75% over the past 10 years
◦ Investors initially overreacted to some of the revenue loss from selling off
underperforming, money losing, business units with large revenue bases
◦ Hasn’t had positive EBITDA since 2012 – profitability obtained in 2017
◦ Trades on the OTC
Illiquid
◦ 40% of shares outstanding are owned by management, and another 30% by large
blockholders – freely-tradable float is only 5 million shares
◦ Trades <$13,000 worth of stock per day

30. Catalysts
Acquisition
◦ IPSI sale freed up cash to continue TSSI’s acquisition strategy
◦ New bank line can also aide in implementing an acquisition strategy, as well as pay
down expensive debt accumulated during TSSI’s restructuring
◦ An acquisition can accelerate the use of TSSI’s $36.9m of NOLs
Increased IR/recognition
◦ As the stock grows to a >$20 million market cap
◦ A listing on a national stock exchange once they satisfy requirements

31. Risks/Caveats
Customer concentration
◦ For FY17, one customer represented 69% of total revenues
◦ However, this is diversified between many different sub-segments of that
customer
Stagnation for years
◦ Investors may be tepid in believing that management has finally turned the
corner, since the restructuring process has been going on since 2011
◦ We think it just took management time to realize they had to let go of their
legacy business.
◦ Management acknowledged this misstep

32. Risks/Caveats
IPSI sale will weaken immediate financials
◦ IPSI represented about 20% of TSSI sales and 43% of EBIT
◦ IPSI was sold for ~3x earnings, while TSSI trades at ~11x earnings
◦ However, proceeds from the sale significantly cleaned up the company’s
balance sheet, and IPSI was in the process of losing their biggest
customer
We would prefer the CEO to own more stock (Currently: 6%)

33. Insider Support
Over the years, TSSI’s insiders have shown confidence in TSSI’s long-term business prospects and have
been willing to help it along
◦ Feb 2015 – MHW, a company managed by Peter Woodward, TSSI’s Chairman, established a $2m term
loan facility with TSSI, with an initial advance of $945,000
◦ July 2017 – TSSI borrowed an additional $650,000 from MHW
◦ TSSI had previously had a convertible note outstanding with Director Gerald Gallagher as well
Insider ownership
◦ Total insider ownership is 41%
◦ Woodward owns 24%
◦ Angelini owns 6%
◦ Worth 3x his annual salary of $350,000

34. Conclusion
o TSSI is a pure-play on the secular transition from traditional to modular data
centers
o New management has set the company on a path for long-term growth, with
ample reinvestment runways through acquisitions
o The business has been left for dead by investors, as evidenced by TSSI’s low
valuation levels that persisted even as the turnaround has gained steam
o We see 97% upside over the next 12 months as TSSI executes on continued
growth and investors slowly rediscover the company as meaningful upside
catalysts get realized